Hamid Mollazadeh
Iran’s latest assessment of national energy consumption reveals a system under mounting strain, shaped by rapid demand growth, structural inefficiencies, and widening gaps with global energy trends. Newly released official data reveals that Iran’s per-capita energy use is significantly higher than the world average, even though economic productivity remains lower than many developed and emerging economies. This imbalance is placing increasing pressure on the country’s energy infrastructure and long-term planning. Over the past five decades, global energy supply has steadily expanded through a diversified mix of oil, natural gas, coal, nuclear power, hydropower, and—more recently—renewables. Many countries have gradually shifted toward cleaner energy sources, reducing their reliance on fossil fuels.
Still dependent on oil
In contrast, Iran still remains heavily dependent on oil and natural gas, both in final consumption and in electricity generation. Natural gas, in particular, has overtaken oil as the dominant fuel in the power sector, while renewables continue to account for only a small fraction of electricity generation. International comparisons of energy intensity—the amount of energy required to produce one unit of GDP—place Iran among the highest in the world. Countries such as Turkey produce more economic value with far less energy input. Although Iran’s energy intensity has declined modestly over time, it remains structurally elevated. This reflects deeply rooted inefficiencies across industry, transportation, residential consumption, and outdated technologies. A breakdown of consumption by sector highlights these challenges clearly. Industry and buildings each account for 33% of total energy use, while the transport sector absorbs another 30%. Agriculture accounts for roughly 3%.
Subsidized prices
Heavy consumption in residential and industrial segments is reinforced by decades of subsidized fuel and electricity prices, which weaken incentives to improve efficiency or adopt cleaner technologies. The transport sector also remains overwhelmingly dependent on fossil fuels, with minimal progress in electrification or sustainable mobility. Three broad themes emerge from the data. First, the long-term growth of Iran’s energy consumption outpaces global trends, driven by rapid urbanization, widespread subsidies, and inefficient infrastructure. Second, the energy system faces recurring shocks—including seasonal gas shortages, electricity supply crises, and peak-demand stress—that reveal chronic systemic weaknesses. Third, long-standing policy misalignments, such as low prices and insufficient investment in modern energy infrastructure, continue to widen the gap between supply and demand. Experts argue that Iran has several pathways to stabilize its energy future. These include optimizing resource allocation, accelerating major energy-efficiency projects, reforming subsidies to target vulnerable groups more effectively, and modernizing industrial production methods.
