Rhein on Energy and Climate

Iran is probably the country with the cheapest gasoline prices.

A litre of gasoline costs only 45 cents beyond the monthly entitlement of 80 litres per car for which car owners pay ridiculous 11US cents.

The Iranian government has to pay almost $ 100 billion annually for financing its generous subsidies on petrol, fuel and electricity (one kWh cost only 0.6 cents!) The excessively low petrol prices are responsible for the congestion on Teheran’s street and the exorbitant level of C02 emissions, comparable to those of France, for what is still a medium income country. According to the World Bank, Iran could reduce its C02 emissions by 49 percent if it phased out the petrol subsidies.

Several efforts have been undertaken during the past years to put an end to this folly, the last in early January 2010 when the parliament decided to phase them out until March 2015 and align energy prices to the level prevailing in the Gulf.

The risk of an impending embargo on petrol shipments has re-fuelled the debate on the future of the unsustainable petrol subsidies, which harm Iran and are a scandal for the world climate.

Even if the embargo will not deter Iran from continuing its nuclear development its positive by-effect on fossil energy consumption and C02 emissions should be appreciated.

Let the international community therefore proceed with it.

Brussels, 10.03.10 Eberhard Rhein

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