Nowadays, one of the most important subjects that correlate to environmental quality is urban renewal and air pollution. Therefore governments should strive to take various policies and programs to overcome environmental problems including air pollution or reduce negative effects of human functions on environment. On the other hand, one of the major inputs used in the manufacturing sectors, is Fossil fuels, that with prices much lower than world prices are provided for producers and consumers and has allocated a large share of subsidy payments. The energy subsidy creates complex changes in the economy through the allocation of resources on the cost and price of goods and services. Considering the low price of fossil fuels and its high consumption and consequently increased air pollution, on the other hand the subsidy imposed on the country\\\'s economy heavy costs, therefore most countries need to remove fuel subsidies. In this paper, using the computational general equilibrium model, effects of removal of fuel subsidies on production changes, cost and price index in the Khorasan Razavi has been studied. The results show that elimination of subsidy on fossil fuels will reduce demand for fossil fuels as intermediate input and final goods increased production, cost and price Indices. The highest growth rate of production and cost Indices is in the gas sector and the highest growth rate of price index is in the oil sector.

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