09.10.2024 New Publication: Economic sanctions and energy efficiency - Evidence from Iranian industrial sub-sectors

Can economic sanctions change the way industries use energy? In their latest study published in Energy Economics, Prof. Farzanegan and his colleagues investigate how sanctions have reshaped energy efficiency across Iran’s industrial landscape.

Sanctions have a significant negative effect on energy efficiency across 24 industrial sub-sectors of the Iranian economy; for example, if our calculated measure of sanction intensity shifts from low to high, the efficiency of energy use is expected to decrease by 3.16%.

 One channel for the impact of sanctions is that by blocking the import of modern equipment and technologies (or increasing their funding costs), they force target countries to rely on outdated equipment; dependence on obsolete technologies inevitably results in a decline in energy efficiency.

 The negative effects of sanctions are particularly significant in industries with higher import dependence; these sectors, which rely more on international markets for their inputs and production, experience greater declines in energy efficiency due to sanctions.

The study is available open access at: https://doi.org/10.1016/j.eneco.2024.107920