Abstract
Iran, endowed with abundant renewable and non-renewable energy resources, particularly non-renewable resources, faces challenges such as air pollution, climate change and energy security. As a leading exporter and consumer of fossil fuels, it is also attempting to use renewable energy as part of its energy mix toward energy security and sustainability. Due to its favorable geographic characteristics, Iran has diverse and accessible renewable sources, which provide appropriate substitutes to reduce dependence on fossil fuels. Therefore, this study aims to examine trends in energy demand, policies and development of renewable energies and the causal relationship between renewable and non-renewable energies and economic growth using two methodologies. This study first reviews the current state of energy and energy policies and then employs Granger causality analysis to test the relationships between the variables considered. Results showed that renewable energy technologies currently do not have a significant and adequate role in the energy supply of Iran. To encourage the use of renewable energy, especially in electricity production, fuel diversification policies and development program goals were introduced in the late 2000s and early 2010s. Diversifying energy resources is a key pillar of Iran’s new plan. In addition to solar and hydropower, biomass from the municipal waste from large cities and other agricultural products, including fruits, can be used to generate energy and renewable sources. While present policies indicate the incorporation of sustainable energy sources, further efforts are needed to offset the use of fossil fuels. Moreover, the study predicts that with the production capacity of agricultural products in 2018, approximately 4.8 billion liters of bioethanol can be obtained from crop residues and about 526 thousand tons of biodiesel from oilseeds annually. Granger’s causality analysis also shows that there is a unidirectional causal relationship between economic growth to renewable and non-renewable energy use. Labor force and gross fixed capital formation cause renewable energy consumption, and nonrenewable energy consumption causes renewable energy consumption.
Highlights
The close and high relationship between production growth and energy consumption growth in the economy refers to the dependence of the economy on energy [1]
The unit root results show that we cannot reject the null hypothesis of unit roots for all variables in the model; the variables are stationary after difference 1 and they are integrated in order 1, I(1)
We can conclude that a cointegration relationship exists among variables
Summary
The close and high relationship between production growth and energy consumption growth in the economy refers to the dependence of the economy on energy [1]. The dependency on oil has declined with time in Iran as well as other countries due to the use of other energy sources, such as natural gas and renewable energies. The share of oil consumption in total final energy demand has declined significantly from 91% in 1980 to 43% in 2018 (Figure 1). This led to increased use of natural gas in the country, from 7% in 1980 to 56% in 2018. While oil consumption has declined and been substituted by natural gas, the share of oil in total consumption is still high and the use of renewable energy resources is low due to low Sustainability 2021, 13, 7328.
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