The potential for greenhouse gases mitigation in household sector of Iran: cases of price reform/efficiency improvement and scenario for 2000–2010

Iran's demographic profile is sharply youth oriented and this upcoming generation's needs for employment and housing, coupled with low-energy efficiency vectors and consumption patterns, has created a constant rise in energy demand and greenhouse gas (GHGs) emissions in the residential sector. Improved energy efficiency as a national policy lynchpin for demand reduction and GHGs mitigation, has become commonplace. OPEC countries however, Iran included, suffer an obvious lack of consumer incentive because of low fuel prices. This study evaluates the twin impacts of price reform and efficiency programs on energy carriers’ consumption and GHGs mitigation in the Iranian housing sector. For this purpose, the demand functions for energy carriers, has been developed by econometrics process models.The results reveal that price elasticity for electricity demand in the Constant Elasticity Model for the short-run while the long-run is −0.142 and −0.901, respectively. In the Variable Elasticity Model the 250% increase in electricity rates in the short-run resulted in a price elasticity change from −0.02 to −0.475, hence the 250% increase in electricity pricing for the long-run resulted in the price elasticity change from −0.15 to −2.0.Finally, aided by a Scenario-Based Approach the impact of fuel pricing and efficiency improvement in trends of energy demand and GHGs emission were assessed in a Scenarios Base, developed on two different cases of Business-as-Usual (BAU) and Management. The results indicate that in the BAU case between 2000 and 2011, the energy demand and CO2 emission increases with an annual growth rate of 7.5% and 6.8%, respectively.Comparatively, if the energy carriers’ price is increased to border price and energy efficiency programs are implemented, they will stimulate carriers’ demand and CO2 emissions growth rate decreases to 4.94% and 3.1%, respectively.