Iran (Islamic Republic of)

Iran’s current mitigation policies and actions are critically insufficient when compared to its fair-share contribution and modelled domestic pathways. Iran needs to implement more stringent policies, but it will also need additional support to do so. The CAT rates Iran’s policies and action “Critically insufficient”.

Iran’s current policies are sufficient to reach both the conditional and unconditional INDC targets, as these are based on highly inflated emissions growth projections. The “Critically insufficient” rating indicates that Iran’s policies and action in 2030 reflect minimal to no action and are not at all consistent with the 1.5°C temperature limit. If all countries were to follow Iran’s approach, warming would exceed 4°C.

Further information on how the CAT rates countries (against modelled pathways and fair share) can be found here.

Iran is expected to significantly overachieve its intended Paris Agreement targets, both conditional and unconditional, with currently implemented policies. One reason for this is the highly inflated business as usual (BAU) scenario used as a basis for the target. Under current policies, we expect Iran’s emissions to reach between 1,030 and 1,160 MtCO₂e in 2030 (excluding land use, land use change and forestry). This represents a 34 to 51% increase compared to 2010 levels, and a 170 to 210% increase compared to 1990 levels. For further information on how the target and policies are calculated, see the Assumptions section.

Analysis shows that energy consumption could be reduced by 40% compared to BAU estimates in 2030 with energy efficiency measures alone, which would also lead to significant emissions reductions (Moshiri & Lechtenböhmer, 2015). Emissions could further decrease with the deployment of renewable energy and other cost-effective mitigation measures (Yetano Roche et al., 2018).

Investments in key mitigation technologies, such as renewable energy, picked up during the absence of international economic sanctions in 2015­­–2018 following the Iran nuclear deal (Lumsden, 2019). In 2018, the US withdrew from the agreement, reimposing sanctions on Iran. The Iranian government made it clear in its intended Paris Agreement pledge that its mitigation objectives are conditional on an absence of international economic sanctions (Department of Environment of Iran, 2015). It is unclear to what extent Iran will pursue mitigation policies under these conditions.

As a result of the sanctions, the Iranian economy experienced a deep recession, with GDP shrinking by 6% in 2018 and nearly 7% in 2019 (IMF, 2021c). Iran has also been severely affected by the COVID-19 pandemic. In the wake of the first COVID-19 wave in March 2020, the government announced economic relief measures totalling 10% of Iran’s GDP (IMF, 2021a). The measures focussed on support for the healthcare system, household, and businesses, without any particular focus on climate-friendly recovery measures.

Emissions are estimated to have decreased in some sectors in 2020, due to the economic downturn. The fossil fuel industry in particular has been hit hard by the sanctions: Iranian oil production plummeted from 3.8 million barrels per day (bpd) in early 2018 to well below 3 million bpd after US sanctions (BBC, 2019).

General — emissions and consumption

The energy sector is the main source of emissions, representing over 80% of total greenhouse gas emissions in 2010, a share that has since increased to nearly 90% (Department of Environment of Iran, 2017; Gütschow, J.; Günther, A.; Jeffery, L.; Gieseke, 2021). Energy industries are the largest emitting sub-sector, followed by fugitive emissions (such as gas flaring), transport and buildings.

Due to the wealth of fossil fuels in combination with government subsidies, Iran’s energy consumption is comparatively high, with consumption per capita far above regional and global averages (The World Bank, 2021).

Oil and gas industry

Iran, a member of OPEC, has some of the world’s largest fossil fuel reserves: it ranks second in natural gas and fourth in global oil reserves (EIA, 2019). The IEA (2021b) estimates that in order for Iran to reach net zero emissions by 2050, there can be no investments in new oil and gas fields after 2021. There is therefore a major risk of stranded oil and gas assets in Iran.

In 2020, Iran was the world’s ninth biggest crude oil producer, despite US sanctions significantly reducing oil exports (EIA, 2021). Fossil fuel resources are the backbone of the Iranian economy and one of the government’s main sources of revenues. Oil revenue accounted for a fifth of Iran’s GDP in 2018 (World Bank, 2021). The government has made some efforts towards diversification from its dependence on oil exports (Jalilvand, 2017), but this has not necessarily led to more climate-friendly developments. Due to the risk of sanctions, Iran has moved to consume more of its fossil fuels domestically (BP, 2020; Jalilvand, 2017).

Gas flaring, a major source of emissions, hit a record high in 2017 (Rajendran, 2018). Iran’s Sixth Five-Year Development Plan (2017–2021) foresees a decrease of at least 90% in gas flaring by 2021 (Government of Iran, 2016). While gas flaring has somewhat decreased in the past few years, in 2020 Iran ranked as having the world’s third highest flaring volumes (GGFR, 2021).

