Energy subsidies matter, because they affect the economy, social welfare and the environment—the three dimensions of sustainability. Approval and enforcement of Targeted Subsidies Law (TSL) by Iranian government in 2010 have been considered as one of the most important economic events in the last few decades. The most important aspect of this law is reforming subsidies and rising prices of energy carriers in different parts of the economy. Article 1 of the law emphasis on adjusting of energy carries prices during the future years, gradually. Like other sectors, the agricultural and rural sector will be influenced by these changes. It is expected that implementing the law strengthen sustainable development through the efficient use of the resources and by improving the environment in agricultural and rural sector. This study tries to assess and analysis the effects of the law on environment, especially in the agricultural sector, in Iran. The results indicate that, in some cases, enforcing the law causes a 30 percent decrease in energy carries in Iranian agricultural sector.