**6. Iran case study**

274 Fossil Fuel and the Environment

three categories can provide policymakers with the information needed to design appropriate strategies for reduction in energy use while helping to mitigate the environmental impacts of industrial energy use. Three factors of structural, activity or technological changes play a significant role in reducing the energy consumption and

Would a more efficient use of energy resources reduce the environmental burden of economic activity? This question has become prominent in recent years as governments across the world have implemented energy efficiency program. The environmental impacts of energy use vary depending upon how energy is produced and used, and the related energy regulatory actions and pricing structures. Gaseous emissions and particulates from the burning of fossil fuels pollute the atmosphere and cause poor local air quality and

Energy use has a variety of impacts. Energy extraction and processing always involves some forms of environmental degradation. As all human activities require energy use, in fact all human impacts on the environment could be seen as the consequences of energy use. In this way energy use is sometimes seen as a proxy for environmental impact of human activity. Principal issues related to the environmental dimension include global climate change, air pollution, water pollution, wastes, land degradation and deforestation. The consideration of global environmental issues such as the greenhouse effect and the 'resulting' climate change problem has led to the development of numerous theoretical models and empirical studies that making it hard to distinguish between environment

The impacts of climatic problems associated with the increased accumulation of pollution on the world economy have been assessed intensively by researchers since 1990s. Greenhouse gas emissions are directly related to the use of energy, which is an essential factor in the world economy, both for production and consumption. Therefore, the relationship between greenhouse gas emissions and economic growth has important implications for an appropriate joint economic and environmental policy. It is confirmed that in both poor and rich countries, economic development is not in a sufficient condition to reduce emissions. In nearly all industrial countries there is a permanent discussion on policies to reduce greenhouse gas (GHG) emissions and secure energy supply. A shift from lower to higher quality energy sources not only reduces the total energy required to produce a unit of GDP but also may reduce the environmental impact of the energy use. An obvious example would be a shift from coal use to natural gas use. However, we need to consider that kinds of fuels with higher quality necessarily do not have less

In addition to energy conserving of technological change, it may also change the environmental impact of energy use over time. So that it reduces the emissions of various pollutants or other environmental impacts associated with each energy source. Therefore, despite the strong connections between energy use and economic growth there are several pathways through which the environmental impact of growth can be reduced. However, if there are limits to substitution of other kinds of energy and technological change then

intensity with respect to the output value.

and energy models (Faucheaux and Levarlet, 1999: 1123).

**5. Environmental implications** 

regional acidification.

environmental impacts.

This section of the chapter explores energy and economic growth trends in Iran. Taking the example of the Iran economy in the period 1967 to 2007, the final fossil fuel consumption increased by about 617%, and carbon dioxide emissions sharply increased about 610%. This was in accordance with a significant increase in GDP.

The major energy carriers in Iran are liquid petroleum fuels, electricity, coal and biomass. As the growth of petroleum fuels consumption has been higher than population growth, the per capita consumption of petroleum fuels has been increasing. Furthermore, increased petroleum energy use generally indicates air pollution increase, particularly because technologies to control emissions are almost non-existent as in Iran.

Figure .1 shows the GDP trends of Iran during 1994-2007. Empirical evidence on economic growth in Iran over the last decade seems increasing simultaneously as energy increase. National Commercial Energy Consumption indicator provides a broad overview of the energy use situation and makes it possible to compare with other countries. As Fig. 2 illustrates, since the 1994 the amount of energy used has increased in almost all sectors.

Fig. 1. Iran gross domestic products

Energy and Economy Links – A Review of Indicators and Methods 277

economic growth – has been dominant concerns in energy policy making during recent years. Thus, the main aim of this paper is to present and discuss the use of a particular kind of analytical tool to reinvestigate energy-environment-economy interactions theoretically. We begin by providing some background that appears to underlie the energy- economy relation which in turn consider environmental issues. Energy poses a challenge to those working to achieve sustainable development goals. We need to use energy to alleviate poverty, promote economic growth and foster social development. But as more energy is

The fact that expanded energy use is associated with economic development still depends on the importance of energy as a factor in economic development. However, there are substantial differences in energy forms and in the nature of economic activities across different stages of development. The linkages among energy, other inputs, and economic activity clearly change significantly as an economy moves through different stages of development. The energy mix in a developed country can be dominated by non-carbon emitting energy sources, notably hydroelectricity, used in the household and industrial sectors, used in the transport sector. Breaking energy consumption down by sector, by region and for urban and rural areas will be useful in identifying strategies for energy policy implementation. Currently it is possible to disaggregate all data by sector, by region, and

Internationally, the efficient use of resources has seen a growing role in policy making. In fact, there has been an extensive debate in the energy economics about the impact of improvements in energy efficiency and environmental consequences. If we work together to safeguard the environment without slowing socio-economic development, we look for technological solutions. So, we should change unsustainable patterns of consumption and production toward the least costly ways of achieving sustainable development goals. Analytical tools, such as the energy indicators described before, can be helpful in finding the

The cutback in emissions according to the Kyoto Protocol and the maintenance of social well-being require a fragile balance between policies that often have opposite effects. Hence, it is very important to determine the link between economic performance and energy consumption. Emissions of greenhouse gases, especially CO2 emissions, are closely linked to the energy consumption of primary energy, but the final consumption is crucial for the consumption of primary energy. In fact, energy demand is a derived demand that depends on the productive structure of the economy, the energy content, the sectoral production, the age of the stock of capital, etc. Recently, global and regional environmental problems associated with the utilization of conventional fuels seek to the Renewable Energy Sources (RES) as a competitive participant in the energy scenery. Legislative measures have been adopted in order to reduce dependency from fossil fuels to further integrate non-polluting

Aghion, P.& Howitt, P.W. (1998). Endogenous Growth Theory. MIT Press, Cambridge, MA

best solutions in a menu of available options, aimed at achieving these goals.

consumed, stress is placed on the environment at the local and regional levels.

between urban and rural.

technologies in the energy mix.

and London.

