This is the first Sustainable Energy Watch report for Iran.
Estimates have been developed for all eight indicators using 1990 data or similar benchmarks for all eight indicators. For each of these indicators, the value of 1 is either the global average or the historical trend for Iran, while the value of 0 is the sustainability target.
Iran is the closest to the sustainability target on the indicator (indicator 3) concerning access to electricity. This reflects the success of the ambitious mass electrification program
The relative share of investment in clean energy (indicator 4) and share of renewable energy (indicator 8) in total primary energy have both improved, although the magnitudes of the indicators are not satisfactory. Iran has a vast potential in renewable energy sources, solar, wind, geothermal, which is not being properly harnessed; Iran has a long way to go to utilize and optimize its potential sources in this field.
The vulnerability indicator (indicator 5) improved slightly, but the change in magnitude is not satisfactory. 80% of the foreign exchange revenue of the country originates mainly from export of crude oil and partially from export of petroleum products.
For the other indicators (indicators 1, 2, 6, and 7), there is deterioration in the sustainability: CO2 emission (indicator 1), ambient pollutants (urban air pollution, indicator 2) and energy productivity (energy intensity, indicator 7) are deteriorating on a large scale. It is clear that these three indicators are technically interrelated and result from deficiencies in the field of energy utilization and urban management. The solution requires an integrated strategy with corresponding policy options.
Indicator 6 reflects low participation of private sector in the energy field with government shouldering the burden of investment. Economic reform and liberalization of the economy, e.g. privatization of state-owned utilities and the opening up the economy to the public sector and foreign investment as declared in Five Year Development Plans (FYDP) are viable options. Energy price reform is an essential prerequisite for a successful economic reform.
Energy and emissions intensity of the economy are described in some detail in this paper as Iran has a heavy reliance on energy-intensive industries for domestic economic production and export. It also has a high dependence on oil products to meet primary energy needs as well as energy demands from energy-intense petrochemical and metal industries. This is compounded by low energy prices and poor energy efficiency.
HELIO International / Iran 6
The continued high-energy intensity and rapid pace of consumption of oil products has been recognized as a serious threat to the economy. Diversification of energy sources for domestic consumption and specifically the substitution of natural gas for oil products have been adopted and successfully implemented. Yet energy price reform has not been effectively pursued and therefore there has not been a successful lowering of energy intensity.
As discussed in the paper, there is vast potential for private sector activity in energy sector and also in expanding capacity in renewable energy, especially for rural electrification. There are positive signs of private sector activities in the field of electricity generation. There also exists a commitment to increase investment in renewable energy and energy efficiency. The success in this challenge depends, among other things, on the implementation of rational energy prices. The indicators for renewable energy employment and public sector burden of investment illustrate the long road ahead for Iran in developing renewable energy sources. Challenges exist in moving beyond seeing these only as solutions to remote area energy problems and opening up the economy to the private sector.
This poses a major challenge to policy makers and the society. Five Year Development Plan (FYDP) documents recognize the importance of these issues but progress ‘on the ground’ has been slow. Simultaneously there are some reservations from a social perspective concerning energy price reforms and some constitutional reservations about opening up the economy.
It is hoped that these indicators and the discussion of their implications will provide a useful starting point for stakeholders to debate Iran’s future and will help stimulate the development of coordinated policies and implementation to create a more sustainable energy sector that supports the development and welfare of all Iran.