Electricity sector developments

Iranian electricity generation is dominated by fossil fuels. In 2019, nearly 90% of all electricity was generated with natural gas and oil, with the remainder generated with hydropower (9%) and nuclear energy (2%) (BP, 2020). Iran has few policies to reduce emissions in the electricity sector. The Sixth Five-Year Development Plan (2017–2021) pledges for an improvement in the efficiency of thermal power but there are no plans to reduce electricity generation from oil and natural gas (Government of Iran, 2016).

Iran has vast untapped renewable energy resources, particularly in terms of solar power. Iran has set a target of the 5 GW renewable target (excluding large hydropower) in the Sixth Development Plan (2017–2021). Current levels of installed renewable energy capacity remain low in view of this target: in 2020, Iran had just 0.7 GW of installed total renewable energy capacity from wind and solar (IRENA, 2021), or less than one percent of totalled installed capacity (Tehran Times, 2020a). Investments in new capacity have largely stalled as a result of economic sanctions.

A source of uncertainty in the sector lies in electricity produced from hydropower. Iran has a significant amount of hydropower—13 GW in 2020 (IRENA, 2021)—but the production of electricity has been fluctuating due to changes in precipitation. In 2018, production from hydropower was down 36% compared to 2017, prompting the government to cancel many planned projects (Lumsden, 2019).

Nuclear energy currently plays a small role in the electricity mix, with just 0.9 GW of installed capacity (World Nuclear Association, 2021). There is however a ~1.1 GW reactor under construction, with operation planned to start in 2024, and another planned ~1.1 GW reactor.

Iran has one of the world’s highest-emitting transport sectors, ranking tenth highest in 2014 (Gabbatiss, 2020; Wang & Ge, 2019). Transport emissions accounted for roughly a fifth of Iran’s emissions in 2010 (Department of Environment of Iran, 2017). Iran’s Third National Communication includes different mitigation measures for the sector. Iran has notably set a target to double passenger rail transport capacity from 17 billion to 34 billion passenger-kilometres per year and to achieve a threefold increase in rail freight transport by 2024.

Iran’s Third National Communication includes plans to introduce 27,000 buses and 500,000 long-range taxis powered with compressed natural gas (CNG). It also has a target to replace 400,000 gasoline-powered motorcycles with electric bikes and 450,000 gasoline-fuelled pickups and 500,000 diesel trucks with CNG pickups and trucks. There is however no clear timeline nor implementation plan for these measures.

The aging fleet of private vehicles is further adding to the carbon intensity of the transport sector (Financial Tribune, 2018). The car market remains dominated by fossil fuel cars and there are no comprehensive measures to promote electric vehicles or zero emissions fuels.

Iran has laid out initial plans to reduce the energy use and improve the energy efficiency of its buildings stock. The Sixth Development Plan (2017–2021) sets a target to reduce the energy use of buildings by 5% by 2021 (IEA, 2021a). In 2016, Iran set a target for government institutes and public entities to supply 20% of their electricity consumption from renewable sources within two years. It is unclear whether this objective has been reached.

Emissions from industrial processes and product use (IPPU) represented 8% of total emissions in 2010 (Department of Environment of Iran, 2017). Combined with energy use from manufacturing industries and construction, total emissions from industry represent nearly a fifth of emissions. Mitigation measures set out in the Third National Communication include replacing part of the clinker used for cement production with industrial by-products, including blast furnace slag, and by replacing oil as a feedstock with natural gas in some industrial applications. These measures are to be implemented by 2025, but there is no detailed timetable.

Agriculture is a main component of the Iranian economy, representing around 8% of GDP (Tehran Times, 2020b). In 2010, the sector still represented over 5% of total emissions, but this share has since decreased, both due to a slight decrease in absolute emissions but also due to increases in emissions in other sectors (Gütschow, J.; Günther, A.; Jeffery, L.; Gieseke, 2021).

Livestock, paddy fields, burning of crop residues, and agricultural soil are the four major sources of emissions in the sector (Department of Environment of Iran, 2017). Measures to decrease emissions in the sector include an improved manure management, for example with biogas recovery systems, improving livestock productivity to decrease emissions from enteric fermentation, and by reducing emissions from agricultural soils.

For the industry sector, these measures are to be implemented by 2025, but there is no detailed timetable.

Iran’s Third National Communication to the UNFCCC includes a target to decrease the net emissions of the forestry sector from 21.6 MtCO₂e in 2010 to 16.6 MtCO₂e in 2025 (Department of Environment of Iran, 2017). To achieve this, Iran aims to reduce illegal wood harvesting, forest, and rangeland conversion by 20% yearly, decrease annual wood harvesting for fuel by 10%, and to increase forest rehabilitation, afforestation, and reforestation. In 2018, forests represented 6.6% of Iran’s total land area, up from 5.6% in 1990 (World Bank, 2021).