This paper investigates a study on the efforts made by Iranian government to carry out the Kyoto protocol obligations (reducing pollution by about 54% by 2030). However, the devaluation of the national currency because of sanctions, prohibition of transactions, and a decrease in oil revenues and derivatives has caused problems in achieving this goal. Hence, on 15 November, 2019, Iranian Government decided to increase the fuel price by about 300% to simultaneously reduce environmental pollution and fuel smuggling. The final results show that smuggling is decreased by about 15%. Also, quotas and increased fuel prices caused daily fuel consumption to decrease significantly from 94 to 74 million litres per day. Despite the reduction in fuel consumption, little change is taking place as most pollution is due to diesel and worn-out vehicles. The increase in fuel prices increases the producer and consumer price index by 1.54% and 2.62%, respectively. Inflation in consumer prices also reaches 15.92%. However, the currency exchange rate and its impact on import products can shift this to 102.15%. Also, because of the shortage of people’s income, domestic automakers’ weaknesses, high tax cost of imported cars, and sanctions, most people prefer compressed natural gas (CNG) and public transportation.
