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By Behdad Gilzad Kohan and Hamid Dahouei

Abstract

Iran’s energy sector, rich in natural gifts and brimming with potential, struggles to realize its promise due to systemic inefficiencies, heavy dependence on fossil fuels, outdated infrastructure, and the weight of international sanctions. These challenges plague Iran with recurring energy crises, including seasonal energy shortages, environmental degradation, and socio-economic discontent. This article investigates the root causes of Iran’s energy challenges and offers a comprehensive analysis of the critical deficiencies of Iranian energy policies. Based on these insights, the article proposes a strategic roadmap with immediate, medium-term, and long-term policy recommendations to stabilize the sector, most critical of which include subsidy reforms, ambitious renewable energy integration, and energy efficiency improvements. The proposed reforms emphasize the importance of transparent governance, targeted investments, and stakeholder engagement to achieve meaningful change. By aligning its energy policies with global sustainability trends and addressing domestic inefficiencies, Iran can transform its energy sector into a model of innovation and equity. 

Introduction

Iran is home to some of the largest proven oil and natural gas reserves in the world, ranking as the third-largest oil reserve holder and the second-largest natural gas reserve holder globally in 2024. With 24 percent of the oil reserves in the Middle East and 12 percent of the global total, Iran is a critical player in regional and global energy markets (U.S. Energy Information Administration, 2024). This immense wealth of resources has historically granted the country significant leverage in political and economic negotiations. Despite these vast reserves, Iran’s energy sector faces systemic inefficiencies and mismanagement, making its abundance into a paradoxical source of fragility.

The case of Iran closely mirrors what scholars describe as the “resource curse” – a paradox in which countries rich in natural resources often experience slower economic growth, weaker institutions, and heightened political instability (Beblawi 1987). Oil-rich states tend to suffer from reduced democratic accountability and an inefficient allocation of public resources, often due to the centralized control of rents. The concept “control of rents” refers to how governments or elites manage the income (“rents”) generated from valuable resources, such as oil. When rents are centrally controlled, the government monopolizes resource revenues, often leading to corruption, favoritism, and inefficient spending, rather than investing broadly in public welfare or diversified economic growth (Beblawi 1987). 

Over the years, mismanagement of the energy sector and over-reliance on fossil fuels have created a conundrum: Iran, a country rich in energy resources, now struggles with frequent electricity blackouts, gasoline shortages, and diminishing export capacities. These issues are compounded by growing domestic demand, driven by a heavily subsidized pricing system that undermines energy efficiency and encourages wasteful consumption. In 2010, Iran's energy subsidies were estimated at around $70 billion (Salehi-Isfahani et al 2015), a significant burden that contributed to fiscal deficits and hindered investment in critical infrastructure.

Compounding these domestic issues, international sanctions have further isolated Iran from global energy markets, reducing its ability to attract foreign investment and access to advanced technology (Stanley, Ladislaw, and Verrastro 2018). These sanctions have not only curtailed energy exports but also deepened structural inefficiencies within the sector. At the same time, domestic political constraints have stifled meaningful reform, leaving the country ill-equipped to address the increasing challenges of energy sustainability and security.

Iran’s energy sector stands at a critical juncture. Without immediate and effective reforms, the nation faces a future of worsening energy shortages, escalating fiscal deficits, and environmental degradation. This paper argues that Iran’s energy sector is hampered not only by international sanctions, but more crucially by internal policy failures including poorly targeted subsidies, fragmented governance, and underinvestment in infrastructure and renewables. These inefficiencies have imposed growing economic costs, exacerbated social inequality, and contributed to widespread public dissatisfaction. For Iran’s leadership, addressing these challenges is not merely a technical or economic choice, but a political necessity: the long-term stability of the regime increasingly hinges on reliable energy access, fiscal sustainability, and environmental health.

This paper first examines the enduring challenges caused by the structure of Iran’s energy sector, including governance inefficiencies, high energy intensity, and subsidy-driven overconsumption. The paper highlights how the shortcomings of past reform efforts – often limited in scope or undermined by weak institutional capacity – have contributed to persistent political barriers, including entrenched rent-seeking behavior and the constraints imposed by international sanctions. The next section outlines the economic, social, and environmental consequences of Iran’s inefficient energy practices and considers their regional and global implications. The example of the United Arab Emirates, Saudi Arabia, and Norway’s energy reforms, particularly the management and structure of their Sovereign Wealth Funds, are useful case studies to identify feasible implementation strategies. Drawing on these insights, the paper presents a comprehensive set of policy recommendations, organized into immediate, medium-term, and long-term strategies to guide Iran through a resilient and sustainable energy transition that promises transformative benefits for its economy, environment, and society.

Energy Reform Policy Options and Lessons Learned from Past Implementation

The Iranian energy sector has been the focus of extensive academic and policy research due to its strategic significance for domestic development and global energy markets. The policy research to date has focused on subsidy removal, renewable energy integration, energy efficiency improvements, governance restructuring, and the role of international sanctions in shaping Iran’s energy landscape. Subsidy reform is a particularly important and contentious topic due to its implications for Iran’s economy. Energy subsidies contribute substantially to inefficiency and excessive consumption while they impose severe fiscal burdens, costing the government over $70 billion USD in 2010 and probably a similar amount or more in the following years (Salehi-Isfahani 2016). The failure of the 2010 Targeted Subsidy Reform Act provides insight into the complexities and challenges of implementation. While the existing literature has yielded valuable findings, significant gaps remain regarding how governance constraints, external shocks, and structural inefficiencies interact to impede long-term sustainability. This section reviews the policy options available to Iran to reform its energy sector, concluding that energy subsidy reforms, energy efficiency improvements, and targeted investments are effective and feasible options. Their impact, however, is mitigated by the need for transparent governance practices. 

Energy Subsidy Reforms

The Burden of Energy Subsidies

In Iran, as in most oil-exporting nations, domestic energy prices have traditionally been set administratively at levels sufficient to cover production costs, with adjustments occurring infrequently. This approach functioned effectively when global oil prices were relatively stable, low, and aligned with production costs. But as international oil prices began to climb after 2002, domestic energy prices increasingly diverged from global market values. High domestic inflation rates and depreciating exchange rates further diminish the extent to which local energy prices align with their international counterparts (Guillaume, Zytek, and Reza Farzin 2011). 