**8. References** 

Fig. 2. Iran total energy consumption by sectors

As Fig. 3 demonstrates, once the indicator of energy intensity is used it shows a decreasing trend in some sectors. This has traditionally been assumed to be the result of the application of more energy-efcient technologies within production processes or changes of energy mix inputs. Closer examination of this trend has, however, suggested that this apparent decoupling has in fact been achieved largely by a switch away from the direct use of lowquality fuels to higher quality fuels and energy inputs, electricity in particular.

Fig. 3. Iran energy intensity by sectors

Energy intensity is a measure of how much energy is used to produce a unit of economic output. The decoupling of increasing economic activity from increasing energy consumption is a goal for sustainable development. Energy intensity tends to decline over time as a function of underlying efficiency gains and the transition to a more service-based economy. So, it shows less energy needed to generate GDP. It should be considered that Government policies can play a crucial role in how energy intensity changes. Increasing per capita energy consumption is generally associated with development. However, with increasing environmental awareness this is not necessarily a desirable trend.

#### **7. Conclusion**

The production, distribution and use of energy create pressures on the environment in the household, workplace and city, and at the national, regional and global levels. Therefore, energy indicators are useful for evaluating impacts of energy systems in all these areas. Trade-offs among three objectives – energy security, environmental protection, and

As Fig. 3 demonstrates, once the indicator of energy intensity is used it shows a decreasing trend in some sectors. This has traditionally been assumed to be the result of the application of more energy-efcient technologies within production processes or changes of energy mix inputs. Closer examination of this trend has, however, suggested that this apparent decoupling has in fact been achieved largely by a switch away from the direct use of low-

Energy intensity is a measure of how much energy is used to produce a unit of economic output. The decoupling of increasing economic activity from increasing energy consumption is a goal for sustainable development. Energy intensity tends to decline over time as a function of underlying efficiency gains and the transition to a more service-based economy. So, it shows less energy needed to generate GDP. It should be considered that Government policies can play a crucial role in how energy intensity changes. Increasing per capita energy consumption is generally associated with development. However, with increasing

The production, distribution and use of energy create pressures on the environment in the household, workplace and city, and at the national, regional and global levels. Therefore, energy indicators are useful for evaluating impacts of energy systems in all these areas. Trade-offs among three objectives – energy security, environmental protection, and

environmental awareness this is not necessarily a desirable trend.

quality fuels to higher quality fuels and energy inputs, electricity in particular.

Fig. 2. Iran total energy consumption by sectors

Fig. 3. Iran energy intensity by sectors

**7. Conclusion** 

economic growth – has been dominant concerns in energy policy making during recent years. Thus, the main aim of this paper is to present and discuss the use of a particular kind of analytical tool to reinvestigate energy-environment-economy interactions theoretically.

We begin by providing some background that appears to underlie the energy- economy relation which in turn consider environmental issues. Energy poses a challenge to those working to achieve sustainable development goals. We need to use energy to alleviate poverty, promote economic growth and foster social development. But as more energy is consumed, stress is placed on the environment at the local and regional levels.

The fact that expanded energy use is associated with economic development still depends on the importance of energy as a factor in economic development. However, there are substantial differences in energy forms and in the nature of economic activities across different stages of development. The linkages among energy, other inputs, and economic activity clearly change significantly as an economy moves through different stages of development. The energy mix in a developed country can be dominated by non-carbon emitting energy sources, notably hydroelectricity, used in the household and industrial sectors, used in the transport sector. Breaking energy consumption down by sector, by region and for urban and rural areas will be useful in identifying strategies for energy policy implementation. Currently it is possible to disaggregate all data by sector, by region, and between urban and rural.

Internationally, the efficient use of resources has seen a growing role in policy making. In fact, there has been an extensive debate in the energy economics about the impact of improvements in energy efficiency and environmental consequences. If we work together to safeguard the environment without slowing socio-economic development, we look for technological solutions. So, we should change unsustainable patterns of consumption and production toward the least costly ways of achieving sustainable development goals. Analytical tools, such as the energy indicators described before, can be helpful in finding the best solutions in a menu of available options, aimed at achieving these goals.

The cutback in emissions according to the Kyoto Protocol and the maintenance of social well-being require a fragile balance between policies that often have opposite effects. Hence, it is very important to determine the link between economic performance and energy consumption. Emissions of greenhouse gases, especially CO2 emissions, are closely linked to the energy consumption of primary energy, but the final consumption is crucial for the consumption of primary energy. In fact, energy demand is a derived demand that depends on the productive structure of the economy, the energy content, the sectoral production, the age of the stock of capital, etc. Recently, global and regional environmental problems associated with the utilization of conventional fuels seek to the Renewable Energy Sources (RES) as a competitive participant in the energy scenery. Legislative measures have been adopted in order to reduce dependency from fossil fuels to further integrate non-polluting technologies in the energy mix.
