The impact of economic complexities and energy security on energy efficiency indicators in Iran

Document Type : Research Article

Authors

1 Associate professor, Department of Economic, Faculty of Humanities and Social Sciences, University of Kurdistan, Sanandaj, Iran.

2 Ph.D. Student in Economics, Department of Economic, Faculty of Humanities and Social Sciences, University of Kurdistan, Sanandaj, Iran

Abstract

Given the pivotal role of energy in economic development and the growing emphasis on sustainable energy resources, analyzing the determinants of energy efficiency is of paramount importance. This study investigates the impact of economic complexity and energy security risk on energy efficiency indicators in Iran. Using macroeconomic data together with indices of energy security and economic complexity, the study examines the relationship between these factors and energy productivity—proxied by energy intensity and carbon emissions—over the period 1995–2023, employing the Fully Modified Ordinary Least Squares (FMOLS) method. The findings reveal that economic complexity has a positive and statistically significant relationship with both energy intensity and carbon emissions, implying that greater economic complexity is associated with higher energy consumption and increased environmental pollution. Conversely, energy security risk exhibits a negative and statistically significant relationship with energy intensity and a positive and statistically significant relationship with carbon emissions, indicating that while an increase in energy security risk reduces energy intensity, it simultaneously leads to higher carbon emissions. These results underscore the complex interplay between economic indicators and energy security factors and highlight the need to address both dimensions simultaneously in order to improve energy efficiency and mitigate environmental degradation in Iran.

