Oil-Rich Azerbaijan Bets Big on a Clean Energy Boom
Azerbaijan is one of the world’s oldest oil producers and exporters, having pumped crude since the mid-19th century, and remains a major global oil producer. It has long relied on oil and gas to meet its energy needs and as a major economic contributor. However, the host of the 29th UN Climate Change Conference (COP29) in 2024 is now looking to diversify its energy mix by deploying more renewable…
Azerbaijan, a longstanding oil and gas producer, is now pivoting towards renewable energy to diversify its energy mix and enhance energy security. Natural gas contributed 67% of the country's energy supply in 2023, while oil and oil products made up 31.1%. Hydropower and other renewable energy sources contributed less than 2% of the energy mix.
Despite oil and gas accounting for nearly half of Azerbaijan's GDP, the government is investing in renewable energy to reduce greenhouse gas emissions by 40% from 1990 levels and to boost the share of renewables to 30% by 2030. In March 2025, the World Bank approved the Azerbaijan Scaling-Up Renewable Energy Project AZURE, which will strengthen Azerbaijan's power transmission network, encourage private investment, and meet the country's growing energy demand.
The initiative is expected to attract $384 million in private investments. The government has introduced favorable policies to attract investors, including tax breaks for renewable energy projects. Azerbaijan has also signed agreements with foreign firms to explore offshore wind and solar projects, aiming to become a major renewable energy exporter to Central Asia and Europe.
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