Iran’s Energy Subsidy Policy Is Dysfunctional; Clean Energy a Far Cry

EghtesadOnline: Given the highly contentious policy of subsidizing fossil fuels, clean energy will not get the voice and space it deserves, a board member of Iran Renewable Energy Association (IrREA) said.

News ID: ۷۴۹۷۵۶

29 February 2020

“Energy (including fossil fuels) is valuable to be used wastefully. It is regretful that low prices have created conditions wherein people not value precious resources and have gotten into the habit of misuse and overconsumption,” ILNA quoted Mohammad Ali Pouramiri as saying.

He put the onus on the government and stressed that fossil fuel subsidies have to be lifted for renewables to become attractive, Financial Tribune reported.

“The country indeed lacks a roadmap for energy economics,” he added, noting that efforts have been made to replace fossil fuels with green energy. Such attempts  “have never been taken seriously” due largely to the bloated policymaking bureaucracy and shortsightedness of decision makers.

According to Pouramiri, global prices for solar PV power have been falling over the past 10 years. Manufacturing a solar panel cost $2.5 in 2010, today is less than 30 cents.

Renewables are rivaling fossil fuels including coal which once was termed as ‘king coal’ and was one of the cheapest sources of energy.

Subsidy policy is generally designed to help the low-income strata like fixed-wage earners, but in practice it benefits the rich simply because they consume more energy -- this often is the criticism of poverty-alleviation experts in Tehran.

Regarding Iran’s potential for renewable energy, he noted that if and when solar power stations are fully developed, they can help meet 35% of the domestic electricity demand, which now is around 70 gigawatts.

“Our oil-dependent economy has never (and will never) let us appreciate the value of green energy and so this sector is not dynamic in Iran,” he said, complaining that subsidies may be a necessary evil, but in the long term harms more and helps less, especially from the perspective of sustainable economic development.

IrREA is the only independent non-governmental syndicate in Iran focused on green energy. The association's activities include promoting and institutionalizing use of clean energy namely wind, solar, biomass, geothermal and hydrogen energy as well as interacting with major companies, institutions, experts and stakeholders in the renewable energy sector.

Long-Term Benefit

Saeed Mansour Afshar, an entrepreneur and founder of the first solar-powered office building in Iran says officials are not fully aware of the long-term benefit of renewables because fossil fuel is sold cheap in the country.

Across the world, including Iran, billions of dollars are spent every year on treating cardiovascular and respiratory diseases emanating from worsening air pollution.

A fraction of these colossal amounts can help reduce such prohibitive medical costs in the middle and long term, but "officials in the Renewable Energy and Energy Efficiency Organization -- a subsidiary of the Energy Ministry also known as Satba -- and other policymakers seem to be oblivious to this” demand of wisdom.

He strongly dismissed claims that the cost and maintenance of PV plants cost a fortune.

“Maintaining a thermal power plant costs almost the same as a solar plant. Furthermore, developing solar stations make more economic sense than building atomic plants."

Many countries, in the developing and developed world, are gradually moving away from dirty fuel towards cleaner energy. Some rich nations have raised the bar higher and have declared that in the next few years renewables and electric vehicles will be the norm while fossil fuels will be consigned to history.