IMF: Azerbaijan expected to submit more ambitious emission mitigation targets this year

As host of COP29, Azerbaijan played a significant role to advancing the global climate agenda.

Report informs, citing the International Monetary Fund, that сlimate policies will prepare Azerbaijan for the global energy transition and contribute to reducing emissions and enhancing adaptation.

"The government finalized its National Adaptation Plan and is expected to submit more ambitious mitigation targets this year, while efforts to meet its current NDC target of 35 percent reduction by 2030 compared to 1990 levels continue," the fund said.

It noted that the authorities have laid out electrification plans and initiatives to upgrade the transmission grid and enhance energy efficiency in buildings and transportation.

The report places particular emphasis on the European Union’s Carbon Border Adjustment Mechanism (CBAM). According to the IMF’s assessment, its short-term impact on trade with the EU is expected to be limited. However, should Azerbaijan diversify its exports into the metallurgical and chemical industries, these sectors could fall under the scope of the mechanism. In the medium term, CBAM may also potentially affect the oil and gas sector.

The IMF welcomes Azerbaijan’s efforts to increase the share of renewable energy in its installed capacity to 30% by 2030, as well as the climate goals of the State Oil Company of Azerbaijan (SOCAR), including its commitment to carbon neutrality and the reduction of methane emissions.

At the same time, the IMF highlights the importance of phasing out both direct and indirect fossil fuel subsidies. In the Fund’s view, such a move would encourage more efficient resource use and free up funds for investment in green technologies, while also enabling better support for socially vulnerable groups.