Decomposition of Natural Gas Intensity in Energy-Intensive Industries in Iran

Abstract. Natural gas is main energy carrier used across industrial sector in Iran. The macro-level policy is to substitute natural gas for other oil products due to environmental and economic impacts. In this article, the natural gas intensity in energy-intensive industries is decomposed into output, structural and pure intensity effects in Iran during the period 1971 to 2011. The increasing share of value added as a proxy for structural changes represents a significant impact on reducing natural gas intensity. The output effect is of the high estmagnitude in changing natural gas consumption, and the pure intensity and structural effects rank the second and third in terms of the overall change in natural gas use, respectively.Keywords. Decomposition, Output effect, Structural effect, Energy-intensive manufacturing sector.JEL. C02, L60, Q41