Iran’s plastics industry brings in much-needed foreign currency, which it can use to try and contain runaway inflation
Last month in the South Korean city of Busan, government negotiators failed to agree to set up a treaty to tackle plastic pollution, instead only deciding to continue the two years of talks in 2025.
While over 100 developed and developing countries wanted the treaty to limit plastic production, a handful of oil and gas-reliant states – vocally led by Saudi Arabia, Russia and Iran – pushed for it to focus more narrowly on the consumption and recycling of plastics.
Experts told Climate Home that Iran’s opposition is largely because plastic production is a lifeline for the country’s sanctions-hit economy as it is a key source of foreign currency to contain soaring inflation and provide jobs in some of the country’s poor and dissatisfied southern provinces.
Plastics and gas
Plastics are made from oil and gas, and Iran’s plastics industry boomed after the country discovered vast natural gas reserves in the late 1980s. Iran is now by far the world’s biggest exporter of methanol, a key feedstock for making ethylene and propylene, the essential building blocks of most plastics.
The plastics industry contributed nearly 2% of Iran’s GDP in 2022 and polymers – of which plastics are a major part – was the second biggest source of export revenue in the country after oil and gas. Despite privatisation attempts, the industry remains effectively controlled by the government.
Climate Home spoke to a former senior manager in Iran’s petrochemical industry, who did not want to be named. With its “diverse range of products, critical role in employment and contributions to growth and earnings, the petrochemical industry is a cornerstone of the nation’s economy,” they said.
Because of the challenges posed by oil sanctions and fluctuations in crude oil exports, they explained that the foreign currency generated by exports of petrochemicals like plastics has become an important tool for managing the country’s soaring inflation rate, which is one of the worst in the world.
The Iranian government uses foreign currency to import basic staples like wheat and rice and its central bank uses foreign currency to buy the Iranian Rial, propping up its value. Both measures help control the cost of living and inflation.
Plastic production curbs are a threat to Iran’s geopolitical power too, according to Maria Ivanova, a Northeastern University professor who has followed the plastics talks. She said that much of Iran’s international influence comes from controlling the supply of oil and gas, as well as petrochemicals. Global moves away from plastics are a “potential threat to geopolitical leverage”, she added.
Iran has been hesitant to sign up to global treaties in general. It is one of only three countries not to have ratified the 2015 Paris climate agreement and in 2022 was one of only eight nations not to vote for the right to a clean,