The following excerpt gives an overview of Azerbaijan's exposure to global decarbonisation trends.
The full case study addresses the following issues:
• Exposure and risk
• Past and present efforts to decarbonise
• Trends and potential
• Cooperation with the EU
Azerbaijan is a signifcant producer of oil and gas. In 2019, it produced about 780,000 barrels of oil per day, or somewhat less than 1% of the world total. Oil production has decreased by more than 20% since the beginning of the 2010s. Azerbaijan’s gas production reached 24.3 billion cubic metres in 2019 (an increase of about 50% over the course of the decade), which put Azerbaijan among the top 30 gas-producing countries.
Azerbaijan has longstanding intentions and eforts to diversify its economy beyond fossil fuels but has achieved only limited success so far. Education and training are crucial areas for developing its economy. Azerbaijan has also made signifcant investments to become a transport hub connecting Europe and Asia (including as part of the Chinese One Belt, One Road initiative). Renewable energy has considerable potential, but plans for its expansion have not come to fruition yet. While the response to the Covid-19 pandemic and resulting crisis has provided an opening for making progress on these fronts, with an emphasis on a green recovery, targeted efforts to exploit this opportunity are still missing.
Azerbaijan is a party to all major climate treaties. It ratifed the UN Framework Convention on Climate Change (UNFCCC) in 1995, the Kyoto Protocol in 2000, and the Doha Amendment to the Kyoto Protocol in 2015. It also ratifed the Paris Agreement in January 2017. It is a non-Annex I Party to the UNFCCC and considered a developing country for the purposes of the climate treaties. Azerbaijan has submitted a relatively ambitious Nationally Determined Contribution (NDC) under the Paris Agreement. Accordingly, it aims at a GHG emission reduction of 35 percent by 2030 in comparison to 1990. This implies a reversal of the trend of rising emissions and a signifcant decrease from emission levels in the 2010s.
EU-Azerbaijan cooperation can build on a firm and broad institutional framework. First of all, a Partnership and Cooperation Agreement has been in force since 1999 and addresses political dialogue, trade, investment, economic matters, legislation, and culture. In 2017, negotiations on a new comprehensive agreement that is to replace the Partnership and Cooperation Agreement of 1999 were launched. Azerbaijan is also part of the European Neighbourhood Policy and the Eastern Partnership (since its inception in 2009). These frameworks provide a basis for cooperation on democracy, the rule of law, prosperity, and social cohesion, including cooperation in the domain of environmental policy. The EU is Azerbaijan’s most important trading partner, accounting for nearly half of the latter’s exports. Energy has been key to EU-Azerbaijan relations, with a strong focus on oil and gas. Renewable energy has received less attention, and existing cooperation on education provides a basis for further development.