sustainability Review A Review on Energy and Renewable Energy Policies in Iran Saeed Solaymani Department of Economics, Faculty of Administration and Economics, Arak University, Arak 38156879, Iran; [email protected] or [email protected]; Tel.: +98-8632621000 Abstract: Iran, endowed with abundant renewable and non-renewable energy resources, particularly non-renewable resources, faces challenges such as air pollution, climate change and energy security. As a leading exporter and consumer of fossil fuels, it is also attempting to use renewable energy as part of its energy mix toward energy security and sustainability. Due to its favorable geographic char- acteristics, Iran has diverse and accessible renewable sources, which provide appropriate substitutes to reduce dependence on fossil fuels. Therefore, this study aims to examine trends in energy demand, policies and development of renewable energies and the causal relationship between renewable and non-renewable energies and economic growth using two methodologies. This study first reviews the current state of energy and energy policies and then employs Granger causality analysis to test the relationships between the variables considered. Results showed that renewable energy technologies currently do not have a significant and adequate role in the energy supply of Iran. To encourage the use of renewable energy, especially in electricity production, fuel diversification policies and development program goals were introduced in the late 2000s and early 2010s. Diversifying energy resources is a key pillar of Iran’s new plan. In addition to solar and hydropower, biomass from the municipal waste from large cities and other agricultural products, including fruits, can be used to generate energy and renewable sources. While present policies indicate the incorporation of sustainable energy sources, further efforts are needed to offset the use of fossil fuels. Moreover, the Citation: Solaymani, S. A Review on study predicts that with the production capacity of agricultural products in 2018, approximately Energy and Renewable Energy 4.8 billion liters of bioethanol can be obtained from crop residues and about 526 thousand tons of Policies in Iran. Sustainability 2021, 13, biodiesel from oilseeds annually. Granger’s causality analysis also shows that there is a unidirectional 7328. https://doi.org/10.3390/ causal relationship between economic growth to renewable and non-renewable energy use. Labor su13137328 force and gross fixed capital formation cause renewable energy consumption, and nonrenewable energy consumption causes renewable energy consumption. Academic Editors: E. Richard Zada and Andrea Gatto Keywords: energy demand; renewable energy; biomass; energy policies Received: 18 May 2021 Accepted: 24 June 2021 Published: 30 June 2021 1. Introduction Publisher’s Note: MDPI stays neutral The close and high relationship between production growth and energy consumption with regard to jurisdictional claims in growth in the economy refers to the dependence of the economy on energy [1]. Thus, the published maps and institutional affil- economy is not only sensitive to energy supply and price shocks, but any initiative to iations. conserve energy can have an impact on the performance of the economy. Iran was recognized as a country with significant oil reservoirs in the world when it discovered the first oil well in the Middle East in 1908 at Masjid Solaiman. With the subsequent exploration and extraction of oil reserves, the Iranian economy, like the world economy, has increasingly become dependent on crude oil consumption and export revenue Copyright: © 2021 by the author. Licensee MDPI, Basel, Switzerland. for industrial growth. However, the dependency on oil has declined with time in Iran This article is an open access article as well as other countries due to the use of other energy sources, such as natural gas distributed under the terms and and renewable energies. For example, the share of oil consumption in total final energy conditions of the Creative Commons demand has declined significantly from 91% in 1980 to 43% in 2018 (Figure1). This led Attribution (CC BY) license (https:// to increased use of natural gas in the country, from 7% in 1980 to 56% in 2018. While oil creativecommons.org/licenses/by/ consumption has declined and been substituted by natural gas, the share of oil in total 4.0/). consumption is still high and the use of renewable energy resources is low due to low Sustainability 2021, 13, 7328. https://doi.org/10.3390/su13137328 https://www.mdpi.com/journal/sustainability Sustainability 2021, 13, x FOR PEER REVIEW 2 of 23 Sustainability 2021, 13, 7328 2 of 23 consumption is still high and the use of renewable energy resources is low due to low production. The The share share of of renewable renewable energy energy consumption consumption in total in total final final energy energy demand demand de- clineddeclined from from 1.5% 1.5% in 1980 in 1980 to 0.58% to 0.58% in 2018 in 2018 (Figure (Figure 1). 1This). This shows shows that that the thecountry country hashas not paidnot paid more more attention attention to the to the generation generation of ofrenewable renewable energy energy sources sources through through investment investment andand providing providing some stimulations for private in investors.vestors. One reason is the abundance of oil andand gas gas resources and their low prices compared to their international prices. However, However, thethe country country needs needs to to achieve achieve the the diversity diversity of of energy energy resources resources and and energy energy security, security, which areare essential steps toward sustainable economiceconomic growth and socialsocial development.development. While IranIran is is endowed endowed with with abundant abundant natural natural resource resources,s, it faces insecurity about the challenges ofof reducing energy resources, protecting th thee environment and sustainable development. development. ConsideringConsidering the diversity ofof climatesclimates inin different different regions regions and and the the cultivation cultivation of of a varietya variety of ofcrops crops and and food food products, products, the the country country has has a substantial a substantial potential potential for diversificationfor diversification of the of energy mix, particularly the renewable energy base. In addition to the forests of the north the energy mix, particularly the renewable energy base. In addition to the forests of the and west of the country, which represent about 7% of the country’s area, Iran also has many north and west of the country, which represent about 7% of the country’s area, Iran also other products and agricultural wastes that can use to produce biofuel. Within the existing has many other products and agricultural wastes that can use to produce biofuel. Within framework of government organizations and institutions, which supervises planting, the existing framework of government organizations and institutions, which supervises farming, harvesting and, in some cases, distribution and research and development, efforts planting, farming, harvesting and, in some cases, distribution and research and develop- to strengthen cooperation and coordination among them will facilitate the transmission ment, efforts to strengthen cooperation and coordination among them will facilitate the and implementation of sustainable development plans. transmission and implementation of sustainable development plans. 100 90 80 70 Percentage (%) 60 50 40 30 20 10 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 oil Natural gas Coal Renewable energies Figure 1. The share of consumption of the various energy sources in total final energy demand in Iran. Source: [2]. Figure 1. The share of consumption of the various energy sources in total final energy demand in Iran. Source: [2]. ToTo predict the energy mix, which includes al alll kinds kinds of of fossil fossil fuel fuel resources resources and and avail- avail- ableable renewable renewable options, options, it itis isnecessary necessary to totake take into into account account current current and and future future energy energy de- manddemand and and key key figures figures relating relating to current to current ener energygy resources. resources. This This study study aims aims to review to review the statusthe status and current and current trends trends in potential in potential resources resources and to and investigate to investigate main policies main policies in Iran to in suggestIran to suggestsome solutions some solutions to help the to helpgovernment the government to achieve to its achieve sustainable its sustainable energy security energy goals.security These goals. suggestions These suggestions can simplify can the simplify application the application of sustainable of sustainable inventions, inventions, and for- mallyand formally examines examines how biomass how biomasscan contribute can contribute to the structure to the of structure the energy of the mix energy in Iran. mix in Iran.The contribution of this study is that it investigates all kinds of energy sources in Iran whichThe compare contribution to other of studies this study that is focus that iton investigates renewable energy all kinds sources of energy or specific sources energy. in Iran Alongwhich comparewith reviewing to other current studies trends that focus and onpolic renewableies, it estimates energy sourcesthe