Iranian Energy Economics

Abstract Renewable energies have been proposed as a key solution to deal with climate change and reduce dependence on fossil fuels. The development and expansion of this type of energy has been dependent on various factors, including human capital and green financing. Human capital and green financing are two key factors in the development of renewable energy. Investing in the training and development of specialized human resources and providing sufficient financial resources can help accelerate the transition to renewable energiesand sustainable energy. The current research is the effect of two factors of human capital and green financing on renewable energy in ECO member countries. Therefore, in the period from 2000 to 2024 and based on the Cross Sectional Augmented Autoregressive Distributed Lag (CS-ARDL), the relationship between the research variables has been analyzed. The results show that in Eco, there is a positive and significant relationship between human capital and green financing and renewable energies. Also, the results of this research, in addition to clarifying the issues of sustainable development, provide an insight based on the examination of the complexities of the transition towards the perspective of greener energies, for policy makers and researchers in this field.

Abstract Renewable energies are gradually replacing fossil fuels as the primary sources of energy. The transition from non-renewable resources to renewable sources, such as solar, wind, geothermal, biomass, etc., has significantly transformed productive, commercial, and financial aspects of the international energy market. This transformation, in turn, has created new challenges and opportunities for energy security of states. Iran, as a major producer of fossil fuels and energy consumer, is also grappling with these challenges and opportunities. Here we aim to answer the question that what strategies and policies Iran has adopted in the field of renewable energies to ensure its future energy security? In other words, what role and position does Iran envisioned for renewable energies in its future energy security?  Answering this question requires addressing several sub-questions. First, what is energy security and its components? Second, what opportunities and threats do renewable energies pose to the energy security of states? Third, what is the current status of Iran in terms of energy security indicators, and how does the shift in the energy market from fossil fuels to renewable energies affect Iran's energy security? Fourth, what strategies and policies has Iran specifically adopted in the field of renewable energies to prevent these threats and risks? Fifth, what are the shortcomings of these strategies and policies, and what solutions can be proposed to overcome them?

Literature Review

The diversity in definitions of energy security has led scholars to propose various indicators for assessing energy security. In Table 1, we attempt to compile all the indicators proposed by researchers in this field.
 
 
Table 1. Indicators of Energy Security




Research examples


Indicator


 






Kruyt, Van Vuuren, de Vries & Groenenberg, 2009; Yao & Chang, 2014; Chuang & Ma, 2013; Fang, Shi &Yu, 2018; Lixia, 2021                    


Acceptability


1




Fang, Shi. &Yu, 2018; Kruyt, Van Vuuren, de Vries & Groenenberg, 2009


Sustainability


2




Karatayev & Hall, 2020; Radovanović, Filipović & Pavlović, 2017


Demand continuity


3




Radovanović, Filipović & Pavlović, 2017; Fu &et al, 2021


Environmental sustainability


4




Paravantis, Kontoulis, Ballis, Tsirigotis & Dourmas, 2018; Kruyt , Van Vuuren, de Vries & Groenenberg, 2009


Supply continuity


5




Kruyt , Van Vuuren, de Vries & Groenenberg, 2009; Erahman, Purwanto, Sudibandriyo & Hidayatno, 2016; Fang, Shi &Yu, 2018


Accessibility


6




Azzuni &Breyer, 2018; Szulecki, 2018


Democracy


7




Lee, Xing & Lee, 2022


Distribution of incomes


8




Lin & Raza, 2020; Radovanović, Filipović & Pavlović, 2017; Kruyt, Van Vuuren, de Vries & Groenenberg, 2009


Energy import dependency


9




Jewell, Cherp &Riahi, 2014


Diversity of resources


10




Sovacool &Mukherjee, 2011; Kruyt, Van Vuuren, de Vries & Groenenberg, 2009; Martchamadol & Kumar, 2013


Estimating resources and Reserve-to-production ratio


11




Kruyt, Van Vuuren, de Vries & Groenenberg, 2009; Shah, Zhou, Walasai &Mohsin, 2019; Novikau, 2019


Political stability


12




Kruyt, Van Vuuren, de Vries & Groenenberg, 2009; Chuang & Ma, 2013; Radovanović, Filipović & Pavlović, 2017; Yao & Chang, 2014; Kruyt et al., 2009


Affordability


13




 
Martchamadol & Kumar, 2013; Dźwigoł, Dźwigoł-Barosz, Zhyvko, Miśkiewicz & Pushak, 2019


Energy consumption intensity


14





Methodology

In response to the main research question and using rational-conceptual modeling method, we first identified fourteen indicators for assessing energy security. Then, we identified the threats and opportunities arising from the transition to renewable resources in each of these indicators. Next, with documentary and descriptive content analysis methods, we demonstrated which of these threats and opportunities Iran has faced or will face, and to which of them it has paid attention in its macro-policy-making and high-level documents.
 