The government of Iran delivers more than four million oil-equivalent barrels of energy (gasoline, natural gas, and electricity) each day to consumers inside the country. The total value of this energy in the global market is more than $100 billion USD, but even after the price increases of 2011, the government reported less than $10 billion in profits (Salehi-Isfahani 2016). In contrast, Saudi Arabia earned approximately $318.5 billion in oil export revenues in 2011 alone, reflecting the immense gap in energy sector performance despite comparable resource wealth (Mahdi, 2012). In Iran, energy subsidies present a dichotomous challenge: while cheap energy is essential for supporting households and industries, it also serves as a major driver of macroeconomic instability.

Subsidies Encourage Excessive Consumption and Illegal Activity: One of the key factors contributing to Iran's high energy consumption is the relatively low price of energy. Government subsidies make energy artificially cheap, leading to wasteful consumption patterns and inefficiencies. The global comparison in Figure 1 (see Appendix) illustrates the unusually high per capita energy consumption in Iran relative to many countries with similar, or even higher, levels of economic development. This pattern underscores the inefficiencies generated by Iran’s heavy energy subsidies and supports the argument that without structural reforms, Iran’s energy sector will continue to impose economic and environmental costs on the nation. Iran's energy intensity index ranks among the highest globally, measuring roughly twice the world average, and has risen at an average annual rate of 3.4 percent over the past four decades (Ministry of Energy, 2010). See Figure 2 in the Appendix for a visualization of the relative scale of Iran’s per capita energy consumption.

Gasoline prices in Iran are centrally controlled and adjusted infrequently, eliminating regional price variations and further distorting demand (Mamipour et al. 2023). The exchange rate also plays a critical role in shaping vehicle costs and gasoline consumption, as it directly influences import prices. Data from the National Iranian Oil Products Distribution Company (NIOPDC) and the Iranian newspaper Donyaye Eqtesad reveal consistent trends in gasoline consumption, prices, and the foreign exchange rate between 2005 and 2014. 

In addition to domestic overconsumption, subsidized prices have led to substantial fuel smuggling to neighboring countries, where fuel prices are much higher. Unofficial estimates suggest that between 20 and 35 million liters of gasoline are smuggled daily, amounting to over 20 percent of Iran's daily gasoline consumption (Ghoddusi, Morovati, and Rafizadeh 2019). 

Figure 3: Monthly fuel price in Iran and the FOB Persian Gulf

Graph from Ghoddusi et al (2022)

Distorted Market Signals: As shown in Figure 3, heavily subsidized energy prices, amounting to approximately 12 percent of GDP, have distorted market signals. By keeping energy prices well below international benchmarks, these subsidies remove price signals that would otherwise reflect the true cost of production and scarcity. As a result, consumers and producers lack financial incentives to conserve energy or invest in efficiency improvements. For instance, industries likely continue operating outdated, energy-intensive machinery instead of upgrading to more efficient technologies, because cheap energy lowers the perceived benefit of such investments. Additionally, subsidies place a significant financial burden on the government that creates macroeconomic disturbances and limits the resources available for modernizing the energy sector or implementing energy-saving technologies. These macroeconomic inefficiencies call Iran’s economic sustainability into question and reveal the need for substantial reforms (Moshiri 2013).

Fiscal Strain: Subsidies constitute a significant share of the government’s budget, which diverts resources away from critical investments in health, education, and infrastructure​. In 2010, researchers estimated total energy subsidies to be about $70 billion USD, about twice the size of the government budget and one-fifth of the GDP (Salehi-Isfahani, Wilson Stucki, and Deutschmann 2015). Subsidies for non-energy-related goods, such as for bread and medicine, amounted to about $5 billion USD. There is also rising awareness that energy subsidies are inequitable. Survey data show that the top income decile benefited more than three times as much as the bottom decile from energy subsidies (Salehi-Isfahani et al 2015). 

Lessons from the Targeted Subsidy Reform Act

In an effort to replace subsidies with direct cash transfers, Iran implemented the ambitious Targeted Subsidy Reform Act in December 2010, resulting in a dramatic rise in energy prices. The act was designed to phase out decades-old subsidies on energy which had encouraged overconsumption, fostered smuggling, and imposed a massive fiscal burden estimated at over $100 billion USD annually. In its place, the government implemented a system of universal monthly cash transfers to nearly 90 percent of the population, with initial payments set at approximately 455,000 Iranian Rials (IRR) per person, about $45 USD at the time. The early results showed promise: the government reported that gasoline consumption declined, public awareness of energy usage improved, and low-income households attained short-term welfare gains. 

Despite its early success in managing public acceptance through cash transfers and a well-executed registration system, the reform faced several challenges:

• Inflationary Pressures: The inflationary impact of subsidy removal, compounded by a significant currency devaluation in the past two decades, weakened the reform’s ability to achieve its consumption reduction goals.
• Industry Transition: A lack of support for energy-intensive industries during the transition period led to production disruptions and increased unemployment. For instance, many industries, long reliant on government protection, struggled to adapt to higher energy costs without sufficient government support.
• Public Awareness: The absence of public awareness campaigns and incentives for adopting energy-efficient technologies limited the reform’s impact on long-term energy behavior.

As Djavad Salehi-Isfahani, a leading scholar at Virginia Tech with a focus on Economics of the Middle East notes, the reform was “unprecedented in scale, targeting annual savings of up to $70 billion.” Initial outcomes included a reduction in gasoline consumption from 64 million liters per day to 59 million liters per day, despite the addition of one million new vehicles annually. The reform’s success was short-lived as inflation eroded the real value of energy prices, leading to a 60 percent decline in Iranians’ purchasing power within three years. Salehi-Isfahani demonstrates that the lack of a sustained price adjustment mechanism and structural inefficiencies undermined the reform’s long-term impact (Salehi-Isfahani 2016). This trend is clearly illustrated in Table 1, which shows that nearly 90 percent of the total expenditures from 2010 to 2018 were allocated to direct cash transfers, while structural components like insurance for vulnerable groups, production support, or health sector investments received a fraction of the budget. This imbalance in spending reinforces Salehi-Isfahani’s critique: the lack of institutional reform and targeted redistribution diluted the long-term efficacy of the subsidy reform, anchoring it in short-term populist policy rather than sustainable transformation.

