Prospects and Challenges: Driving Sustainable Growth in Azerbaijan through Green Energy
Date Issued
2023-05
Author(s)
Fataliyeva, Fatima
Alakbarova, Shafiga
Mammadov, Vagif
Abstract
This research work aims to investigate policy options to facilitate the transition to
green energy in Azerbaijan. Country, being the exporter of fossil fuels, also largely consumes
conventional energy sources. However, adverse effects of fossil fuels on environment and
public health, as well as exposure to volatility in energy prices in global markets and
international commitment to reduce greenhouse emissions as part of the Paris Agreement and
Sustainable Development Goals, encourage Azerbaijani government to introduce state
policies to increase the stake of renewable energy in local energy mix. In spite of
government’s willingness to make transition to green energy, there is slow progress in this
area as conventional energy constitutes largest portion in local energy consumption. In this
context, government should critically assess obstacles which delay transition to renewables.
Moreover, since investment is crucial to implement green energy projects, government
should clearly identify financial and legal incentives to promote such projects for foreign and
local investors. Therefore, this paper firstly assesses Azerbaijan’s potential for renewable
energy and concludes that country holds considerable resources. Afterwards, paper relies on
analysis of existing literature to identify obstacles and reveals that lack of trained
professionals and public support, along with shortage of investment from local and foreign
businesses slow down development of green energy sector in Azerbaijan. These findings are
later confirmed with survey which gathered 70 respondents. Paper then moves to analysis of
each obstacle and utilizes information from interviews with experts to devise policy solutions
for each challenge. It is found that training, financial incentives in the form of tax exemptions and subsidies, public awareness campaigns, and well-developed legislative framework are
required to attract and protect investment and secure public support.
green energy in Azerbaijan. Country, being the exporter of fossil fuels, also largely consumes
conventional energy sources. However, adverse effects of fossil fuels on environment and
public health, as well as exposure to volatility in energy prices in global markets and
international commitment to reduce greenhouse emissions as part of the Paris Agreement and
Sustainable Development Goals, encourage Azerbaijani government to introduce state
policies to increase the stake of renewable energy in local energy mix. In spite of
government’s willingness to make transition to green energy, there is slow progress in this
area as conventional energy constitutes largest portion in local energy consumption. In this
context, government should critically assess obstacles which delay transition to renewables.
Moreover, since investment is crucial to implement green energy projects, government
should clearly identify financial and legal incentives to promote such projects for foreign and
local investors. Therefore, this paper firstly assesses Azerbaijan’s potential for renewable
energy and concludes that country holds considerable resources. Afterwards, paper relies on
analysis of existing literature to identify obstacles and reveals that lack of trained
professionals and public support, along with shortage of investment from local and foreign
businesses slow down development of green energy sector in Azerbaijan. These findings are
later confirmed with survey which gathered 70 respondents. Paper then moves to analysis of
each obstacle and utilizes information from interviews with experts to devise policy solutions
for each challenge. It is found that training, financial incentives in the form of tax exemptions and subsidies, public awareness campaigns, and well-developed legislative framework are
required to attract and protect investment and secure public support.