The Impact of Targeted Subsidies plan on Combination of Energy Consumption in Iran: The Case of Non-Metal Mineral Manufacturing Industries

Abstract

Although the implementation of targeted energy subsidies plan has been considered by policymakers since the First 5-year Economic, Social and Cultural Development Plan in Iran, it is only partially implemented in 2010. This issue has great importance for industry sector that has benefited from subsidized energy prices. This research attempts to investigate the possible impact of implementing Subsidy Reform Plan on manufacture of non-metal mineral products industry by using Artificial Neural Network approach. This investigation focuses on new entered firms into this industry as one of the most energy intensive industries. The results indicate that by replacing subsidized prices with electricity real price, the consumption of this energy carrier will generally decline by 16 percent. Despite this, the large entrance of new firms has raised the energy consumption in some years. Therefore, the results show that targeted subsidies plan does not have a large impact on energy consumption in non-metal mineral manufacturing industries. Furthermore, we find out that the impact of this policy depends on combination of firms in each industry.