Azerbaijan in search of "workable" climate finance solutions ahead of COP29

Azerbaijan, which is hosting this year's UN Climate Change Conference, COP29, has already begun negotiations with financial institutions, companies and countries on the sensitive issue of climate finance, the Minister of Ecology and Natural Resources of Azerbaijan Mukhtar Babayev   said at the Financial Times Climate Capital Live event. The country is considering expanding its own climate ambitions ahead of COP29, which will be held in Baku in mid-November, he said.

World leaders are under pressure to create a new global climate finance framework, known as the New Collective Quantitative Climate Finance Target (NCQG) for COP29, which is seen as a key factor in the implementation of the entire climate agenda.

M.Babayev, who was recently appointed president-designate of COP29, said his team hopes to hear the views of various colleagues and shareholders in order to make "climate finance workable" and find "consensus" on these issues.

Scant progress in financing climate change in recent years has increasingly fueled mistrust between developed and developing countries.

"COP29 will be a turning point for climate finance, as parties will be asked to identify a new collective mitigation and adaptation target that is expected to address the challenges associated with existing commitments and effectively reflect the needs of developing countries to help achieve increased ambitions," analysts at S&P Global Commodity Insights said..

In addition to climate finance, according to M. Babayev, issues related to "water, land degradation, food security, agriculture, etc." will be highlighted. Azerbaijan also hopes to bridge the gap between East and West, as well as the Global North and the Global South.

The minister stressed that Azerbaijan is focused on increasing the growth of renewable energy, even though it seeks to increase gas production. "Green growth is a priority for Azerbaijan in the coming decades," he said, adding that many projects are planned in the Caspian region, especially those focused on solar energy.

Azerbaijan has not yet committed itself to achieving the zero emissions target. In October 2023, the country revised its nationally determined contributions, committing to reduce emissions by 40% by 2050 compared to 1990 levels.

This depends on international support provided through financing, technology transfer and capacity building, according to the documents presented in the UN Framework Convention on Climate Change.

Copenhagen talks

On March 21-22, several climate ministers will gather in Denmark for the Copenhagen Ministerial meeting to reach consensus ahead of the climate summit in Baku.

Speaking at the same event (Financial Times Climate Capital Live-ed.), Danish Climate and Energy Minister Dan Jorgensen said that next week's meeting would focus on setting the COP29 agenda, with discussions likely to be dominated by climate finance.

He also said ministers would assess what was achieved at COP28 in Dubai, where world leaders agreed to phase out fossil fuels and work towards phasing out coal use.

Azerbaijan is a major exporter of oil and gas and a member of the OPEC+ alliance. According to the latest Platts OPEC+ survey, in February, the country produced an average of 480 thousand barrels of oil per day. However, this is below the OPEC+ quota of 551 thousand barrels per day, as production cuts at mature fields continue to affect production.

According to the country's Ministry of Energy, the total volume of gas production in Azerbaijan in the first two months of this year amounted to 8.2 billion cubic meters, by 3% more than last year.

Azerbaijan has also become a reliable partner of the EU in gas supplies, as it seeks to replace imports of Russian pipeline gas. They were sharply reduced after Russia's invasion of Ukraine in early 2022, as a result of which gas prices in Europe reached record levels.