BAKU, Azerbaijan, November 29. Azerbaijan's economic interests are served by low-carbon transition, sustainable development initiatives, and policy reforms, the Azerbaijan Country Climate and Development Report of the World Bank (WB) Group said, Trend reports.
Citing the World Bank assessment, operational climate change policies can assist Azerbaijan in mitigating the risks associated with the global low-carbon transition while safeguarding its population's living standards.
As the report mentions, Azerbaijan's economy is strongly reliant on the oil and gas sector, which accounts for one-third of GDP and 90 percent of exports.
"As existing oil reserves dwindle and are expected to last another 25 years, comprehensive and effective decarbonization efforts will help diversify the economy and stimulate new drivers of growth, such as green hydrogen and agriculture," the authors of the paper state.
WB Regional Director for the South Caucasus Rolande Pryce commented on the study, stating that regardless of the pace of global decarbonization initiatives, boosting decarbonization investments accords with Azerbaijan's priorities.
"These efforts are also in line with national economic diversification goals." The Azerbaijan Climate and Development Report "represents a practical path for the country to transition from goal-setting to implementing measures that can protect Azerbaijan's economy and population from the negative consequences of climate change," she said.
According to the research, Azerbaijan has established national goals to cut greenhouse gas emissions by 35% by 2030 compared to 1990 levels and by 40 percent by 2050.
"Given the structure of the national economy, calls for decarbonization in Azerbaijan are extremely significant." State firms, which employ half of the country's workers, dominate in sectors critical for transitioning to a "green" economy, such as energy and water supply. Defining and implementing a clear path toward decarbonization necessitates economic diversification and a more active private sector, according to the paper.
Based on the analysis, decarbonization and sustainable development initiatives will necessitate significant investments of roughly $44 billion, or around 3.2 percent of GDP, by 2060, when the world economy is forecast to achieve 'net-zero' emissions.
As attested by the paper, the majority of these costs must be funded by commercial and private sector financing.
Besides, commenting on the report, the Regional Manager for the South Caucasus at the International Finance Corporation (IFC), Ivana Fernandes Duarte, mentioned that for Azerbaijan to transition to a low-carbon economy, it would be beneficial to shift its economy away from fossil fuels and utilize private capital and expertise, but time is a crucial factor for this.
"Utilizing the opportunities mentioned in this report will help the country build a future-oriented economy and protect the population from climate change," she added.
The CCDRs are new core diagnostic reports that include climate change and development concerns. They will assist governments in prioritizing the most effective strategies for reducing greenhouse gas (GHG) emissions and increasing adaptation while meeting larger development objectives.
Moreover, the CCDRs identify the main pathways to reduce GHG emissions and support a sustainable transition.