Publication: Azerbaijan : Towards Green Growth - Issues Note

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World Bank
The welfare and economic growth of Azerbaijan’s development trajectory based on fossil fuel extraction has come at the expense of the environment, other non-oil industries, and human capital growth. Due to its lack of economic diversification, the country is highly vulnerable to transition risks, volatility of fossil fuel markets, and climate change. This note, produced in support of Azerbaijan’s ambition for green growth, identifies how increased climate action and greening of a number of sectors have the potential to spur diversification of Azerbaijan’s economy, contribute to addressing sector- and country-specific environmental challenges and goals, reduce greenhouse (GHG) emissions, address the identified physical and transitional climate risks and vulnerabilities, and strengthen long-term climate resilience of the country. Investments in resource efficiency, sustainable intensification of agriculture, better land use and urban planning, water and waste management, switching to cost-effective renewable energy, and research on low-carbon hydrogen and Caspian maritime space are the green measures that can have an immediate positive impact on Azerbaijan’s economy and the environment. The first stage in identifying areas for wealth development will be a comprehensive green growth and asset diversification strategy, informed by detailed sectoral analysis and supported by capable institutions. Once mobilized by public sector interventions through policies to enable and incentivize green investments and green finance instruments, private enterprises will take the lead in relocating capital to green supply chains, creating jobs and building human capital while increasing the focus on innovation and efficiency. Cutting system leak emissions in the oil and gas industry could contribute significantly to reducing GHG emissions at lower costs. Enhancing the environmental performance of enterprises will be made possible by promoting eco-efficient policies and investments in cleaner production and technologies. Beginning now and leveraging this transition to green growth and diversification through the use of public resources and revenues from fossil fuel exports, Azerbaijan can mitigate certain short-term difficulties and promote long-term sustainable growth to ensuring a cleaner environment and economic prosperity.
World Bank. 2022. Azerbaijan : Towards Green Growth - Issues Note. © World Bank, Washington, DC. License: CC BY 3.0 IGO.
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