Strategic Studies of public policy

Strategic Studies of public policy

Iran's energy subsidies reform by introducing the new approach of redistributing energy subsidies; A case study of electricity and natural gas

Document Type : Research Paper

Authors
Mohammad Bagher Homayoun 1
Mohamadreza Akbari 2
Esmail Saghab esfahani 3
Hamid Heidari 1
Amirhossein Souhankar 4
Seyed Majid Miri larimi 5
1 Department of petroleum engineering, Amirkabir University of Technology, Tehran, Iran
2 Department of Petroleum Engineering, Amirkabir University of Technology, Tehran, Iran.
3 Secretary of the government's evolution leadership headquarters, Tehran, Iran.
4 Knowledge-Base Economy Group, Technology Studies Institute, Tehran, Iran
5 Assistant Professor, Faculty of Electrical and Computer Engineering, Tarbiat Modares University, Tehran, Iran.
10.22034/sspp.2024.2025011.3584
Abstract
In Iran, the equitable distribution of wealth has long been an important social issue having especially affected families living in urban and rural. This research deals with the challenges caused by the established energy subsidy system and proposes a new approach to redistribute energy subsidies by increasing social justice.

This study introduces a new method to redistribute income from energy sales through subsidies to individuals and target groups. The subsidy program will reduce government spending on energy subsidies from $66.7 billion to $43.9 billion. This amount represents a quarter of the country's general budget for 2023.

In addition to the financial savings of this approach, with the effective use of energy savings subsidies and implementing a fair redistribution system, the government can increase its revenue stream. This approach not only ensures equitable allocation of resources among vulnerable households but also can reduce inequalities and reduce budget deficits. On the other hand, due to the realization of prices along the chain, sufficient incentives will be created for producers to reduce waste and for investors in the field of energy consumption optimization, so that the implementation of projects on the ground and its implementation will be justified from an economic point of view.

In this study, a combination of comparative studies and content analysis methods with modeling the subsidy redistribution program impacts were used. The results emphasize the transformative capacity of this new approach in optimizing government spending, increasing income generation strengthening socio-economic equality, and reducing energy waste in Iranian society.
Keywords
Energy subsidy
social justice
wealth redistribution
exchange rate control
energy consumption optimization
Subjects
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Strategic Studies of public policy
Volume 14, Issue 52
Examination of solutions to solve the challenge of the country's energy imbalance"
Autumn 2024
Pages 14-45