Table 1: Expenditures of the Targeted Subsidy Organization (Values in billion rials)

Data Source: Majlis Research Center (2019)

Saeed Moshiri, an Iranian economist and professor at the University of Saskatchewan, published an analysis showing that the Targeted Subsidy Reform Act’s lack of integrated energy efficiency measures hindered its success. His findings reveal that energy intensity in Iran remains among the highest in the world, driven by decades of subsidized prices, poor infrastructure, and inefficiencies in energy-intensive industries such as steel, petrochemicals, and transportation (Moshiri 2013). The Subsidy Reform Act initially stabilized energy consumption trends, but without complementary investments in efficiency programs, these gains were not sustainable. Moshiri’s scenario analysis suggests that energy-saving potential in Iran would exceed 50 percent in the residential sector and 41 percent in the industrial sector over the next 25 years if the government implements proper efficiency measures (Moshiri 2013). 

The conclusion from Moshiri and Salehi-Isfahani’s results is that subsidy reform is necessary but insufficient on its own. To achieve sustainable outcomes, Iran must integrate non-price policies such as retrofitting old buildings, promoting high-efficiency appliances, and incentivizing industrial efficiency through tax rebates and low-interest loans. Without these measures, energy reforms risk perpetuating inefficiencies and fiscal imbalances rather than resolving them.

The 2019 Fuel Price Increase Crisis

In November 2019, the government sought to address these economic pressures by tripling gasoline prices overnight – an abrupt move made possible by the government’s centralized control over the oil and natural gas sector. The policy aimed to reduce the fiscal burden of subsidies and redirect the savings toward social welfare programs. The abrupt implementation was met with widespread protests across the country. Political protests in Iran have become increasingly decentralized, extending beyond major cities where the state traditionally concentrates its resources to suppress dissent. In contrast to previous decades, the middle class is no longer the primary driver of these movements. Instead, the economically disadvantaged segments of society, who have been disproportionately affected by the ongoing economic crisis, are now asserting themselves in the political sphere (Shahi and Abdoh-Tabrizi 2020). The demonstrations, which spread across the country, were marked by violent clashes. The government justified the price hike as an economic necessity, but many citizens viewed it as another burden in an already challenging economic environment characterized by inflation and unemployment. 

Since then, the government has been hesitant to increase gasoline prices, leading to a significant shift in Iran's energy balance. In 2024, the country imported substantial quantities of gasoline, amounting to approximately 4 billion dollars, which is expected to increase to 6 billion dollars in 2025 (Eghtesad Moaser 2025). This marks a dramatic change from 2020, when Iran was a gasoline exporter. The crisis underscored the difficulties of enacting reforms without public trust and a robust safety net for the most vulnerable.

Energy Efficiency and Renewable Energy

Despite Iran's significant renewable energy potential, progress in transitioning to sustainable energy sources remains minimal. The Stanford Iran 2040 Project has highlighted untapped solar and wind resources across the country. Iran possesses approximately 1.7 million hectares of land with solar irradiance levels exceeding 270 W/m² and 28 million hectares with irradiance ranging from 250 to 270 W/m², putting the country in league with other nations that have exceptional solar energy potential in Southern and North Africa. Similarly, around 2.1 million hectares of land in Iran experience mean annual wind speeds of 8 m/s or higher, making them ideal for wind energy projects (Azadi and Mahmoudzadeh 2017). However, systemic barriers such as regulatory hurdles, lack of financial incentives, inadequate grid infrastructure, and bureaucratic inefficiencies hinder progress.

Iran’s current renewable energy capacity constitutes less than one percent of its total energy mix, falling short of the government’s stated goal of about five gigawatts per year (German Solar Association 2016). Moreover, limited private investment has slowed the development of large-scale solar and wind projects. The Renewable Energy Organization of Iran (SUNA) and the Ministry of Energy have introduced feed-in tariffs (FITs) to attract investors, offering 18 ¢/kWh for solar projects and 12 ¢/kWh for wind projects for the first decade (Azadi and Mahmoudzadeh 2017). These rates – two to three times higher than Iran’s average wholesale electricity price – allow investors to earn approximately $180 USD for every megawatt-hour of solar power generated. While promising, these incentives have yet to stimulate sufficient growth due to high upfront capital costs and Iran’s economic constraints.

To address these inefficiencies, demand-side management requires a multifaceted approach. Iran’s energy authorities should consider adopting smart grid technologies, promoting the use of energy-efficient appliances, and employing behavioral nudges to encourage responsible consumption patterns. Technological upgrades, such as retrofitting industrial facilities with high-efficiency equipment, are essential to reducing energy intensity and enhancing overall productivity. Additionally, public awareness campaigns likely play a critical role in educating citizens about energy conservation, linking incentives to behavioral change, and fostering a culture of sustainable energy use.

Countries such as Morocco provide valuable lessons, having successfully scaled renewable energy through public-private partnerships, international funding mechanisms, and robust policy frameworks. For example, Morocco's Noor Ouarzazate Solar Complex generates over 580 megawatts of clean energy, enough to power nearly 1 million homes, demonstrating the feasibility of large-scale renewable projects in the region (The World Bank, 2017). If Iran were to emulate such strategies, particularly public-private partnerships, it could mitigate dependence on fossil fuels, enhance energy security, and reduce environmental degradation.

Political Roadblocks and Solutions to Implementing Effective Policy Reform

Governance structure

Governance issues such as corruption, rent-seeking, and bureaucratic inefficiencies have long undermined Iran’s energy sector. These systemic challenges not only impede the formulation and implementation of effective energy policies but also erode public trust in government institutions. Previous research argues that rent-seeking behavior in the government’s allocation of energy subsidies often benefits politically connected industries over those in genuine need, perpetuating inefficiencies (Krueger 1974). 

The oil refining industry, while involving both public and private actors, remains under strong government oversight. All oil and gas reserves are state-owned, held in trust for the public under Article 45 of the Iranian Constitution, which prohibits private or foreign ownership of natural resources. The National Iranian Oil Company (NIOC), a fully state-owned enterprise, is the key body responsible for managing these resources.

Although legally permitted, the development of private refineries faces significant obstacles due to international sanctions, financing challenges, unclear feedstock contracts with NIOC, state-controlled pricing, and bureaucratic red tape. According to the Renewable Energy and Energy Efficiency Organization, the bureaucratic red tape in Iran has delayed critical infrastructure projects, such as the expansion of renewable energy facilities, by an average of 2 to 3 years. 

