Azerbaijan

Background

Azerbaijan is the largest of the three countries of the southern Caucasus by area, lying at the boundaries of Europe and Asia. The country is bounded to the east by the Caspian Sea with an 850 km coastline and to the north by the Greater Caucasus mountain range. The country is covered by a substantial river network as part of the Caspian Sea basin. Azerbaijan had an estimated population of 9.9 million in 2018 and has been classified as an upper-middle income country since 2016. This classification reflects the very high GDP per capita growth, which in 2014 stood at over eight times its 2004 level. Economic growth and relative prosperity is primarily as a result of the substantial increase in oil and gas production. The oil and gas sector represented 88% of the country’s exports in 2016. In terms of employment, the services sector represented 49.3% of jobs in 2017, followed by the agricultural (36.4%) and industrial (14.4%) sectors. Since the 1990’s significant progress has been made on key social indicators, such as the prevalence of poverty, undernourishment, and infant mortality in Azerbaijan.

Azerbaijan has signed and ratified the Paris Climate Agreement. In its Nationally Determined Contributions (2017), the country has outlined climate change mitigation actions in its energy, oil and gas, residential and commercial, transport, agricultural, and waste sectors. Azerbaijan’s NDC is currently under review and an updated NDC is expected to be released by the end of 2021. Azerbaijan is also planning to align its climate change legislation with the EU standards and develop industry-specific guidelines for the implementation of the Paris Agreement across various sectors, in particular agriculture and energy sectors. These actions primarily entail technological improvements to reduce the negative environmental impact of various sectors of the economy, together with some regulatory changes and public awareness measures. Additionally, adaptation measures in the areas of agriculture, water supply, forestry, coastal communities, human health and tourism have been identified in the country’s Third National Communication to the UNFCCC (NC3) (2015). Azerbaijan has begun its National Adaptation Plan (NAP) process, which is anticipated be in place by 2024. While Azerbaijan’s National Communications address a wide range of sectors in relation to projected climate change impacts and related adaptation measures, the NAP will focus on three areas, as defined by the Ministry of Ecology: water, agriculture, and coastal areas.2 Azerbaijan has also developed and implemented its Nationally Appropriate Mitigation Actions (NAMA), which primarily target three key sectors: energy efficiency in buildings (retrofitting), transport through the modification of transport fleet (introduction of hybrid cars) and eco-driving, and oil industry through capturing and use of associated gas. Azerbaijan’s first NAMA projects were piloted with SOCAR (State Oil Company, major GHG emitter) and are being considered for replication across the country and sectors.

Credits: World Bank