Developing a Foundational Framework for Emission Policy Design to Mitigate CO2 Emission in Iran Case Study: An Empirical Approach to Guide Decision-Makers in Iran Using Simplified DICE Models

Asadollahi, Mohammadreza; Hajian, Mohammad Mahdi; Toosi, Abbas; Fallahzadeh, Alimohammad

doi:10.22050/pbr.2025.500200.1378

Developing a Foundational Framework for Emission Policy Design to Mitigate CO2 Emission in Iran Case Study: An Empirical Approach to Guide Decision-Makers in Iran Using Simplified DICE Models

Document Type : Original Article

Authors

Mohammadreza Asadollahi ¹

Mohammad Mahdi Hajian ²

Abbas Toosi ²

Alimohammad Fallahzadeh ²

¹ PhD Candidate at Private Law Department, Law and Political Sciences Faculty, Allameh Tabataba'i University, Tehran, Iran

² Assistant Professor of Private Law Department, Allameh Tabataba'i University, Tehran, Iran

https://doi.org/10.22050/pbr.2025.500200.1378

Abstract

Climate change is a global issue, driven largely by greenhouse gas emission, with carbon dioxide (CO2) being the biggest contributor. Iran, one of the top 10 emitters globally, faces unique challenges in reducing its CO2 emission due to economic sanctions, data gaps, and limited experience with climate policy. To help guide decision-makers, this study uses the Simplified DICE model—DICE model is a widely accepted tool for analyzing climate and economic interactions—to evaluate different strategies for emission reduction. These strategies mainly include carbon pricing, investment in renewables as mitigation of emission growth, and improving energy efficiency. The results show that such policies can positively impact GDP, temperature stabilization, and emission levels. This research provides the first numerical framework tailored to Iran’s specific context, offering practical insights for policymakers. Key policy implications include the necessity to overcome sanctions in aspects of Investment and technology absorption, improved data collection to refine future analyses, and adopting cost-effective measures that balance economic growth with environmental sustainability.

Highlights

· Despite being one of the top global emitters of greenhouse gases (GHGs), Iran has not yet taken serious steps to reduce its emissions, even though doing so is inevitable.

· The primary challenge for decision-makers is to establish an analytical framework. This framework must guide them toward the necessary strategies, forecast the outcomes of their actions against targeted goals, and finally, monitor their progress.

Among all integrated assessment models (IAMs), the 2023 simplified DICE model was selected as the basis for analysis. The evaluation of four scenarios revealed positive outcomes for CO₂ mitigation, while also indicating that GDP and the economy would benefit from both the mitigation efforts and the resulting decrease in emissions.

Keywords

Emission Reduction Policies, Mitigation Strategies for CO2 Emission Reduction

Simplified DICE model

Environmental and Climate Strategies, Environmental Economic analysis

Subjects

Oil and Gas Economics and Management

Agency, I. E., Global Energy Review: CO2 Emissions in 2021 – Global emissions rebound sharply to highest ever level, International Energy Agency, Paris, 2022. Available at: https://www.iea.org/reports/global-energy-review-co2-emissions-in-2021-2

Alcamo, J., Kreileman, G. J. J., Krol, M. S., and Zuidema, G., Modeling the global society–biosphere–climate system: Part 1: Model description and testing, IMAGE 2.0: Integrated Modeling of Global Climate Change, p. 1–35, 1994.

Asadollahi, M., and Hajian, M. M., A Review of Contractual Risk Allocation in Usance Finance Contracts, Petroleum Business Review, Vol. 5, No. 3, p. 19–27, 2021. https://doi.org/10.22050/pbr.2021.281438.1187

Asadollahi, M., Hajian, M., Toosi, A., and Fallahzadeh, A., Designing a Model for Participatory Environmental Governance in Iran: Case Study of Reducing Greenhouse Gas Emissions through Carbon Trading, Majles & Rahbord, Vol. 31, No. 119, p. 133–173, 2024. https://doi.org/10.22034/mr.2023.5659.5343

Baatz, C., Climate Change and Individual Duties to Reduce GHG Emissions, Ethics, Policy and Environment, Vol. 17, No. 1, p. 1–19, 2014. https://doi.org/10.1080/21550085.2014.885406

Burke, M., Hsiang, S. M., and Miguel, E., Global non-linear effect of temperature on economic production, Nature, Vol. 527, No. 7577, p. 235–239, 2015.

Calvin, K., Patel, P., Clarke, L., Asrar, G., Bond-Lamberty, B., Cui, R. Y., et al., GCAM v5.1: representing the linkages between energy, water, land, climate, and economic systems, Geoscientific Model Development, Vol. 12, No. 2, p. 677–698, 2019.

