Dynamic modeling to analyze the impacts of carbon reduction policies, Iran's electricity industry

Sustainable development and reducing greenhouse gas emissions require optimizing the structure of energy production as the main factor in the emission of pollutants in Iran's electricity industry. Over the past years, environmental scientists have proposed carbon tax (CT) and carbon emission trading (CET) as policy tools to reduce pollutant emissions in developed and developing economies. Due to poor access to environmental data and the lack of effective pollution control laws and policies in Iran, efforts to realize the effectiveness of these policies in Iran have been inadequate. The present paper establishes a system dynamics model with feedback to fill these gaps in analyzing the effects of the CT and CET schemes. The following eight scenarios were considered and examined: a baseline scenario (BAU scenario), an emission tax scenario, an emission trading mechanism scenario, an energy supply scenario (to increase electricity generation), an emission tax scenario with investment in technology research and development (to increase energy efficiency), a tax scenario on emissions along with increasing energy supply, the scenario of emission trading mechanism with investment in technology research and development, and the scenario of emission trading mechanism with increasing energy supply. The results showed that while both CT and CET policy groups can be effective in reducing carbon emissions in thermal power plants, in the long run, using price tools to maintain energy security reduces the efficiency of policies greatly. Nevertheless, the effectiveness of CT policy in reducing emissions is higher. Also, despite the allocation of revenue from the application of scenarios to the development of renewable energy, the development of this sector cannot compensate for the reduction in the supply of thermal power plants following the implementation of these policies. As a result, other supportive policies are necessary for the further and faster development of the renewable sector and optimizing the energy structure with an emission reduction approach.