As a result, the refining sector and the broader oil industry functions as a rentier system. It distributes oil wealth through elite networks, limiting competition and fostering clientelism. Historically, higher oil revenues have correlated with increased corruption risks, as oil rents reinforce structures of political patronage and rent-seeking (Farzanegan and Shirzadi 2024). Transparency International’s Corruption Perceptions Index ranks Iran 149 out of 180 countries, highlighting the scale of governance issues. Without significant improvements in transparency, accountability, and institutional capacity, technical solutions such as energy pricing reforms or renewable energy investments are unlikely to yield sustainable outcomes.

The Role of International Sanctions 

Iran’s economy remains heavily reliant on oil and gas exports, which account for a significant portion of government revenue. This overdependence exposes the economy to external shocks, such as fluctuations in global oil prices and demand. Barring sanctions relief, Iran’s energy sector faces a trajectory marked by declining competitiveness and sustainability without meaningful internal reforms.

In the 1404 (2025/2026) budget bill, the Iranian government projects its revenue from the sale of oil, condensates, and net gas exports will reach 509 trillion Tomans (approximately $8.48 billion USD). [1] Meanwhile, the government’s borrowing from the National Development Fund for the upcoming year’s budget, compared to the 2024-2025 budget law, has risen by 49 percent. In the 2024-2025 budget bill, oil revenue was forecast at around 614 trillion Tomans (approximately $21.54 billion USD). Government performance so far this year indicates that this amount has, in fact, been realized (Emirates Policy Center, 2025). For detailed figures on Iran’s projected oil production, exports, and fiscal allocations under the 1404 (2025) budget bill, see Table 2 in the Appendix.

Over the past four decades, Iran has faced various levels of economic and financial sanctions, along with asset freezes, beginning in November 1979 when the U.S. imposed an oil embargo and froze $12 billion USD of Iranian assets abroad to secure the release of American hostages (Hewitt and Nephew 2019). Although this specific sanction episode was resolved by January 1981, U.S. policy toward Iran became increasingly rigid, aiming to limit Iran’s economic and political influence in the Middle East and beyond, particularly as tensions escalated over its nuclear program. Current sanctions from the European Union and Japan ban 57 percent of Iranian oil exports. Together, sanctions have reduced Iran’s total import by 20 percent, total export by 16.5 percent, private consumption by 3.9 percent, capital income by 3.8 percent, and GDP by 2.2 percent (Farzanegan, Khabbazan, and Sadeghi 2016).

The collapse of global oil prices in 2014 dealt a severe blow to Iran’s economy that was exacerbated by international sanctions. As discussed above, this economic strain drastically reduced export revenues, restricted access to foreign exchange reserves, and created budgetary shortfalls that continue to impact the country. The international sanctions that were reintroduced in 2018 have also significantly worsened Iran's economic and energy-sector pressures. Following the U.S. withdrawal from the Joint Comprehensive Plan of Action (JCPOA), the U.S. intensified sanctions to target Iran’s financial and oil sectors. These measures drastically reduced oil exports, curbed access to global markets, and restricted financial transactions, effectively isolating Iran from the global economy. The resulting economic downturn not only undermined the government’s fiscal stability but also led to widespread poverty, deepened social inequalities, and empowered illicit networks exploiting the gaps created by sanctions.

Sanctions have created a feedback loop of fiscal pressure: reduced revenues limit reinvestment in the energy sector, which in turn exacerbates inefficiencies and reduces production capabilities. Ghoddusi et al. underscore how sanctions have disrupted the supply chain for critical equipment, delayed the modernization of energy infrastructure, and exacerbated Iran’s reliance on outdated facilities. This technological stagnation has constrained Iran’s capacity to efficiently process crude oil, leading to increased inefficiencies and vulnerability to both domestic and external shocks (Ghoddusi, Morovati, and Rafizadeh 2022). The limitations on technology transfers and investment inflows have curtailed crude production and restricted the country’s ability to meet export quotas. Between 2018 and 2020, crude oil exports fell from approximately 2 million barrels per day (mbpd) to under 500,000 mbpd, contributing to a $40 billion USD annual revenue loss (CEIC Data).

Beyond the immediate impacts of sanctions – reduced oil export revenues, restricted access to foreign currency reserves, and other trade-related losses – their indirect effects are equally significant. These include rent-seeking behaviors, distortions in resource allocation, and the broader economic costs associated with mitigating and circumventing the sanctions (Laudati and Pesaran 2023). Sanctions have created opportunities for politically connected individuals and entities to gain privileged access to subsidized foreign exchange rates or smuggling networks, enabling them to profit disproportionately through arbitrage, while bypassing formal regulatory and tax frameworks. The Iranian economy and average households have been enormously impacted as a consequence. Some research claims that the wealth of all income groups in urban and rural areas have declined as a result from oil sanctions (Farzanegan, Khabbazan, and Sadeghi 2016). 

The macroeconomic ramifications of sanctions amplify inflationary pressures and undermine energy subsidy reforms. Iran’s lack of economic diversification from oil and gas compounds fiscal instability, leaving the government heavily dependent on the energy sector for revenue generation (World Bank 2024). The government thus relies on monetary expansion and borrowing, exacerbating inflation and eroding public confidence in economic management. Attempts to rationalize energy pricing are met with limited success due to the persistent structural issues exacerbated by sanctions, such as fuel smuggling to neighboring countries with higher fuel prices. For example, up to 15 percent of Iran's subsidized fuel is smuggled abroad (Farhikhtegandaily 2025), resulting in lost domestic revenue and reinforcing inefficiencies. 

The economic pressure that sanctions place on Iran make immediate internal reform of Iran’s energy sector all the more relevant. Acknowledging that sanctions relief might be a long time coming, Iran needs to make the reforms now that will make a transition toward a sustainable and integrated energy sector possible, with or without sanction relief in the short term.  

The Economic, Political and Environmental Consequences of Neglecting Reform 

Iran’s energy sector is overwhelmingly reliant on fossil fuels, with natural gas and crude oil together accounting for 98 percent of the country’s primary energy consumption as of 2022 (Iranian Ministry of Energy, Energy Statistical Yearbook 2022). Natural gas is the main source of energy in Iran (Ember 2024), driven largely by the development of the South Pars gas field, which is regarded as the largest gas field in the world (IEA 2008). 

While this has strengthened domestic production, it has also inadvertently disrupted the balance of Iran’s energy portfolio. Based on International Energy Agency data, renewable energy, including solar, wind, and hydropower contributes less than four percent to the total energy mix, well below the global average of about 13 percent (U.S. Energy Information Administration, 2024). Electricity generation is similarly concentrated, with natural gas-fired power plants accounting for over 80 percent of total capacity. Hydropower and other renewable sources make up the remainder, with hydropower providing the bulk of this contribution (International Energy Agency 2024). This lack of diversification increases the grid’s vulnerability to supply fluctuations, particularly during periods of peak demand in summer and winter. 

