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Energy Intensity Target: 50% Cut in 6 Years

Energy Intensity Target: 50% Cut in 6 YearsEnergy Intensity Target: 50% Cut in 6 Years

Iranian Fuel Conservation Company has set a lofty target and plans to cut Iran's energy intensity—the world standard for measuring how efficient an economy is at using energy—by half within six years.

It is unclear how the Oil Ministry's subsidiary got about this target, but such an improvement in energy usage in a six-year time frame requires draconian measures. Government officials are, however, adamant that they can get the job done.

"We can attain this goal by using a balanced approach. We have to use pricing and non-pricing measures to do so," the company's chief executive, Nosratollah Seifi, told state-owned IRIB. Energy intensity is a measure of the energy efficiency calculated as units of energy per unit of GDP. High energy intensities indicate a high price or cost of converting energy into GDP and vice versa.

Regardless of the planning, the Iranian government needs to curb energy consumption. Outdated industries need to boost the energy efficiency of machinery and production procedures. Even public consumption trends should be reformed to cut wastage.

Iran consumed 2,873 tons of oil equivalent per capita in 2012, roughly the same as Italy with an economy over four times its size, according to World Bank estimates.

Also due to huge energy subsidies, Iran is one of the most energy inefficient countries, with an energy intensity three times higher than the global average and 2.5 times the Middle Eastern average. The roads, energy and industries ministries, along with the agricultural and petrochemical sectors, are top Iranian energy consumers, according to Mansour Azimi, the oil minister's deputy.

"The country's energy needs rely on the Oil Ministry. So it has gathered energy consumption data from all consumers and worked out solutions to cut energy intensity," Azimi was quoted as saying by Moj News Agency.

Azimi and Seifi, who are both members of Energy Planning Council, a body tasked with planning a reduction in Iran's energy usage, said the council plans to use the sixth five-year development plan (ending 2020) as a vehicle to implement energy conservation regulations and directives.

"We must plan a change in our energy consumption trends if we want a stable economy, and the lifting of sanctions and release of our frozen assets will not alter this need," said the deputy minister. IFCO, a subsidiary of National Iranian Oil Company, is tasked with regimenting fuel consumption in different sectors through the review and survey of current trends and executing conservation measures nationwide.

Financialtribune.com