Keywords

Main Subjects

References

Adekoya, O. B., Kenku, O. T., Oliyide, J. A., Al-Faryan, M. A. S., & Ogunjemilua, O. D. (2023). Does economic complexity drive energy efficiency and renewable energy transition?. Energy, 278, 127712. https://doi.org/10.1016/j.energy.2023.127712.
Alemzero, D. A., Sun, H., Mohsin, M., Iqbal, N., Nadeem, M., & Vo, X. V. (2021). Assessing energy security in Africa based on multi-dimensional approach of principal composite analysis. Environmental Science and Pollution Research, 28(2), 2158-2171. https://doi.org/10.1007/s11356-020-10554-0
Ali, U., Guo, Q., Kartal, M. T., Nurgazina, Z., Khan, Z. A., & Sharif, A. (2022). The impact of renewable and non-renewable energy consumption on carbon emission intensity in China: Fresh evidence from novel dynamic ARDL simulations. Journal of Environmental Management, 320, 115782. https://doi.org/10.1016/j.jenvman.2022.115782
Amini, O., Amani, R., & Ghaderi, S. (2023). Renewable, Non-Renewable Energy Consumption and Energy Security Risk in Iran: An Application of Structural VAR. Iranian Energy Journal, 25(4), 81-103. http://necjournals.ir/article-1-1845-fa.html (In Persian)
Aydin, M., Guney, E., Degirmenci, T., & Demirtas, N. (2025). Analyzing the impact of environmental technological regulations, energy security, and natural resources on energy intensity in the USA. Energy Reports, 14, 500-507. https://doi.org/10.1016/j.egyr.2025.06.013
Azhgaliyeva, D., Liu, Y., & Liddle, B. (2020). An empirical analysis of energy intensity and the role of policy instruments. Energy Policy, 145, 111773. https://doi.org/10.1016/j.enpol.2020.111773
Balland, P. A., Broekel, T., Diodato, D., Giuliani, E., Hausmann, R., o'Clery, N., & Rigby, D. (2022). Reprint of the new paradigm of economic complexity. Research Policy, 51(8), 104568. https://doi.org/10.1016/j.respol.2022.104568
Bano, S., Zhao, Y., Ahmad, A., Wang, S., & Liu, Y. (2018). Identifying the impacts of human capital on carbon emissions in Pakistan. Journal of Cleaner Production, 183, 1082-1092. https://doi.org/10.1016/j.jclepro.2018.02.008
Bhatt, M., & Chavda, P. (2025). Impact of Economic Complexity and Energy Intensity on Environmental Sustainability. Evidence from India. Available at SSRN 5271860. https://dx.doi.org/10.2139/ssrn.5271860
Boleti, E., Garas, A., Kyriakou, A., & Lapatinas, A. (2021). Economic complexity and environmental performance: evidence from a world sample. Environmental modeling & assessment, 26(3), 251-270. https://doi.org/10.1007/s10666-021-09750-0.
Borozan, D. (2024). Do geopolitical and energy security risks influence carbon dioxide emissions? Empirical evidence from European Union countries. Journal of cleaner production, 439, 140834. https://doi.org/10.1016/j.jclepro.2024.140834
Breyer ,C., Dmitrii Bogdanov, A. A., Ashish Gulagi, M. C., Ayobami Solomon Oyewo, J. F., Kristina Sadovskaia, P. V. (2017). Solar photovoltaics demand for the global energy transition in the power sector. Eu Pvsec Paper, 26(8). https://doi.org/10.1002/pip.2950
Cherp, A., & Jewell, J. (2014). The concept of energy security: Beyond the four As. Energy policy, 75, 415-421. https://doi.org/10.1016/j.enpol.2014.09.005
Chu, L. K., & Hoang, D. P. (2020). How does economic complexity influence income inequality? New evidence from international data. Economic Analysis and Policy, 68, 44-57. https://doi.org/10.1016/j.eap.2020.08.004
Cole, M. A. (2006). Does trade liberalization increase national energy use?. Economics Letters, 92(1), 108-112. https://doi.org/10.1016/j.econlet.2006.01.018
Doğan, B., Ghosh, S., Hoang, D. P., & Chu, L. K. (2022). Are economic complexity and eco-innovation mutually exclusive to control energy demand and environmental quality in E7 and G7 countries?. Technology in Society, 68, 101867. https://doi.org/10.1016/j.techsoc.2022.1018667
Demski, C., Wouter Poortinga, L. W., Gisela Böhm, S. F., Linda Steg, R. U., Pekka, J. & Pasi, P., (2018), National context is a key determinant of energy security concerns across Europe. Nature Energy, 3, 882–888 (2018), https://doi.org/10.1038/s41560-018-0235-8
Fang, J., Gozgor, G., Mahalik, M. K., Padhan, H., & Xu, R. (2021). The impact of economic complexity on energy demand in OECD countries. Environmental Science and Pollution Research, 28(26), 33771-33780. https://doi.org/10.1007/s11356-020-12089-w
Filipović, S., Verbič, M., & Radovanović, M. (2015). Determinants of energy intensity in the European Union: A panel data analysis. Energy, 92, 547-555. https://doi.org/10.1016/j.energy.2015.07.011
Gillingham, K., Newell, R. G., & Palmer, K. (2009). Energy efficiency economics and policy. Annual Review of Resource Economics, 1(1), 597-620.  https://doi.org/10.1146/annurev.resource.102308.124234
Goh, T., & Ang, B. W. (2020). Four reasons why there is so much confusion about energy efficiency. Energy Policy, 146, 111832. https://doi.org/10.1016/j.enpol.2020.111832
Hidalgo, C. A., & Hausmann, R. (2009). The building blocks of economic complexity. Proc. Natl. Acad. Sci. USA, 106(26), 10570–10575. https://doi.org/10.1073/pnas.0900943106
Ibrahim, M. A., & Musaheb, J. M. (2021). Energy Security and Energy Transition in Germany. Review of International Geographical Education Online, 11(7), 1433-1439. https://rigeo.org/menu-script/index.php/rigeo/article/view/1949
International Energy Agency (IEA). 2019. Energy transitions indicators [Online] Available at: https://www.iea.org/articles/energy-transitions-indicators. (Accessed 21 March 2022)
Kazemzadeh, E., Fuinhas, J. A., Koengkan, M., & Shadmehri, M. T. A. (2023). Relationship between the share of renewable electricity consumption, economic complexity, financial development, and oil prices: a two-step club convergence and PVAR model approach. International Economics, 173, 260-275. https://doi.org/10.1016/j.inteco.2022.12.001
Khaki, N., khorsandi, M., Mohammadi, T., Faridzad, A. & Azizi, Z. (2021). The Impact of Economic Complexity Index on Greenhouse Gas Emissions in Selected Oil Exporting Countries: A Panel Gentle Transmission Regression (PSTR) Model Approach. Iranian Energy Economics, 10(39), 99-125. https://doi.org/10.22054/jiee.2022.67727.1911 (in Persian)