The summer season in Iran brings an annual surge in electricity demand, primarily driven by the extensive use of air conditioning as temperatures often exceed 40°C in many regions. This seasonal spike exposes the systemic inefficiencies and aging infrastructure of the country’s energy sector. Thermal power plants, which supply the majority of Iran’s electricity, operate at an average efficiency exceeding 39.6 percent (Tehran Times 2025), far below global benchmarks. This inefficiency means that much of the energy input is wasted, leaving power plants ill-equipped to meet the heightened demand. Consequently, frequent power outages occur, disrupting industrial operations and significantly impacting energy-intensive sectors such as manufacturing, petrochemicals, and mining. 

The effects of these electricity shortages are felt most acutely in rural and underserved areas, where infrastructure is often outdated or insufficient to handle peak demand. Residents in these regions experience prolonged blackouts that can last several hours or even days, exacerbating existing regional inequalities. Urban areas, although better equipped, also face scheduled outages (Motamedi 2024), further straining public trust in the government’s ability to manage energy resources effectively. Moreover, the unreliability of electricity supply during summer months forces businesses and households to turn to backup generators, which primarily run on diesel fuel. This not only increases operational costs but also contributes to environmental pollution. 

Socioeconomic Impact

The energy crises in Iran have far-reaching and multifaceted consequences for the country’s society and economy, underscoring systemic challenges that exacerbate public discontent and economic vulnerabilities. Frequent blackouts, coupled with deteriorating air quality due to the increased use of mazut (low-quality residual fuel oil) in power plants, have become a source of widespread frustration among Iranian citizens. When burned, mazut releases large quantities of sulfur dioxide and particulate matter, contributing to smog formation and severe respiratory health risks, particularly in densely populated urban areas like Tehran (Motamedi 2024). These conditions have sparked protests across the nation, with many citizens voicing their discontent over the government’s inability to provide reliable energy or implement sustainable solutions. Public dissatisfaction is further amplified by perceptions of governmental inefficiency and mismanagement.

The economic repercussions of these energy crises are equally significant. Energy-intensive industries such as petrochemicals, steel, and manufacturing are likely to bear the brunt of these outages, leading to lower production outputs and lost revenue. Small and medium-sized enterprises (SMEs), which often lack the resources to invest in backup power solutions, are particularly vulnerable, resulting in widespread job losses and diminished economic activity. Moreover, unreliable energy supplies probably discourage foreign investment, further stifling economic growth and innovation in critical sectors. Energy shortages also deepen existing socioeconomic inequalities. Rural and lower-income households are disproportionately affected by prolonged blackouts and higher energy costs, as they often lack access to alternative energy sources or efficient appliances (Somerville 2022). In contrast, wealthier urban residents can mitigate the effects of energy shortages by investing in private generators or renewable energy solutions. This disparity exacerbates the gap between urban and rural areas, which could undermine national cohesion and foster resentment among marginalized communities.

To address these socioeconomic challenges, Iran must prioritize equitable energy distribution and infrastructure development in underserved regions. Implementing targeted subsidies for energy-efficient technologies in lower-income households, alongside investments in grid modernization, could alleviate some of the disparities. Furthermore, engaging communities in energy conservation initiatives and improving public awareness about energy efficiency can foster greater resilience and reduce the societal impact of future energy crises.

Environmental Effects

Iran's reliance on fossil fuels has resulted in severe environmental challenges, including critical levels of air pollution, significant greenhouse gas (GHG) emissions, and widespread ecological degradation. Fossil fuels power over 98 percent of the country’s energy needs; emissions from vehicles, thermal power plants, and industrial processes are major contributors to the country’s environmental crisis (Taghizadeh et al, 2023). Cities such as Tehran, Isfahan, and Ahvaz frequently experience unhealthy air quality levels, with Tehran alone recording the air quality index (AQI) of above 100 on average 20 percent (16.99–33.43%) of the days annually (Khoshakhlagh, Mohammadzadeh, and Morais 2023). These challenges are compounded by the country’s slow progress in adopting renewable energy sources and the systemic inefficiencies of its energy sector.

Greenhouse Gas Emissions and Climate Change: Iran is the 9th largest emitter of GHGs worldwide, producing over 950 million tons of CO2 annually (Climate Watch, Historical GHG Emissions, 2021). The energy sector accounts for 85 percent of these emissions, driven by natural gas and oil combustion in power generation, industrial activities, and transportation. Without decisive policy intervention, Iran's greenhouse gas (GHG) emissions are projected to continue increasing, undermining its commitments under the Paris Agreement. The power sector, contributing 30 percent of national emissions, remains a critical focus for mitigation efforts. The current trend shows emissions rising to 224.92 megatons of CO2 equivalent by 2030, an increase of approximately 13 percent compared to 2020 levels (Shahveran and Yousefi 2025). To honor its obligations under the Paris Agreement, Iran must reduce emissions to 197.92 megatons through conditional commitments or to 215.92 megatons unconditionally (Shahveran and Yousefi 2025). 

With an annual average precipitation of only 240 mm (World Bank Group 2023), compounded by inefficient water usage in the agricultural sector, climate-related pressures are likely to intensify. To prevent further negative impact, Iran must promote renewables and efficiency, demonstrating a potential path to achieving significant GHG reductions and illustrating the importance of integrating renewable energy into a national vision.

Smuggling and Inefficiencies in Distribution

Fuel smuggling remains a significant challenge for Iran’s energy sector, primarily driven by the substantial gap between heavily subsidized domestic fuel prices and higher international market prices. This disparity creates lucrative opportunities for smugglers to exploit, leading to economic losses, distorted fuel consumption patterns, and broader implications for regional stability (Dadpay 2020).

Extent and Scale of Fuel Smuggling: Iran’s fuel smuggling problem is deeply rooted in its subsidization policies. Reports estimate that, on average, 20 to 25 percent of Iran’s daily fuel production has been smuggled to neighboring countries such as Iraq, Afghanistan, and Pakistan, with smugglers making substantial profits by reselling fuel at international rates (Clawson, 2024). For example, Iranian fuel sold domestically for less than $0.04 USD per liter due to heavy subsidies. [2] In contrast, the same fuel can be resold across borders for up to $1 USD per liter, creating a powerful incentive for smuggling operations. The scale of these illegal networks have become increasingly sophisticated and widespread. Oil tankers carrying smuggled fuel are frequently stopped in the Balochistan region and there have been reports of illegal underground pipelines, such as the one operating in the Khuzestan region (Energy Press 2024).   

