Iran remained the single largest provider of energy subsidies across the globe in 2020.
According to IRNA and based on data from the International Energy Agency, Iran paid $29.7 billion in energy subsidies last year to rank first globally, leaving behind China with $25.5 billion, India with $23.7 billion and Saudi Arabia with $10.9 billion.
Iran spent $69.2 billion and $48.66 billion on fossil energy consumption subsidies in 2018 and 2017 respectively.
In 2020, Iran’s subsidies for natural gas consumption reached $12.2 billion, fossil-fueled electricity $12.5 billion and oil $5 billion.
IEA data show Iran accounted for 16.2% of the total volume of global energy subsidies that stood at $181 billion worldwide.
In 2020, the fall in fossil fuel prices and energy use brought the value of fossil fuel subsidies down to a record low, as the estimated $180 billion are 40% down from the 2019 level.
Iran is experiencing the most significant increase in subsidies for fossil fuel-based electricity, alongside Venezuela, Mexico, Egypt and China.
Referring to electricity subsidies in 2020, IEA put it at $50 billion, 25% of which were paid in Iran.
In the natural gas sector, the situation is much worse for Iran. Close to $35 billion were granted globally in natural gas subsidies last year, of which 40% were paid in Iran.
Iran’s natural gas consumption increased by an estimated 3% in 2020, with most of the growth in the power generation and residential sectors.
Although gas production is estimated to have increased by 2% due to the ongoing development of the South Pars Gas Field off the Persian Gulf, net exports fell by 2-3 billion cubic meters, as deliveries to Turkey dropped in Q2 due to a pipeline explosion and exports to Iraq were temporarily cut back in December 2020 as a result of payment disputes.
Bitter Irony
Iran holds the world’s second largest gas reserves after Russia. According to BP Statistical Review of World Energy, Iran has 34 trillion cubic meters of natural gas reserves, or 18% of the world’s proven reserves, but the bitter irony is that it is unable to provide its thermal power plants with sufficient fuel in winter, so power cuts are very likely.
Close to 1 billion cubic meters of gas are produced in Iran, of which 700 million cubic meters come from SP.
Gas delivery to power stations in winter reduces to as low as 50 mcm/d (due to its rising use in household sector) and this is while demand is at least 180 mcm/d. As a result, electricity producers have to burn polluting liquefied fuels, such as mazut and diesel.
Iran also has the fourth-largest proven oil reserves, but oil officials have announced that they cannot supply power plants with enough fuel in winter.
Thermal power stations need at least 120 million liters of diesel and mazut per day and the Oil Ministry will only be able to supply 70 ml/d.
Largely due to the abundance of oil and gas reserves, little if any importance is given in Iran to optimizing energy consumption.
“Iranians, especially profligate consumers in Tehran, use energy in buildings at levels said to be 2.5 times above the world average,” says the director of a project on energy efficiency and environment in buildings.
Nasim Shekari added that domestic consumption patterns need to change for a whole set of valid reasons, the least of which is that injudicious consumption is increasing the country's social and health costs.
The production and use of energy have many well-known benefits to society, but they also have “hidden costs” or “externalities,” such as the harm to human health and the environment from local pollution.
The electricity used in Iranian buildings is mostly generated by thermal power plants that burn eco-unfriendly fossil fuels.
The combustion of fossil fuels results in the release of pollutants that have a significant impact on public health and wellbeing.
