Azerbaijan on the eve of COP28. Achievements and shortcomings

The 28th session of the Conference of the Parties to the UN Framework Convention on Climate Change (COP28) will be held in Dubai (UAE) on November 30-December 12, and Azerbaijan, in confirmation of the importance of this international event, will not only send a representative delegation to it, but will also be presented for the first time at COP summits with its pavilion on the theme "Innovative Sustainable solutions for climate change resilience."

Back in 2015, Azerbaijan joined the UN commitments - the Paris Climate Agreement (signed by 198 countries), sharing the concerns of the world's states about global warming due to the greenhouse effect. The country has approved a commitment to reduce greenhouse gas emissions by 35% by 2030 and bring it to 40% by 2050.

International experts, including from PwC, argue that around the world it is necessary to increase the rate of reduction of carbon dioxide emissions annually by 17.2% in order to keep the temperature of the planet below 1.5 degrees Celsius. And this is  by 12 times faster than the world average recorded over the past year.

The president-designate of the COP28 Climate Meeting in the UAE, Sultan al-Jaber, the CEO of Abu Dhabi National Oil Co., on the eve of the Summit called on world governments to triple the capacity of renewable energy sources (RES) to 11,000 gigawatts by 2030 and double the production of hydrogen by 2030.

COP28 will bring together representatives from almost 200 countries (over 70,000 delegates), and COP28 aims to "send a signal about a fair energy transition that will lead to a 43% reduction in emissions worldwide by 2030."

In accordance with the Paris Climate Agreement, COP28 will conduct the first ever Global Analysis – a comprehensive assessment of progress towards achieving climate goals, as well as a planned five-year analysis of achievements.

During the COP15 climate summit in 2009, developed countries pledged to mobilize $100 billion annually by 2020 to finance climate change and send it to poor countries, but this goal will be achieved only by 2025.

At the same time, according to UN estimates, the developed countries of the world need to allocate $6 trillion by 2030 to prevent warming on Earth by 1.5 degrees Celsius, and COP28 is supposed to touch on all aspects of the climate change financing system, from development banks to the private sector.

According to the Chairman of COP28, governments should pursue policies that encourage private sector participation, for example, to develop strong, reliable and regulated carbon markets that attract private money to invest in the fight against climate change.

Banks must undergo a recapitalization process to reduce risks and work more efficiently in order to fulfill their necessary financial role in states on the way to energy transition. COP28 plans to approve financing mechanisms for the "Loss and Damage Fund" created last year at COP27, as well as strategies for the distribution of these funds.

Countries within the framework of national programs (NDC - national contribution level or action plan to combat climate change) will also be urged to join the "COP28 Declaration on Sustainable Food Systems, Sustainable Agriculture and Actions to Combat Climate Change", since the agricultural sector is one of those sectors of the economy that "sins" large greenhouse gas emissions. Discussions on reducing methane emissions (the second most risky gas after carbon dioxide) are also expected at COP28, and a separate day will be devoted to this topic on December 4.

Participants of numerous meetings in Dubai will discuss both methods and the speed of ending the use of fossil fuels. The latest UN assessment shows that current climate policy will mean a projected 9 percent increase in global emissions between 2010 and 2030, despite scientific consensus calling for a 45 percent reduction over the same period.

It is worth emphasizing that global investments in clean energy will reach $1.7 trillion in 2023, but countries are not ready to abandon fossil fuels. The profits of the oil and gas industry in the world in 2022 increased to about $4 trillion, and subsidies for fossil fuels reached a record $7 trillion.

The chairmanship of the head of the oil and gas ADNOC at COP28 is symbolic, but this company develops not only hydrocarbon projects around the world, but also renewable energy projects.

THE SITUATION IN AZERBAIJAN

The achievements of the NDC require rapid expansion of the capacity of renewable energy sources (RES), and in this sense, Azerbaijan can "boast" of the declared portfolio of renewable energy projects, although only one has actually been commissioned so far - the Garadagh solar power plant (SPP) from the Arab company “Masdar” for 230 megawatts.

In general, Azerbaijan plans to put into operation the capacity of "green energy" in 1870 MW by 2028, as a result, the share of renewable energy in the energy sector will reach 33% (including hydropower). Previously, Azerbaijan planned to increase the share of renewable energy to 30% only by 2030.      

Currently, the capacity of Azerbaijan's energy system due to renewable energy sources is estimated at 1,688 MW, the share is 20%.

After the Masdar project, a 240 MW Khizi-Absheron wind farm (ACWA Power project) can be commissioned in the country in 2025, as well as a 240 MW “Shafag” SPP - a project of BP, SOCAR and the Azerbaijan Investment Company.