Economic and Political Impact: The economic losses attributed to fuel smuggling are staggering, with reports indicating that at least 20 million liters of gasoline are smuggled out of the country daily (Eghtesad Online 2025). Iran loses billions of dollars annually in public revenues due to smuggling, an amount comparable to its development budget (see Appendix). These losses constrain the government’s ability to fund infrastructure projects, education, and healthcare services, exacerbating fiscal deficits. 

Implementation Lessons from the UAE and Saudi Arabia

Comparative studies with other energy-rich countries in the Middle East, such as Saudi Arabia and the UAE, provide valuable insights into alternative strategies for managing resource wealth. These nations have actively pursued energy diversification and renewable energy investments, demonstrating the potential for Iran to adopt similar practices. For example, Saudi Arabia’s Vision 2030 and the UAE’s Energy Strategy 2050 highlight the role of long-term planning and international partnerships in achieving energy sustainability. The historical analysis of the oil market by Crémer and Salehi-Isfahani (1989) challenges the traditional narrative of OPEC as a cohesive cartel controlling global oil prices. The authors emphasize that the 1973 oil price surge was less a product of deliberate cartel strategies and more a consequence of geopolitical shocks, such as the 1973 Arab-Israeli War and the Arab oil embargo, which created expectations of a long-term price increase. The inelastic nature of oil demand during this period amplified the impact of even minor supply reductions. Conversely, the gradual price decline in the 1980s is explained through structural shifts, including increased oil conservation measures in importing countries, the discovery of new reserves in regions like the North Sea and Mexico, and expanded absorptive capacity among oil-exporting nations (Crémer and Salehi-Isfahani 1989). 

The persistence of high prices for nearly a decade, despite minimal collective action by OPEC, underscores the importance of competitive dynamics and market fundamentals. This perspective highlights how external economic and geopolitical factors interplay with the behavior of individual producers, offering a richer understanding of the market compared to the simplistic view of cartel-driven manipulation (Crémer and Salehi-Isfahani 1989). Notably, Iran sought to use its oil exports as leverage in negotiations with Western countries; however, the gradual intensification of sanctions significantly diminished Iran's influence on the global oil market. Furthermore, despite high global oil prices, Iran was unable to fully capitalize on this opportunity, often forced to sell its oil at considerable discounts while incurring substantial costs to circumvent sanctions, thereby exacerbating its economic challenges. On the other hand, countries like the UAE and Saudi Arabia benefited immensely from the relatively high prices, leveraging their substantial oil revenues through well-managed Sovereign Wealth Funds (SWFs) to fuel economic diversification and achieve high growth rates (Alhashel 2015).

Covering an area of around 2.25 million square kilometers, Saudi Arabia is the largest country in both the Arabian Peninsula and the Middle East. Oil was first discovered there in 1938, and the nation started exporting it the following year (Tlili 2015). This discovery rapidly positioned Saudi Arabia as the world's leading producer and exporter of oil within a short period (Stambouli et al. 2012). The country also has a high energy demand, driven by population growth, low-cost electricity usage, and the increasing need for desalinated water (Alnaser and Alnaser 2011). Over the past three decades, Saudi Arabia’s economic growth has surged, largely fueled by its abundant natural gas and oil resources (Ong, Mahlia, and Masjuki 2011). With a population exceeding 34 million, the nation has experienced rapid expansion in its manufacturing sector, which is growing at an annual rate of five percent to meet increasing energy demands (Amran et al. 2020).

In the United Arab Emirates (UAE), the need for economic diversification started in the 1980s and was necessitated by various global events such as the global economic crisis of 2008, the SARS pandemic of 2002, and shockwaves in oil prices during 1980 and 2012. Like in any other nation, economic diversification holds the promise of a long-term and sustainable economy for the UAE. Hence, the UAE has adopted a deliberate state policy of diversification that has led the non-oil sector of the country to currently account for over 70 percent of its GDP (Langton 2018). 

The UAE's economic diversification strategy focuses on vertical diversification by introducing new non-oil sectors such as tourism, aviation and logistics to reduce reliance on oil revenues. According to Antwi‐Boateng and Al Jaberi (2022), the effectiveness of this diversification strategy was evidenced in 2018, where the UAE tourism industry contributed 11.1 percent to GDP while aviation generated $47.4 billion USD (13.3 percent of GDP). The manufacturing sector targets areas like chemicals, pharmaceuticals, and aerospace, supported by entities like Senaat and Mubadala. Investments in the digital economy and knowledge-based industries, including the UAE Vision 2021 and Emirates Science, Technology, and Innovation Policy, aim to foster innovation and technological advancement. The UAE has increased R&D spending and launched initiatives like the National Advanced Sciences Agenda 2031 to drive long-term growth. Foreign direct investment (FDI) laws allow complete foreign ownership in selected sectors, with Dubai attracting $12.7 billion USD in Greenfield Projects in early 2019 (Antwi‐Boateng and Al Jaberi 2022). Additionally, sovereign wealth funds like the Abu Dhabi Investment Authority (ADIA) channel oil revenues into global investments. Infrastructure enhancements, competitive regulations, and advancements in petrochemicals further strengthen the UAE’s post-oil economic framework, positioning it as a resilient and globally competitive economy (Antwi‐Boateng and Al Jaberi 2022).

The combined efforts of the UAE and Saudi Arabia in economic diversification provide significant lessons for countries aiming to reform their energy policies and achieve sustainable development. Both nations have adopted ambitious strategies to reduce reliance on oil revenues by investing in non-oil sectors such as tourism, logistics, manufacturing, and the digital economy. Saudi Arabia's Vision 2030 aligns closely with the UAE's approach, emphasizing innovation, private sector growth, and global investment through sovereign wealth funds like the Public Investment Fund (PIF) and Abu Dhabi Investment Authority (ADIA). Their focus on developing world-class infrastructure, streamlining regulatory frameworks, and fostering knowledge-based economies showcases the importance of proactive governance and strategic planning to make energy reforms successful. For countries like Iran, these efforts highlight the need to create transparent institutions, attract foreign direct investment, and prioritize innovation-driven policies to ensure energy policy reforms contribute to long-term economic resilience and global competitiveness.

