2024-07-05 09:41:42
A visit to Baku, where the UN hosts its annual climate summit, can be a sight to behold. From the plane window overlooking the sparkling Caspian Sea, it’s impossible not to notice the oil rigs and wells. But there are green spaces, too.
In the remote hills of Garadagh district, a 230-megawatt solar power plant sits on more than 550 hectares of land. The project, developed by the Emirates’ state-owned renewable energy company Masdar, has increased the country’s share of renewable energy from 16 percent to 20.3 percent of its total energy consumption since its completion in February this year.
In 2024, the world’s attention will be focused on Azerbaijan’s climate strategy as the country hosts a major climate conference that will focus on the need to reduce fossil fuel use.
As reported by Day.Az, this is stated in an article in the English-language newspaper The Strait Times, based in Singapore.
The author of the article, Cheryl Tan, recalls that oil became the driving force of Azerbaijan in the 1990s. At the same time, Azerbaijan is actively expanding the use of “green” energy, aiming to increase the share of renewable energy sources to 30% by 2030.
Ahead of the conference, which runs from November 11 to 22, The Strait Times visited Baku as part of a trip organised by the COP29 presidency to see how the country is making a green transition.
Like Singapore, Azerbaijan’s energy balance is made up of natural gas, accounting for about 90 percent of its energy needs. The latter uses the fossil fuel to meet about 95 percent of its needs.
However, both countries are trying to do more to include cleaner energy sources in their energy portfolios, although their strategies in doing so differ.
Singapore, for example, is maximizing rooftop and reservoir space for solar panels and importing renewable electricity from neighboring countries. Meanwhile, Baku is stepping up its renewable energy efforts. Currently, electricity production, mainly from hydroelectric power plants, accounts for 7-8 percent of total consumption.
There are eight more wind and solar projects in development, representing about 2 GW, or 2,000 MW, of capacity, demonstrating the huge untapped potential of renewable energy.
Kamran Huseynov, deputy director of the State Agency for Alternative and Renewable Energy Sources of Azerbaijan, told reporters: “We had an initial target of 30% by 2030, but we intend to add these 2 GW of clean energy by 2027, 2028… If we add them to the system, we will bring the share of renewable energy to about 32-33%.”
Azerbaijani presidential aide Hikmet Hajiyev said that with the climate summit approaching, the country hopes to show that it is “leading by example” in the transition to clean energy despite being an exporter of fossil fuels. Azerbaijan also hopes to transform its economy and become an exporter of renewable energy, Hajiyev said. He added that the country is “working very hard” to do so, looking at all the “components and configurations” of its economy to determine whether it can achieve net zero emissions as early as 2050.
Many governments, including Singapore, Japan, the European Union (EU) and Australia, have set long-term targets to reduce carbon emissions to zero by 2050 under the Paris Agreement. This goal is in line with climate scientists’ recommendations to keep global warming below 1.5 degrees Celsius, which would help the world avoid more catastrophic climate change impacts.
Azerbaijan’s goal is to cut emissions by 40% from 1990 levels by 2050. Some say Azerbaijan’s economic transition could be a beacon for other fossil fuel-producing countries.
A beacon for combating climate change
By developing renewable energy sources, Azerbaijan has every chance to achieve the global goal of tripling renewable energy capacity by 2030 and doubling energy efficiency by 2025. This commitment, made by 133 countries at the COP28 climate summit in Dubai in 2023, can help the world move away from fossil fuels within this decade.
A spokesman for the International Renewable Energy Agency said Baku was an early adopter of the target and was making good progress. Observers interviewed by The Strait Times said Azerbaijan had created a supportive regulatory environment that was helping to attract foreign investment into its growing renewable energy sector.
“While the government does not directly invest in renewable energy projects, project developers are provided incentives such as free land leases for projects that produce 100 MW or more of clean energy,” Huseynov said. “The clean energy produced at each plant will have a guaranteed buyer, which is AzerEnerji.”
A representative of the research group Climate Action Tracker (CAT) noted that such policies are expected to reduce financial risks for investors, thereby attracting more foreign direct investment (FDI) into renewable energy.
At least $2 billion to $2.5 billion would be invested in Azerbaijan’s upcoming renewable energy projects, many of which involve Emirati and Saudi companies.
“This influx of investment will create jobs, contribute to technological growth and overall economic development of Azerbaijan,” the SAT representative said.
Kim Jong-won, a senior research fellow at the NUS Institute of Energy Studies, believes that other developing regions, including Southeast Asia, may need to follow Azerbaijan’s strategy of increasing FDI in the renewable energy sector, as these projects require a lot of private sector involvement.
“Azerbaijan also intends to use renewable energy sources to produce clean hydrogen and ammonia, and export part of the clean electricity to neighboring countries,” Huseynov said. According to him, preliminary deals with foreign companies on clean electricity total 27 to 28 GW.
A key project under study is the “green energy corridor,” which would transmit at least 4 GW of clean energy from Azerbaijan to Georgia, Romania and Hungary via a nearly 1,200 km long submarine cable. The feasibility study is expected to be completed by the end of 2024.
NUS’s Dr Kim said cross-border electricity trading projects could increase revenues for countries with excess renewable electricity, while importing countries could meet their greenhouse gas emissions targets in a more cost-effective manner.
The Future of Fossil Fuels
Azerbaijan’s renewable energy sector is growing rapidly, as is gas production. Although the government has shown a strong will to develop the non-oil sector, old incentive schemes for the oil and gas sector and an abundance of fossil fuels still make the sector attractive to investors.
Oil and gas are expected to continue to play a major role in Azerbaijan’s economy in the short to medium term. The country exported 23.8 billion cubic meters of gas in 2023, mainly to Europe (11.8 billion cubic meters), Turkey (9.5 billion cubic meters), and Georgia (2.5 billion cubic meters). It has also signed an agreement with the EU to increase natural gas exports to 20 billion cubic meters per year by 2027, as the bloc seeks to wean itself off Russian gas.
To meet demand, Azerbaijan has increased its share of renewable energy to free up more gas for export, and is investing in new gas fields and infrastructure. It also recently struck deals with France’s TotalEnergies and Abu Dhabi National Oil Company to expand exploration and drilling. An April article by the news site Politico said Baku had secured an additional $40 billion in FDI to boost gas exports by 2034.
But a CAT spokesman noted that “Azerbaijan must prioritize the development of renewable resources. The longer-term vision is to build offshore wind farms in the Caspian Sea and use them to produce green hydrogen for export to European markets, where demand is expected to grow in the coming decade.”
A spokeswoman for the International Renewable Energy Agency said green hydrogen and ammonia could help decarbonise sectors such as shipping and heavy industry. “This opens up additional export opportunities and could help further diversify revenue sources,” she said.