The Politics of Low-Carbon Energy in Iran and Iraq

Both Iran and Iraq are major oil producers; both have abundant hydroelectric, solar and wind potential, and face fast-rising energy demand which they have been challenged to meet. Yet both have struggled to adopt low-carbon energy on a large scale. The underlying reasons, however, are quite different. Iran’s pursuit of nuclear power has been driven by domestic security and nationalist interests. Its buildout of hydroelectric dams has been encouraged by local politics and insider business. Non-hydro renewables have suffered from turf wars, lack of institutional support, fossil fuel and electricity subsidies, and barriers to international finance, exacerbated by sanctions. In Iraq, by contrast, the period following the 2003 invasion, when alternative energy has advanced worldwide, has been marked by pervasive corruption, insecurity and mismanagement which have prevented realisation of most large-scale projects outside the upstream oil and gas sector. Despite severe electricity shortages and some targets for renewable energy installation, little progress has been made due to an unattractive investment model and rent-seeking political interests. Nevertheless, the economics of renewables is very good in both countries, neither has any fundamental opposition to them, and progress should occur over the next few years, even though halting and well behind potential.