Rhein on Energy and Climate

Like most oil and gas producing countries Iran has been spoiling its citizens by ridiculously low prices for gasoline, fuel, gas and electricity, at a hefty charge for the national budget. The subsidies, including those for food, telephone and transport services, cost the government almost € 70 billion annually.

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As a consequence of lower oil receipts and the economic crisis affecting the country, the government has decided it can no longer afford such generosity and needs to raise energy prices. To cushion poor households, it will continue some subsidies, but in more targeted manner.

This is a courageous step for which the Iranian government deserves praise, even if budgetary and not climate change considerations have motivated the policy change. Still, it will allow the Iranian government to position itself in a better light at the forthcoming Copenhagen Climate Conference. Iran is after all a major C02 emitter (more than 1 percent of global emissions). Its per capita emissions are almost as high as those of France, a much richer country. Energy waste is the single most important factor explaining the high level of emissions.

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Its action responds to persistent demands from the International Energy Agency and UN climate authorities to all countries to phase out existing subsidies on fossil energies.

Let us hope the Iranian example will be followed by its neighbours in Gulf and elsewhere.

Brussels 16.10.09 Eberhard Rhein

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