Kruyt, B., Van Vuuren, D. P., de Vries, H. J., & Groenenberg, H. (2009). Indicators for energy security. Energy policy, 37(6), 2166-2181. https://doi.org/10.1016/j.enpol.2009.02.006.
Kumar, S. (2016). Assessment of renewables for energy security and carbon mitigation in Southeast Asia: The case of Indonesia and Thailand. Applied Energy, 163, 63-70. https://doi.org/10.1016/j.apenergy.2015.11.019
Lapinskienė, G., Tvaronavičienė, M., & Vaitkus, P. (2014). Greenhouse gases emissions and economic growth–evidence substantiating the presence of environmental Kuznets curve in the EU. Technological and economic development of economy, 20(1), 65-78. https://doi.org/10.3846/20294913.2014.881434
Lee, C. C., & Wang, C. S. (2022). Financial development, technological innovation and energy security: Evidence from Chinese provincial experience. Energy Economics, 112, 106161. https://doi.org/10.1016/j.eneco.2022.106161
Liu, X., Niu, Q., Dong, S., & Zhong, S. (2023). How does renewable energy consumption affect carbon emission intensity? Temporal-spatial impact analysis in China. Energy, 284, 128690. https://doi.org/10.1016/j.energy.2023.128690.
Malik, S., Qasim, M., Saeed, H., Chang, Y., & Taghizadeh-Hesary, F. (2020). Energy security in Pakistan: Perspectives and policy implications from a quantitative analysis. Energy Policy, 144, 111552. https://doi.org/10.1016/j.enpol.2020.111552
Malinauskaite, J., Jouhara, H., Ahmad, L., Milani, M., Montorsi, L., & Venturelli, M. (2019). Energy efficiency in industry: EU and national policies in Italy and the UK. Energy, 172, 255-269. https://doi.org/10.1016/j.energy.2019.01.130
Marimuthu, M., Khan, H., & Bangash, R. (2021). Reverse causality between fiscal and current account deficits in asean: evidence from panel econometric analysis. Mathematics, 9(10), 1124, 1-18.  https://doi.org/10.3390/math9101124
Mohamadi, N., Sahabi, B., Heydari, H. & Sadeghi, H. (2024). Economic Complexity, Renewable and Non-renewable Energy Consumption A Comparative Study of Developed and Developing Countries. Economic Research and Perspectives, 24(2), 91-114. https://doi.org/10.22034/24.2.91 (in Persian)
Neagu, O., & Teodoru, M. C. (2019). The relationship between economic complexity, energy consumption structure and greenhouse gas emission: Heterogeneous panel evidence from the EU countries. Sustainability, 11(2), 497. https://doi.org/10.3390/su11020497
Newell, R. G., Jaffe, A. B., & Stavins, R. N. (1999). The Induced Innovation Hypothesis and Energy-Saving Technological Change. The Quarterly Journal of Economics, 114(3), 941–975. https://doi.org/10.1162/003355399556188
Paramati, S. R., Shahzad, U., & Doğan, B. (2022). The role of environmental technology for energy demand and energy efficiency: Evidence from OECD countries. Renewable and Sustainable Energy Reviews, 153, 111735. https://doi.org/10.1016/j.rser.2021.111735
Payne, J. E., Truong, H. H. D., Chu, L. K., Doğan, B., & Ghosh, S. (2023). The effect of economic complexity and energy security on measures of energy efficiency: Evidence from panel quantile analysis. Energy Policy, 177, 113547. https://doi.org/10.1016/j.enpol.2023.113547
Phillips, P. C., & Hansen, B. E. (1990). Statistical inference in instrumental variables regression with I(1) processes. The review of economic studies, 57(1), 99-125. https://doi.org/10.2307/229754
Salimi, L. , mostolizadeh, S. M. and Farahati, M. (2023). Investigating the Effect of Economic Complexity on Renewable Energy Consumption in Iran. Economic Policies and Research, 2(3), 1-20. https://doi.org/10.22034/jepr.2023.140173.1062 (in Persian)
Seri, C., & Fernandez, A. (2021). The relationship between economic growth and environment. Testing the EKC hypothesis for Latin American countries. arXiv preprint arXiv:2105.11405. https://doi.org/10.48550/arXiv.2105.11405.
Solarin, S. A. (2020). Towards Sustainable Development in Developing Countries: Aggregate and Disaggregate Analysis of Energy Intensity and the Role of Fossil Fuel Subsidies. Sustainable Production and Consumption, 24, 254-265. https://doi.org/10.1016/j.spc.2020.07.011
Stern DI, Economic growth and energy (2007). Encyclopedia of energy,  2, 10.1016/B0-12-176480-X/00147-9.
Salarvand, B., & Hasanvand, A. (2025). Investigating the Impact of Economic Complexity and International Risks on Sustainable Development in Emerging Countries: A Panel Smooth Transition Regression (PSTR) Approach. Quarterly Journal of Quantitative Economics (JQE). https://doi.org/10.22055/jqe.2024.47924.2656 (in Persian)
Ullah, S., & Lin, B. (2025). An environmental assessment through load capacity factor: the dynamic effects of technological cooperation grants and energy depletion in Pakistan. Frontiers in Sustainable Energy Policy, 3, 1438573. https://doi.org/10.3389/fsuep.2024.1438573
Winzer, C. (2012). Conceptualizing energy security. energy policy, 46, July 2012, 36-48, https://doi.org/10.1016/j.enpol.2012.02.067.
Yao, L., & Chang, Y. (2014). Energy security in China: A quantitative analysis and policy implications. Energy Policy, 67, 595-604. https://doi.org/10.1016/j.enpol.2013.12.047
Zabihi, S. M. G., Akbari, F., & Salehnia, N. (2023). The Effect of the Energy Security Risk Index on Economic Stability in Iran. Stable Economy Journal, 4(3), 134-164. https://doi.org/10.22111/sedj.2023.46891.1399  (in Persian)
Zafar, M. W., Zaidi, S. A. H., Khan, N. R., Mirza, F. M., Hou, F., & Kirmani, S. A. A. (2019). The impact of natural resources, human capital, and foreign direct investment on the ecological footprint: the case of the United States. Resources Policy, 63, 101428. https://doi.org/10.1016/j.resourpol.2019.101428
Journal of Economic Policies and Research
Volume 5, Issue 3 - Serial Number 19
September 2026
Pages 1-30

Files

History

  • Receive Date: 04 August 2025
  • Revise Date: 27 October 2025
  • Accept Date: 02 November 2025
  • Publish Date: 23 September 2026

Share

How to cite

Statistics