Simulating The Effects of Emission Trading on The Structural Change in The Iran's Economy

نویسندگان

1 Faculty of Management and Economics, Shahid Bahonar University of Kerman, Kerman, Iran.

2 Faculty of Management and Economics, Shahid Bahonar University of Kerman, Kerman, Iran.

3 Faculty of Management and Economics, Shahid Bahonar University of Kerman, Kerman, Iran.

4 Faculty of Management and Economics, Shahid Bahonar University of Kerman, Kerman, Iran

doi
10.22099/ijes.2025.54213.2059
چکیده

Carbon emissions trading is one of the most important policy instruments for reducing greenhouse gas emissions, serving as an effective response to climate change, which has garnered global attention. Given the rising trend of carbon emissions in Iran and the country’s ranking as the sixth largest emitter of carbon dioxide globally, examining the impacts of implementing such a policy at both national and regional levels is highly important. In this study, utilizing a dynamic computable general equilibrium (DCGE) model, the regional carbon market between Iran and selected trading partners (China, India, Turkey, and the United Arab Emirates) was simulated for the 2050 horizon, and its impacts on Iran’s environmental performance, income, structural changes, and gross domestic product (GDP) were evaluated. Results showed that implementing the carbon market would lead to a 40.29% reduction in carbon dioxide emissions in Iran and a 3.33% decline in GDP. The output share of the fossil-fuel-based power sector, energy-intensive industries, and services decreased by 15.79%, 7.13%, and 2.65%, respectively, whereas electricity from renewable energy increased by 22.1%. Furthermore, due to lower emissions than the assigned cap, Iran could earn an income of $ 10,162.89 million by selling surplus emission permits. This income could be used to develop renewable electricity generation and support industries in financing innovation enhancement and productivity improvement. Therefore, based on the results, developing the carbon emissions market is recommended to optimize Iran's energy structure and that of its major trading partners.

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