 

Results

In Table 2, we categorized the most important threats and opportunities affecting the stability or improvement of Iran's energy security.
Table 2. Threats and opportunities of renewable resources for Iran's energy security




Threats and opportunities


Indicator


 






Change in public perception towards non-renewable resources and domestic and international public opinion pressures


Acceptability


1




Positive public perception of renewable resource exploitation




Loss of oil and gas resources during production process




De-legitimization of governmental oil and gas derivatives consumption methods




Utilization of the country's capacity in wind, solar, hydro, and nuclear energy production


Sustainability


2




Probable future reduction in oil and gas resources




Investment in export of renewable energy


Demand continuity


3




Reducing dependency on international oil and gas demand




Aggravation of climate crises and increasing pollution of biochemical cycles due to fossil resource production and consumption


Environmental sustainability


4




Enhancement of environmental sustainability with renewable resources




International sanctions on oil and gas technologies and renewable energy technologies


Supply continuity


5




International sanctions on oil and gas sales




Development of unconventional oil and gas resources exploitation




Global prices increase




Decrease in job opportunities in oil and gas industries




New job opportunities in renewable energy sector




Increased public access to renewable resources to expand local development


Accessibility


6




Rentier state and the need to reduce dependency on oil and gas revenues


Democracy


7




Reduction in distribution of oil and gas incomes


Distribution of incomes


8




Possibility of creating new public revenues through renewable energy sources




Increase in the role of other energy sources versus oil and gas


Energy import dependency


9




Diversity of resources


10




Relying solely on Estimating resources and reserves volume


Estimating resources and Reserve-to-production ratio


11




Social protests due to energy-related issues


Political stability


12




Increase in energy carrier prices


Affordability


13




Optimizing energy consumption


Energy consumption intensity


14




 
Examining high-level documents of Iran’s energy shows that the greatest attention has been paid to Affordability and Energy consumption intensity indicators, while the least attention has been given to Acceptability and political stability indicators, and to some extent, Supply continuity indicators.

Conclusion

It seems that understanding the critical situation and deficiencies of Iran's energy security can only be achieved through recourse to the foundations of good governance, particularly good energy governance. Based on a general rule in good governance, such governance entails a tripartite relationship between the government, civil society and stakeholders. However, in high-level energy documents and general energy security policies, two other actors of good governance are absent. Acceptability, political stability, and to some extent, Supply continuity are indicators directly related to these other two kinds of actors.
Acknowledgments
The authors of this research are grateful to the referees for their valuable comments and suggestions.

Abstract Global greenhouse gas emissions have risen from 31,553 million tons of CO2 equivalent in 1990 to 46,187 million tons in 2022. According to the United Nations Intergovernmental Panel on Climate Change (IPCC), since the late 19th century, the Earth’s average temperature has increased by 1.1 degrees Celsius.
Every decade since 1960 has been warmer than the previous one, with the last decade being the hottest on record. The warming caused by human activities and greenhouse gas emissions has currently reached about 1 degree Celsius above pre-industrial levels. Over the past two decades, global scientific and political communities have increasingly focused on the issue of global warming and its associated climate changes. The historic Paris Agreement, signed on December 12, 2015, during the 21st Conference of the Parties (COP21) to the UN Climate Change Convention, was a significant step toward combating climate change and addressing the challenges of reducing emissions and investing in a low-carbon, resilient, flexible, and sustainable economy. The agreement, signed by 195 countries, came into force on November 4, 2016. Under the Paris Agreement, countries committed to reducing greenhouse gas emissions to prevent the global average temperature from rising more than 2 degrees Celsius above pre-industrial levels, and to pursue efforts to limit the increase to 1.5 degrees Celsius above pre-industrial levels.
Following the agreement, countries through the UN Climate Change Convention asked the IPCC to provide a special report on the impacts of global warming of 1.5 degrees Celsius above pre-industrial levels and related global greenhouse gas pathways. In the IPCC report, supported by 133 researchers, various greenhouse gas emission pathways to achieve the 1.5-degree goal were outlined. Achieving this goal will require significant reductions in greenhouse gas emissions, with a major focus on the energy sector. Four proposed scenarios, which aim to reach net-zero carbon emissions by 2050, predict a sharp decline in the use of fossil fuels. However, the type of fuel and the speed of the transition in fuel consumption vary considerably, especially for coal, oil, and gas, through 2030. Coal faces the most severe reductions, with consumption needing to decrease by 59% to 78% by 2030 compared to 2010. Natural gas has a better outlook, with predictions ranging from a one-third increase to a one-quarter decrease in different scenarios. Oil has the most uncertain future, with the fourth scenario, based on bioenergy combined with carbon capture and storage (BECCS), predicting an 86% increase in oil consumption compared to 2010. Given the uncertain future of oil in these scenarios, analyzing the impact of implementing each of the IPCC's proposed scenarios on OPEC member countries, whose economies are heavily reliant on oil revenues, is crucial. The innovation of this research lies in examining the effects of climate change policies on oil-producing and exporting OPEC countries, including Iran, using a time-series econometric approach, co-integration equations, and a vector error correction model.
Methods and Material
In this research, to examine the effects of the IPCC scenarios, which are based on reducing global fossil fuel consumption, on OPEC’s oil demand and supply, a time-series econometric approach was used. Co-integration equations were employed to estimate long-term relationships, and the vector error correction model was applied for short-term estimates. Given the significance of reduced demand for OPEC countries, which are economically dependent on oil export revenues, data on the production and price of OPEC oil were used. Additionally, the long-term effects of environmental actions under the IPCC scenarios, which replace fossil fuels with renewable energy by 2030 and 2050, were incorporated into the model using renewable energy price variables. Variables used in the supply and demand functions include OPEC oil production, OPEC oil prices adjusted for the U.S. consumer price index, industrial production indices for developed and emerging countries, and renewable energy price indices. The research data were gathered monthly from 1986 to 2022. OPEC oil price and production statistics were obtained from OPEC, and the U.S. consumer price index data were sourced from the World Bank. The industrial production index (IP) for developed countries was calculated as a weighted average of IP from the U.S., Japan, Germany, France, the U.K., Italy, Canada, Spain, the Netherlands, Sweden, Norway, Belgium, Austria, Denmark, Finland, Greece, Ireland, Portugal, and Luxembourg, with weights based on the GDP share of each country in total GDP. For emerging countries, the IP index was similarly calculated for China, Brazil, India, South Korea, Mexico, Turkey, and Indonesia. The GDP data were obtained from the World Bank, and IP data from the International Monetary Fund. Renewable energy prices were based on the weighted average levelized cost of energy (LCOE) for renewable sources such as concentrated solar power, offshore and onshore wind power, and photovoltaic solar energy. The weights were based on each energy type's share of total renewable energy production, and the LCOE data were published by the International Renewable Energy Agency. Initially, the industrial production indices for developed and emerging countries, as well as the renewable energy price index, were seasonally adjusted.
Table 1. Long-term supply and demand relationships for oil based on Johansen's method.
 