Filonchyk, M., Peterson, M. P., Yan, H., Gusev, A., Zhang, L., He, Y., and Yang, S., Greenhouse gas emissions and reduction strategies for the world’s largest greenhouse gas emitters, Science of The Total Environment, Vol. 944, p. 173895, 2024. https://doi.org/10.1016/j.scitotenv.2024.173895

Filonchyk, M., Peterson, M. P., Zhang, L., Hurynovich, V., and He, Y., Greenhouse gases emissions and global climate change: Examining the influence of CO2, CH4, and N2O, Science of The Total Environment, Vol. 935, p. 173359, 2024. https://doi.org/10.1016/j.scitotenv.2024.173359

Ghadaksaz, H., and Saboohi, Y., Energy supply transformation pathways in Iran to reduce GHG emissions in line with the Paris Agreement, Energy Strategy Reviews, Vol. 32, p. 100541, 2020. https://doi.org/10.1016/j.esr.2020.100541

Goddéris, Y., François, L. M., Probst, A., Schott, J., Moncoulon, D., Labat, D., and Viville, D., Modelling weathering processes at the catchment scale: The WITCH numerical model, Geochimica et Cosmochimica Acta, Vol. 70, No. 5, p. 1128–1147, 2006.

Grubb, M., Drummond, P., Poncia, A., McDowall, W., Popp, D., Samadi, S., et al., Induced innovation in energy technologies and systems: a review of evidence and implications for CO2 mitigation, Environmental Research Letters, Vol. 16, No. 4, p. 043007, 2021.

Gupta, J., A history of international climate change policy, Wiley Interdisciplinary Reviews: Climate Change, Vol. 1, No. 5, p. 636–653, 2010.

IEA, Greenhouse Gas Emissions from Energy – 2024 Edition: Database Documentation, International Energy Agency, 2024. https://www.iea.org/data-and-statistics/data-product/greenhouse-gas-emissions-from-

IMF, World Economic Outlook Database, International Monetary Fund, 2023. https://www.imf.org/en/Publications/weo

International Energy Agency, CO2 Emissions Statistics, 2023. Retrieved February 4, 2025 from https://www.iea.org/countries/iran/emissions

IPCC, Human Influence on the Climate System, in Climate Change 2021 – The Physical Science Basis, Cambridge University Press, p. 423–552, 2023. https://doi.org/10.1017/9781009157896.005

Iranian Meteorological Organization, Annual Climate Report 2023, Retrieved February 4, 2025 from https://www.irimo.ir

Kaufmann, R. K., Assessing the DICE model: Uncertainty associated with the emission and retention of greenhouse gases, Climatic Change, Vol. 35, No. 4, p. 435–448, 1997.

Loulou, R., Labriet, M., Kanudia, A., Remme, U., and Lettila, A., The TIMES Integrated Assessment Model (TIAM): An Introduction, ETSAP Workshop, p. 23, 2007.

Manne, A., Mendelsohn, R., and Richels, R., MERGE: A model for evaluating regional and global effects of GHG reduction policies, Energy Policy, Vol. 23, No. 1, p. 17–34, 1995.

Matsuoka, Y., Morita, T., and Kainuma, M., Integrated assessment model of climate change: the AIM approach, Present and Future of Modeling Global Environmental Change, p. 339–361, 2001.

Michaelowa, A., Shishlov, I., and Brescia, D., Evolution of international carbon markets: lessons for the Paris Agreement, Wiley Interdisciplinary Reviews: Climate Change, Vol. 10, No. 6, e613, 2019.

Nordhaus, W. D., Revisiting the social cost of carbon, PNAS, Vol. 114, No. 7, p. 1518–1523, 2017. https://doi.org/10.1073/pnas.1609244114

Nordhaus, W., Managing the Global Commons: The Economics of Climate Change, MIT Press, 1994.

Parag, Y., and Fawcett, T., Personal carbon trading: a review, Energy and Emission Control Technologies, Vol. 23, 2014. https://doi.org/10.2147/eect.s56173

Pfenninger, S., Hawkes, A., and Keirstead, J., Energy systems modeling for twenty-first century challenges, Renewable and Sustainable Energy Reviews, Vol. 33, p. 74–86, 2014.

Pindyck, R. S., The use and misuse of models for climate policy, Review of Environmental Economics and Policy, 2017.

Rajamani, L., Jeffery, L., Höhne, N., Hans, F., Glass, A., Ganti, G., and Geiges, A., National ‘fair shares’ in reducing greenhouse gas emissions, Climate Policy, Vol. 21, No. 8, p. 983–1004, 2021.

Ramachandra, T. V., Aithal, B. H., and Sreejith, K., GHG footprint of major cities in India, Renewable and Sustainable Energy Reviews, Vol. 44, p. 473–495, 2015.

Ridgley, M. A., Fair sharing of greenhouse gas burdens, Energy Policy, Vol. 24, No. 6, p. 517–529, 1996.

Solomon, S. D., Qin, D., Manning, M., Chen, Z., Marquis, M., et al., Contribution of Working Group I to the Fourth IPCC Report: The Physical Science Basis, Cambridge University Press, 2007.

Sterner, T., and Coria, J., Policy instruments for environmental and natural resource management, Routledge, 2013.

Ueckerdt, F., Pietzcker, R., Scholz, Y., Stetter, D., Giannousakis, A., and Luderer, G., Decarbonizing global power supply under region-specific challenges, Energy Economics, Vol. 64, p. 665–684, 2017.

Weyant, J., Grubb, M., Shukla, P. R., Profile, S., and Tol, R. S. J., Integrated Assessment of Climate Change: A Comparison of Approaches and Results, available at: https://www.researchgate.net/publication/221678860