COP29 to strengthen Azerbaijan's role in global green energy market

Hosting COP29 in Azerbaijan should be assessed as a strategic move that not only bolsters the country's economic standing but also enhances its potential to transition to a green economy, Economist and expert Gunduz Jamalzada told Report.

According to Jamalzada, COP29 has the potential to position Azerbaijan at the heart of the international community, making it a key player in global discussions. Such events extend beyond climate change dialogue, addressing broader economic, political, and social issues.

The expert highlighted that Azerbaijan's proactive steps in addressing climate change will pave the way for international cooperation. "Azerbaijan's efforts to adapt its energy sector, especially its oil and gas export-based economy, to international climate agreements demonstrate a commitment to a sustainable and livable world. This also underscores our nation's dedication to environmental and climate issues," Jamalzada explained.

“Azerbaijan's active participation in energy transition, sustainable development, and the green economy will strengthen its position and foster future international cooperation as well.”

Jamalzada also emphasized that COP29 provides a unique platform for advancing the use of renewable energy sources. “Azerbaijan is currently evaluating its potential in renewable energy (particularly wind and solar),” he said. “COP29 offers an unparalleled opportunity to accelerate progress in this area and steer the energy sector towards a more sustainable and diversified path.”

“Moreover, hosting such global events enables the country to attract foreign investments, speed up technology transfers, and enhance business transparency. Active engagement in global climate issues will bolster Azerbaijan’s international standing and enhance its dialogue with the West on critical topics like energy security and climate stability. This holds not only economic, but also geopolitical importance for Azerbaijan.”

Jamalzada pointed out that fulfilling the obligations under COP29 will take time. “In 2023, revenues from the oil and gas sector constituted a significant portion of the country’s total budget,” he noted. “Azerbaijan’s economy is currently heavily reliant on energy exports, which poses economic risks in transitioning to renewable energy. Because oil revenues are important for financing this transition. The challenge lies in executing this transition gradually and efficiently to maintain long-term economic stability.”

The expert noted, “Additionally, the development and deployment of renewable energy require substantial financial resources. Foreign investments and technological partnerships will be crucial in bridging the technological and financial gap in this sector.”

Jamalzada emphasized that Azerbaijan should leverage international expertise and technologies to develop and implement renewable energy solutions. “It’s crucial to collaborate with international donors and attract foreign capital to meet COP29 obligations,” he stated.

“Training specialized personnel and enhancing institutional structures in the renewable energy sector are also necessary. Despite numerous economic and structural challenges, COP29 presents substantial opportunities for Azerbaijan’s sustainable economic development and efforts to combat climate change.”

Although the oil and gas sector plays a significant role in Azerbaijan’s economy, Jamalzada believes that integrating into the renewable energy sector will make the country a more stable player in global energy markets. “While Azerbaijan’s transition to green energy is in its early stages, the country is making significant strides,” he noted. “The State Program on the use of alternative and renewable energy sources, adopted in 2004, laid the groundwork for this transition. In 2021, the law on the use of renewable energy sources for electricity production was approved.”

The expert pointed out that “Furthermore, Azerbaijan is executing several wind, solar, and hydropower energy pilot projects, gradually attracting the interest of local and foreign investors. The wind energy potential along the Caspian Sea is particularly promising. Azerbaijan also aims to diversify its energy exports to align with global green energy requirements, with potential projects in green hydrogen production and other alternative energy types under discussion.”

The economist underlined Azerbaijan's potential to strengthen its position in the green energy market as a member of the Global Club. “Azerbaijan’s geographical location, especially the Caspian Sea coasts with high potential for wind and solar energy, positions it as a candidate to become a leader in green energy,” he stated.

He also noted that Azerbaijan is set to become a crucial transit hub for green energy exports. “Azerbaijan's role as a potential supplier of green energy to countries transitioning to greener sources will solidify its place in the Global Club.”

“Additionally, Azerbaijan is actively attracting large international players in the renewable energy sector. The development of renewable energy projects in collaboration with global energy companies will bolster Azerbaijan's green energy strategy. This cooperation will enhance the country's technological and financial capabilities, and make it known as a green actor in the global energy market.”

The expert highlighted the importance for Azerbaijan to establish legal and regulatory frameworks that support development in the green energy sector. “These frameworks will expedite the implementation of renewable energy projects, aligning with the country’s climate commitments,” he stated.

Jamalzada added that the competitiveness of green energy in the global market hinges on technological advancements and international market demands. “Some developing countries find that green energy sources are not immediately profitable and prefer traditional energy sources,” he explained. “Dependence on the traditional energy sector and the significance of revenues from this sector can impede the green transition process since renewable energy projects require substantial financial investments and technological capabilities. Insufficient foreign investment and delays in technology transfer are major obstacles to the green transition. By managing this balance effectively, Azerbaijan can support the green energy transition and fortify its position as a key player in the global energy market.”