variables


OPEC Oil Supply function


OPEC Oil Supply function




OPEC oil production


1


1




Real price of OPEC oil


0.22
(0.05)


-0.05
(0.02)




Non-OPEC oil production


1.56
(0.41)


0




IP(Advanced economic)


0


0.76
(0.16)




IP(Emerging economic)


0


0.58
(0.07)




Renewable energy price


0


0.26
(0.06)




Error correction term


0.03-
)0.009)


0.08-
(0.003)




Results and Discussion
OPEC adopts two approaches in the global oil market: a strategic approach, where OPEC acts similarly to non-OPEC producers and amplifies the effect of price shocks, and an adaptive approach, where OPEC seeks to balance non-OPEC production changes and stabilize oil price fluctuations. The estimated coefficients indicate that during the study period, OPEC countries, alongside the increase in non-OPEC production, attempted to maintain their market share, often increasing production to force high-cost producers out of the market. This finding is consistent with those of Bog, Pal, and colleagues (2016), who viewed OPEC as a dominant producer seeking to protect market share by limiting competitors like shale oil producers.
The results of the model estimation indicate a direct relationship between OPEC oil supply and real oil prices, with a price elasticity of oil supply of 0.22. Additionally, a 1% increase in non-OPEC production leads to a 1.56% increase in OPEC oil production. The price elasticity of oil demand is negative at -0.05, with demand from developed countries having a more significant impact on OPEC oil demand than demand from emerging countries. Furthermore, a 1% decrease in renewable energy prices reduces OPEC oil demand by 0.26%. Therefore, in the pessimistic IPCC scenario, where oil consumption declines by 37%, OPEC’s oil supply could decrease by 40% by 2030.
Based on the findings, it is recommended that OPEC regularly monitor the pace of renewable energy development up to 2030 and adjust its strategies accordingly. Although the growth of industrial production in developed countries has a more significant effect on OPEC oil demand, trends in oil imports from China and India, which accounted for about 40% of OPEC’s exports in 2019, versus declining imports from the U.S. and European OECD countries, which have dropped by 40%, should also be considered by OPEC.

Abstract Despite self-replenishing nature and lack of negative external effects of new energies, the energies entail higher costs than the conventional energy resources. The governments cannot afford these extra costs, and it needs to take part the public. This study examines extent of public participation in the funding of these costs. The study employed the double-bounded dichotomous choice (DBDC) contingent valuation (CV) method. We release 400 questionnaires under five corresponding prices. Two cost-related questions were asked from each participant (once twice the original price, and once half of that). The interviewees determined the extra cost they would incur, taking into account seven factors, namely: regional economy, demand for electricity, environmental considerations, diplomatic relations, safety, ethics, and the economy.  The results suggest a willingness-to-pay of 46360 Rials (≈1.2USD) per month. The findings also indicate that the items including willingness to new energies, importance of environment and influence of the energies have the highest effect on the willingness of payment.