This paper investigates the effects of innovation investments in Iranian industries including R&D expenditures (disaggregated as domestic and foreign) and ICT investments on energy intensity in three clusters of Iranian industries including small, medium and large size industries. We used the GMM panel method to estimate during 2000-2009 periods. The results show that in all clusters, domestic R&D expenditures have not significant effect on energy intensity, while foreign R&D expenditures induces to decrease considerably energy intensity. Also, ICT investments cause to increase energy intensity. Moreover, as expected, the spillovers from these innovations, especially R&D spillover cause to decrease energy intensity. Overall, in Iranian firms, innovation investments, in particular foreign R&D expenditures play a substantial role to improve energy efficiency.
Keywords: Energy Intensity, ICT Investments, Domestic R&D, Foreign R&D, Spillovers