Policy Recommendations

Addressing Iran’s energy sector challenges requires a unified, evidence-based approach that integrates economic, social, and environmental priorities. This section provides a comprehensive roadmap for reform, structured into immediate, medium-term, and long-term measures.

Immediate Stabilization Measures

To mitigate acute crises and stabilize the energy sector, Iran must prioritize the following interventions:

• As a critical first step, the government must carefully audit its capacity to execute such reforms, particularly in the context of limited social capital and trust. Enhancing social freedoms and fostering a participatory governance framework are critical steps toward building the trust and collective cooperation necessary for successful policy implementation. Measures to strengthen social freedoms could include ensuring greater protections for freedom of expression, promoting transparency in decision-making processes, and enabling more inclusive public participation. To address this, the Iranian government could take immediate steps to address bureaucratic obstacles to legalize access to social media platforms. The Iranian government can demonstrate a commitment to upholding individual rights and social equity by establishing channels for constructive dialogue between the government and civil society, reducing undue restrictions on civic activities, and adopting equitable governance practices.
• Iran’s energy subsidies, among the highest globally, significantly contribute to fiscal deficits and energy inefficiencies. A phased reduction of these subsidies through gradual energy price adjustments is critical. Prices for fuels like gasoline should increase relative to global benchmarks but not necessarily match them to maintain affordability, reflect international market trends, and reduce the risk of social unrest driven by high energy costs. To further promote social stability in this transition, Iran should apply lessons learned from the nationwide protests in 2019 by adopting gradual, periodic fuel price increases, followed by sustained periods of price stabilization. Stabilizing energy prices in the face of high inflation leads to a gradual erosion of their real value, distorting relative prices and undermining the intended effects of subsidy reforms. It is crucial that energy prices, once set, are adjusted frequently and in a timely manner to reflect inflation, ensuring their alignment with broader economic conditions and preventing inefficiencies from re-emerging.
• The financial gains from these price adjustments should be promptly redistributed to low-income households through targeted cash transfers to mitigate the impact of higher energy costs. To enhance public acceptance and reduce potential backlash, governments with limited social capital should consider initiating cash transfers one to two months prior to the price increases to foster trust and cushioning vulnerable populations during the transition. This strategy balances fiscal responsibility, energy market efficiency, and social equity.
• Public awareness campaigns are essential to complement these measures, not only to encourage energy conservation but also to emphasize the necessity of energy price adjustments. The public must understand that the long-term economic, health, and environmental costs of price stabilization far outweigh the immediate challenges of price increases. Stabilized prices, when disconnected from inflation and market realities, exacerbate energy inefficiencies, increase fiscal burdens, and lead to greater environmental degradation.
• Regulatory frameworks to limit non-essential energy use during peak hours, combined with incentives for adopting energy-efficient appliances, can effectively reduce wasteful consumption. The deployment of smart meters and real-time monitoring systems will enhance transparency, allowing consumers to track and optimize their energy use. Empowering citizens with both knowledge and tools ensures a more sustainable energy landscape and facilitates a smoother transition to reformed pricing policies.
• Urban air quality necessitates urgent action. Prohibiting the use of mazut in densely populated areas and imposing stricter penalties on industrial polluters are critical to curbing hazardous emissions. The deployment of real-time air quality monitoring systems in major cities can enhance enforcement of environmental regulations. While short-term urban shutdowns for households may provide temporary relief, limiting energy supplies to industries is not advisable due to its significant economic costs and the increased uncertainty it creates for businesses. This balanced approach prioritizes both environmental health and industrial stability.

Medium-Term Structural Reforms

Over the medium term, Iran must address systemic inefficiencies and governance deficits to foster resilience and growth:

• Establishing a robust Sovereign Wealth Fund (SWF) is essential for channeling a significant portion of energy revenues into productive investments and high-quality assets. A well-designed SWF can mitigate income volatility, ensure financial sustainability, and drive long-term economic diversification. By prioritizing investments in strategic sectors such as renewable energy, infrastructure, education, and healthcare, the SWF can enhance national development and reduce dependence on finite energy resources. Ensuring transparency, accountability, and alignment with international best practices, such as the Public Investment Fund, will foster public trust and effective management.  
• Lessons from countries like Norway underscore the importance of SWFs in the success of energy sector reforms. Norway’s Sovereign Wealth Fund – a state-owned investment vehicle that manages excess reserves, often from natural resource revenues like oil – operates under strict transparency and accountability mechanisms, ensuring efficient resource allocation and long-term economic stability (Thomas Ekelii and Amadou N.R. 2020). Iran could benefit from adopting similar governance frameworks, tailored to its unique political and economic context. A strong SWF not only safeguards wealth for future generations but also provides a stable financial foundation for supporting structural reforms and building a more resilient economy.
• Iran’s strategic geographical location and its position on the solar belt have endowed it with a substantial capacity for harnessing solar energy. Moreover, Iran possesses diverse wind patterns that can be used to provide environmentally friendly power. The country is evaluating the potential of utilizing renewable energies. Supporting such energy carriers can enhance the diversification of Iran’s energy portfolio, thereby bolstering the security of energy supply and meeting the demands of consumer sectors. Additionally, it can contribute to the reduction of environmental pollutants (Hasheminejad, Raei, and Maleki 2024). Expanding renewable energy infrastructure is critical to diversifying Iran’s energy mix. Large-scale solar and wind projects, particularly in high-potential regions, can reduce reliance on fossil fuels. Public-private partnerships should be established to attract investment, while regional collaboration can facilitate technology transfer and funding.
• Promoting energy efficiency across sectors is equally vital. Subsidies and low-interest loans for retrofitting industrial facilities and upgrading public infrastructure can significantly reduce energy intensity. Mandating strict energy efficiency standards for new developments and existing buildings will ensure sustainable practices become standard. Modernizing gas distribution and storage networks is another priority. Upgrading aging pipelines and minimizing leakages will improve efficiency and reliability. Expanding strategic reserves can safeguard supply stability during seasonal peaks, reducing the need for emergency measures.
• Governance reforms must underpin these initiatives. To improve governance and performance in Iran’s oil sector and the broader energy industry, the government should strengthen oversight of NIORDC and other similar organizations by instituting regular independent audits, enforcing transparent public reporting, and enhancing regulatory supervision. At the same time, enabling fair private investment through guaranteed feedstock access and streamlined approvals can attract productive capital. Anti-corruption rules must be strictly applied in ownership transfers and project contracting to prevent insider deals and rent-seeking. Depoliticizing management by promoting merit-based leadership will enhance efficiency and accountability. Lastly, gradually phasing out rentier privileges by aligning industrial energy pricing with market levels can reduce distortions and foster more responsible resource use across the sector. Independent regulatory bodies like universities and think-tanks should oversee policy implementation, ensuring transparency and accountability. Judicial reforms targeting corruption and rent-seeking behaviors will build public trust and attract foreign and domestic investment. 