In the next 6-7 years, Azerbaijan plans to build a 315 MW SPP in the Neftchala region, a 445 MW SPP in the Bilasuvar region, and implement a number of other renewable energy projects in the liberated territories (zones with "net zero" - zero carbon dioxide emissions), considering that the potential of solar energy in Gubadli, Zangilan, Jabrayil, and Fizuli regions is estimated at more than 7.2 thousand  MW, wind power in Lachin and Kalbajar regions - approximately 2 thousand MW.

According to a source who participates in Azerbaijani delegations to the COP, "Azerbaijan will make several new statements on green energy goals in Dubai.

"We want to sell our "green products" on European markets, because the EU is the most active in their implementation and use. We need to meet the "green" requirements that are set by the international community," the source said.

Among the important achievements of Azerbaijan, he pointed to the fact that SOCAR has actually reached zero carbon footprint (carbon neutrality) in relation to the concentration of carbon dioxide in dry air.

As another informed source explained to ASTNA, this was achieved, in particular, by freezing work on old land deposits (as part of the reduction of production under obligations to OPEC+), through the use of modern carbon capture technologies at SOCAR's base fields, for example, the Guneshli shallow waters and Oil Dashlars, installation of modern equipment at state-owned enterprises In particular, at the Heydar Aliyev oil refinery (the output of production at it to Euro-5 was among the tasks for the NDC of Azerbaijan).

It is noteworthy that carbon neutrality allows SOCAR not to fully use its carbon quotas (obligations to reduce CO2 emissions) and successfully sell the "green certificates" registered under them on the German market (the so-called "UER projects", Germany is a commercially profitable market for such sales).

"In 2021-22, SOCAR successfully tested the sale of the first package of carbon quotas with a volume of 26 thousand tons using the Clean Development Mechanism (CDM) under the Kyoto Climate Protocol (adopted in 1997). This mechanism allows countries (companies) to implement projects to reduce carbon dioxide emissions in order to obtain certificates of emission reductions (CER), that is, "green certificates" to work in progressive global markets. SOCAR continues to work on the development of UER (upstream emission reduction) projects in order to certify them on the basis of the first successful project. And if the projects are successful and it turns out that they will be certified in Germany, then we will consider the issue of implementing a significant amount of carbon quotas (more than the debut one) in this sales market," a SOCAR expert familiar with this issue told ASTNA.

SHORTCOMINGS

It should be recalled that Azerbaijan did not join the international Initiative to reduce methane emissions at COP27 (its share in the total volume of greenhouse gases in the world is up to 20%, and the "leadership" of 75% is for CO2), although this gas is dangerous because it accumulates in the atmosphere and in the atmosphere more easily than carbon dioxide, and heats it up 80 times faster.

According to the heads of European energy companies, the fight against methane emissions is the fastest way to slow down the pace of global warming, given the fact that methane is the main component of natural gas.

Since 2017, methane emissions in the world have been reduced by almost half in the total volume of gas sold - up to 0.15% in 2022, which was facilitated by the use of new technologies that track gas leaks.

The problem of methane emissions is also reflected in the Declaration with the EU, which Azerbaijan signed with the European Commission in July 2022. The fight against methane emissions is key at the upcoming COP28 summit.

"Azerbaijan conducts constant consultations on this issue. We did not join this Initiative in 2022, because we have not yet clarified for ourselves what impact the fulfillment of this obligation may have on the economy of Azerbaijan as a whole," an informed source said in an interview with ASTNA.

It should be noted that methane emissions occur mainly in three sectors of the economy - energy, agriculture and waste processing (all three sectors play an important role for the economic development of Azerbaijan.) Methane accounts for over 32% of the total greenhouse gas emissions in the country, with almost 85% in the oil and gas sector.

SOCAR does not rule out that with the planned increase in gas production and export, Azerbaijan will face an increase in methane emissions, as it happens in other gas-producing countries in the CIS, for example, in Russia and Turkmenistan. Thus, it is difficult for him to make any commitments to reduce methane emissions.

Other gaps in Azerbaijan's implementation of "green trends" include the following: there is still no law "On control of greenhouse gas emissions"; there is no "green financing" from banks; there is no market for "green certificates", few decarbonization projects.

"Azerbaijan has succeeded in activating numerous studies on "green" ideas, but there is, in fact, no practical application of them. Perhaps progress will be made after more renewable energy projects are implemented, but for now there are a lot of bureaucratic delays," the expert summed up the current situation in an interview with ASTNA.