Powering up the COP29 presidency 

Azerbaijan’s dependency on revenues from exporting oil and gas to a shrinking EU market endangers the country’s economic future while the country’s lack of a sound transition strategy exacerbates the risk. Azerbaijan must step up the decarbonisation of its energy system and diversify the wider economy to futureproof and maintain its socio-economic growth.

Its COP29 Presidency offers a unique opportunity to demonstrate progress on both and show global climate leadership by setting an ambitious climate target under the Nationally Determined Contributions (NDCs) update process. This would enable Azerbaijan to take a leadership role and become a model for other producing countries, paving the way towards delivering the global transition away from fossil fuels.   

As one of Azerbaijan’s key international partners and the biggest offtake market for its oil and gas exports, the EU needs to rethink its energy partnership and futureproof its overall bilateral relationship with the country. The few already ongoing initiatives under EU4Energy should be expanded to help accelerate and support energy systems and all of economy transformation in line with Azerbaijan’s economic growth and the global climate targets. The EU could furthermore use the variety of economic incentives and diplomacy tools at its disposal to enable a stronger Azerbaijan COP29 presidency and support it in submitting an NDC that includes a phase out date for fossil fuel use with clear sectoral pathways, as well as a commitment to stop further expansion of fossil fuel production, supported by transparent and regular reporting mechanisms.  

Recommendations for Azerbaijan 

To emerge as a strong COP29 presidency and at the same time address its economic vulnerability, Azerbaijan needs to: 

1. Use its COP presidency as an opportunity to submit 1.5°C aligned Nationally Determined Contributions (NDCs) with more ambitious domestic targets that reflect commitments to transition away from fossil fuel production.
2. Kickstart a producer-consumer dialogue on support mechanisms for dependent countries to transition away from fossil fuels, particularly for vulnerable producers.
3. Take immediate steps to fulfil and report progress on the delivery of commitments to reduce CO₂ and methane emissions under the framework of the Global Methane Pledge.
4. Prioritise renewables rollout rather than gas expansion, considering EU’s projected gas demand decline, to avoid additional stranded assets and align economic development with the goals of the Paris Agreement. It will be essential to prioritise Azerbaijan’s domestic energy transition before exporting renewable electricity or carriers.
5. Develop an economy-wide transition plan and work with the State Oil Fund of Azerbaijan (SOFAZ) to use existing oil and gas revenues while it still can.

Recommendations for the European Union (EU) and oil and gas importing member states, notably Italy 

To futureproof its relations with Azerbaijan and support its COP29 leadership, the European Union (EU) and its oil and gas importing member states, notably Italy, need to:   

1. Clearly communicate its gas demand reduction trajectory to make sure Azerbaijan’s gas export planning is based on realistic scenarios. 
2. Initiate a consumer-producer dialogue on mechanisms to support a just and equitable transition away from fossil fuels for producing countries, especially vulnerable producers.   
3. Broaden the EU-Azerbaijan partnership to focus on clean energy and industry to develop supply and value chains for green goods and commodities. 
4. Support Azerbaijan and SOCAR to reduce methane emissions intensity of its gas and other exports, securing mid-term access to EU markets.
5. Encourage Azerbaijan to submit an ambitious NDC aligned with limiting global warming to 1.5°C and operationalising the global transition away from fossil fuels.

Read the full briefing here.