Long-Term Transformative Strategies

For sustainable transformation, Iran must align its energy policies with global trends and future challenges:

• A comprehensive national energy transition framework is essential. This plan should set ambitious targets for renewable energy adoption, carbon emissions reductions, and energy efficiency improvements. Aligning these goals with international sustainability standards will position Iran as one of the global energy leaders.
• Diversifying the energy portfolio through investments in hydropower, bioenergy, and geothermal projects will reduce dependency on fossil fuels and enhance energy security. These efforts must be supported by robust research and development programs to drive innovation and local expertise.
• Introducing a carbon pricing mechanism can incentivize emissions reductions while generating revenue for clean energy projects. The key difference between this strategy and prior attempts is that this policy should be framed as a long-term solution, in contrast to the short-term price hikes aimed merely at removing subsidies. Although any increase in prices tends to be unpopular with the public, strong public awareness campaigns and sufficient government capacity, will enhance the effectiveness and public acceptance of this approach. Public awareness campaigns should communicate the long-term benefits of carbon pricing and the true costs of environmental degradation. Successful implementation will require sufficient government capacity to administer the policy effectively, monitor emissions, and manage the reinvestment of revenues. Iran’s active participation in international agreements like the Paris Agreement will further enhance its credibility and open pathways for global collaboration.
• Regional energy leadership offers significant opportunities for Iran. Strengthening energy trade partnerships and pursuing collaborative renewable energy projects with neighboring countries—such as exporting electricity to Iraq or natural gas to Turkey—can yield both economic and diplomatic gains. Iran could also explore transit routes through Turkey to supply gas to European markets, positioning itself as a key energy corridor. These initiatives would not only generate much-needed revenue but also deepen interdependence with regional partners, creating long-term strategic ties. In the long run, such partnerships could bolster regional stability and enhance Iran’s leverage in international negotiations. Moreover, easing sanctions through diplomatic engagement would further facilitate Iran’s integration into global energy markets, enabling broader participation in energy trade and investment flows.

Conclusion

Iran’s energy sector stands at a pivotal juncture, with its challenges emblematic of broader governance, economic, and environmental vulnerabilities. This paper has analyzed the structural and institutional inefficiencies undermining Iran’s energy sector—ranging from excessive dependence on fossil fuels and poorly targeted subsidies to chronic underinvestment in infrastructure and the compounding effects of international sanctions. These vulnerabilities, combined with recurring crises, such as seasonal shortages, pollution, and rising public dissatisfaction, underscore the urgency for reform.

The findings underscore that addressing these multifaceted issues requires a holistic and integrated approach. Immediate stabilization measures, including targeted subsidy reforms, infrastructure upgrades, and pollution control initiatives, can alleviate the most pressing challenges. Medium-term structural reforms focusing on renewable energy expansion, energy efficiency, and governance improvements can lay the foundation for a resilient and equitable energy sector. In the long term, transformative strategies such as energy diversification, adherence to global climate commitments, and regional partnerships will position Iran as a leader in sustainable energy transitions. However, implementing these recommendations demands unwavering political will, strategic investments, and inclusive policy making. 

The success of reforms hinges on transparent governance, robust stakeholder engagement, and effective communication to build public trust and secure buy-in from domestic and international partners. Iran’s ability to align its energy policies with global sustainability trends will determine not only the future of its energy sector but also its broader economic and geopolitical standing. By transforming its energy sector into a model of innovation and sustainability, Iran can unlock its potential as a regional powerhouse and contribute meaningfully to global energy transitions. The stakes are high, but so are the opportunities – if Iran can rise to meet the challenge, the rewards will be transformative for its economy, environment, and society.

*This article was edited by Sophia Kierstead (Princeton University) and Katia Galati (University of Toronto).

About the Authors

Behdad Kohan is an MPA student at Princeton SPIA. Before pursuing graduate education at SPIA, he was dedicated to driving social impact through evidence-based policy-making and public awareness in Iran. As the co-founder of the influential Sekke Podcast, he has fostered informed discussions on critical economic and development issues. His role as the Head of the Department of Education at the Tehran Economic Policy-making Think-tank (TEPT), a think tank at the University of Tehran, has enabled impactful research and the provision of high-quality education for students and practitioners on applied economics and development. He received his B.S. and M.S. in Economics from the University of Tehran, and he is passionate about applying economic tools to promote sustainable development and inclusive governance in the Middle East.

Hamid Dahouei is a second-year MPA/ID candidate at Harvard Kennedy School and a Teaching Fellow at Harvard College, focusing on development finance in resource-rich economies. He has previously led investment efforts in a pioneering impact investment firm. His work blends rigorous economic analysis with hands-on experience in investing.

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Notes

1. In the 2023-2024 budget bill, the exchange rate for essential goods was set at 23,000 Tomans per U.S. dollar, later adjusted to 25,000 Tomans per U.S. dollar by parliament. In the 2024-2025 budget, the Euro replaced the dollar, with an exchange rate of 31,000 Tomans per Euro. For the 2025-2026 budget, however, the exchange rate for essential goods has been planned to float and align with inflation trends. Each Toman is equal to 10 Rials. [Return to Note]
2. As of March 2025, the exchange rate of the Iranian Rial to the U.S. Dollar is approximately 800,000 IRR to 1 USD. The current price of fuel in Iran, without the quota, is 30,000 IRR per liter. [Return to Note]

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Appendix

Figure 1

Fossil Fuel Consumption Trends in Iran and the World (1980-2015)

Data source: The World Bank

Figure 2

\

Energy Consumption Per Capita in Iran and the World (1980-2015) Data source: U.S. Energy Information Administration (2023); Statistical Review of World Energy (2024)

Table 2

Key Metrics from Iran's 1404 (2025) Budget Bill

Data source: Emirates Policy Center, Iran Studies Unit, 2025