Analyzing GHG Emissions Reduction Effects and Potentials of Fossil Fuels Subsidies Reform Policy in Iran

Abstract: Fossil fuels subsidies are intervention policies by governments to keep energy prices lower than the market price which leads to an increase in energy consumptions and GHG emissions. Iran provides the largest amount of fossil fuels consumption subsidies in the world, but it implemented the Targeted Subsidies Act to reform its subsidies and increase energy carriers’ end-user prices. This thesis investigated GHG emissions reduction effects and potentials of fossil fuels subsidies reform policy in Iran. For this aim, qualitative study and quantitative research approaches were employed, existing studies were collected and reviewed with the use of a synthesis matrix. Then the reviewed studies were examined to evaluate the GHG emissions reduction effects and potentials of fossil fuels subsidies reform policy at the global level and other countries. Followingly, the results of Targeted Subsidies Act were collected and analyzed by employing environmental policy framework and economic frameworks. Findings of this thesis demonstrate that fossil fuels subsidies have environmental consequences and costs for countries and reforming them leads to GHG emissions reduction. Iran did not implement its fossil fuels subsidies reform policy as it was aimed, and energy carriers’ end-user prices did not meet targets. Partial implementation of this policy did not lead to a decrease in energy consumption and GHG emissions reduction. For having a successful fossil fuels subsidies reform policy, complementary policies need to be implemented both in domestic and global level in parallel. National decision-makers need to consider their domestic social, environmental, political and economic context and implement the most appropriate package of policies. Global decision-makers need to come together and design an umbrella policy for national reform policies to mitigate their reverse effects.