Chapter 15 - The importance of renewable energy expansion in power generation sector in Iran: a computable general equilibrium approach

Abstract

Iran is among the top 10 CO2 emitters in the world, and achieving its sustainable development goals is compromised by the heavy reliance on fossil fuels and the concomitant increase in CO2 emission levels. The Iranian government has set a target to reduce total CO2 emissions by 4% by 2030. In this regard, the high level of emissions, the need for diversification in the energy mix, and the high potential for green energies in the context of an upper-middle-level economy call for the investment and expansion of renewable energy (RE) sources in Iran. However, the lack of comprehensive studies on the current situation and dynamics among these variables and the potential opportunities for renewable sources has given more importance in this chapter. This chapter highlights areas that provide much potential for the use of different RE sources toward mitigating emission levels in Iran. It shows that after hydro, the emphasis should be on the development of solar and wind power. Further, new generations of renewable resources such as hydrogen and geothermal are discussed. The chapter notes that following the easing of sanctions and the offer of guaranteed rates for power purchased from RE sources, Iran can be particularly attractive for investors in RE development projects. The findings of the chapter contribute to the literature on sustainable and RE and offer policy implications for Iran as well as provide areas for future research. Empirical results confirm that applying environmental instrument such as tax and reallocating the revenues to RE production is an effective policy option for Iranian policy makers.