The impact of the Iranian energy subsidy reform on the emissions of the manufacturing sector- An exploratory analysis

This chapter compares the emission of air pollutants and 𝐶𝑂2 by Iranian manufacturing firms before and after the introduction of the 2010 energy subsidy reform. The assessment shows that the energy subsidy reform has not changed the level of energy consumption, but manufacturing firms switched to a cleaner energy mix in the form of a larger share of natural gas and electricity in response to the change in relative prices of energy. As a result, after the energy subsidy reform, the direct emissions of man-ufacturing firms (both air pollutants and 𝐶𝑂2) declined. The coke and pe-troleum products industry largely contributed to this emission reduction. However, these encouraging findings do not hold when the emissions re-sulting from electricity generation are included. These findings challenge the environmental aspects of energy subsidy reforms as stand-alone tools without major ‘green’ reforms and technological advancements in electricity generation.