DUBAI Feb 16 Iran plans to set up a carbon
trading market to reduce industrial emissions of climate-warming
gas, an official from Iran's Fuel Conservation Organization
(IFCO) told oil ministry news service Shana.
Iran has some of the world's largest gas reserves and is
major crude oil exporter. But rapidly rising domestic demand has
created a gas supply and vehicle pollution crisis in some
Although Iran has some large hydro-power plants, heavy
subsidisation of fossil fuels means there is little incentive
for private investments in wind or solar power projects.
The European Union set up the world's first carbon emissions
trading scheme in 2005 in the hope that forcing industry to buy
permits to emit carbon would spur them to reduce pollution.
The EU's success has been limited because too many emissions
allowances were issued, driving down the price of permits
to levels that give little incentive to cut.
A short but growing list of other countries - including
China and India - are developing their own emissions trading
schemes and now Iran is planning its own.
"Reducing energy consumption and capping carbon emission are
two sides of the coin. When energy consumption declines, carbon
emission will also fall," Mehdi Sharif, director of energy
efficiency at IFCO, a subsidiary of the National Iranian Oil
Company, was quoted as saying on Sunday.
Under the planned scheme, some industrial facilities will be
allocated credits to emit a limited amount of carbon and will
have to buy permits on the carbon market to cover any further
emissions, Sharif said.
He gave no further details and did not specify which
industrial facilities would be included in the scheme.
Carbon markets are supposed to encourage companies to reduce
their emissions of climate-warming gas by creating a visible
cost for polluters. For such schemes to work there must be a
shortage of permits in the system that encourages some companies
to invest in cleaner and more efficient energy technology.
Middle East oil producers like Iran, Saudi Arabia and the
United Arab Emirates still rely heavily on oil export income and
heavily subsidise oil and gas supplies.
But there is a growing sense around the Gulf that solar
energy, in particular, could help dampen rapid fuel demand
growth at home that threatens long term oil export revenues.
There is also growing acceptance that excessive carbon
emissions from unrestrained fossil fuel burning contribute to
(Reporting by Daniel Fineren; Editing by Anthony Barker)