Iraq pursues ambitious environmental reform to tackle fossil fuel dependence

Shafaq News/ Iraq, one of the world's leading countries in associated natural gas flaring during oil extraction, is urgently searching for hundreds of billions of dollars to fund its environmental ambitions. As the nation participated in COP29, it faces a daunting challenge: balancing its oil-reliant economy with the pressing need to transition to sustainable energy.

Heavy Dependence on Fossil Fuels

Iraq’s economy is deeply tied to oil, which accounts for over 95% of its exports, 85% of government revenue, and approximately 42% of its GDP. This heavy dependence leaves the country highly vulnerable to fluctuations in global oil prices, threatening economic stability and the delivery of public services.

Energy production in Iraq reflects this reliance. Natural gas generates 60% of Iraq's electricity, oil contributes 35%, and renewable energy, primarily hydroelectric, accounts only 5.5%. Despite producing significant quantities of natural gas, Iraq flares a substantial portion due to inefficient practices, releasing harmful methane emissions.

The government’s fiscal vulnerability is compounded by an aging energy infrastructure, which relies heavily on fossil fuels for extraction, refining, and electricity generation.

Environmental Challenges and Ambitious Targets

The environmental cost of Iraq’s fossil fuel dependency is stark. The International Finance Corporation estimates Iraq will require $233 billion by 2040 to meet its climate goals, which include reducing greenhouse gas emissions, capturing associated gas, and improving energy efficiency.

The country’s Nationally Determined Contribution (NDC) pledges to cut emissions by 15% by 2030, but 13% of this target relies on international support.

In 2023, Iraq reduced gas flaring by achieving a 60% utilization rate for associated gas, according to Deputy Minister of Oil for Gas Affairs, Ezzat Saber. However, the country still flared 636.8 billion cubic feet of gas that year, contributing heavily to methane emissions.

International support has begun to flow. The United Kingdom recently announced $6.5 million in funding for Iraq as part of its broader efforts to combat climate change. This assistance focuses on transitioning to clean energy, improving climate resilience, and building technical capacity.

Notably, at COP29, Iraq successfully resisted proposals to phase out fossil fuels, arguing that such measures could undermine its economic stability. Majid Shankali, Chairman of the Parliamentary Health and Environment Committee, emphasized the importance of balancing economic needs with environmental goals.

Political and Security Obstacles

Efforts to implement environmental reforms face significant political and security hurdles. External and internal interference frequently obstruct key decisions and initiatives.

Economist Durgham Mohammed Ali told Shafaq News that Iraq's reliance on fossil fuels makes a full transition to clean energy unfeasible within the next three decades. "Even wealthier countries with better environmental conditions haven’t managed a complete shift to green energy," he noted.

However, the government has initiated plans for a partial transition by constructing two solar power plants with remarkable generation capacity. "These efforts remain far from achieving a full transition, focusing instead on relative integration of clean energy," he added.

Ali emphasized the need to reduce reliance on private diesel generators, which are more polluting than other fuel sources. "Supporting individuals through loans and providing reliable solar energy systems will help diminish dependence on private generators," he said.

Moreover, Political interference, both from internal and external actors, has been cited as one of the main obstacles to Iraq’s environmental reforms.

Muzher Salih, an adviser to the Prime Minister, highlighted the government’s strategy to phase out gas flaring within three years by repurposing associated gas for electricity generation, cooking, or export. Yet, he acknowledged that “efforts may be delayed due to a lack of political consensus on environmental matters.”

Oil expert Hamza al-Jawahiri echoed these concerns. "The government is serious about transitioning to cleaner energy, but political interference obstructs every major decision in this direction," he said.

Al-Jawahiri stressed the need for carbon tax regulations and strict policies on gas flaring, alongside a robust regulatory body insulated from external pressures.

Government Initiatives and Vision for a Greener Future

Despite the challenges, Iraq has launched several initiatives aimed at reducing its fossil fuel dependency and adopting sustainable energy practices.

In 2024, the government introduced the National Strategy for Environmental Protection and Improvement for the period 2024–2030, in collaboration with the United Nations Development Programme (UNDP) and the United States Agency for International Development (USAID). This strategy focuses on cutting greenhouse gas emissions, boosting energy efficiency, and promoting sustainable development.

Iraq has also set ambitious targets for renewable energy. The government plans to generate 12 gigawatts of solar power by 2030 and produce 800 tonnes of green hydrogen. Additionally, two solar power plants with significant generation capacities are under construction, signaling a partial shift toward clean energy.

To further reduce pollution, Iraq is prioritizing the capture and utilization of flared gas. By investing in modern gas infrastructure, the government aims to lower emissions and improve energy efficiency.

Private diesel generators, a major source of air pollution, are another focus. Ali suggested that offering loans and robust solar energy systems to individuals could significantly reduce reliance on these generators, contributing to cleaner energy consumption.

Structural and Institutional Challenges

Transitioning to renewable energy requires addressing Iraq’s outdated infrastructure and regulatory shortcomings. The country’s energy sector continues to rely on aging technologies that hinder efficiency and exacerbate environmental degradation.

Effective environmental regulations remain scarce. Experts call for stronger carbon taxes and stricter policies on gas flaring. However, the absence of an empowered regulatory authority allows political pressures to derail these initiatives.

During COP29, Iraq secured $30 million from the Green Climate Fund to aid its climate efforts. While this support is a step forward, it is insufficient to overhaul Iraq’s energy sector, which requires extensive modernization to reduce its dependence on fossil fuels.