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The main purpose of this paper is to estimate the Iran's economy-wide energy rebound effect. Based on Brookes’ explanation on the rebound effect combined with the IPAT equation, this paper first presents a different estimation method of economy-wide energy rebound effect. Then, by using the state-space model, Iran's economy-wide energy rebound effect is estimated over the period 1967–2017. Results show that the annual average of Iran's economy-wide energy rebound effect is 57%. Also, except the 1978-1988 period, in all periods under study energy rebound effect is considerable and it has an increasing trend that makes actual energy saving far less than potential energy saving.
Due to the significant impact of energy rebound effect on Iran's energy saving, in order to reduce the effect of energy rebound effect and increase energy saving it is recommended that, first, the amount of the energy rebound effect be taken into account while designing energy saving goals and policies, because its overestimation or underestimation, causes actual energy saving to be more or less than predicted. Second, saving of energy should not be based on improving energy efficiency solely, because if this policy is not accompanied by appropriate price measures, due to the energy rebound effect, a significant amount of the potential energy saving will not be realized in practice. Of course, relying on price policies and abandoning energy efficiency policies will have the same results.

Keywords: Energy rebound effect, State-space model, Technological progress, Iran

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