Baku, December 18, AZERTAC

Dario Liguti, Director of the Sustainable Energy Division at the United Nations Economic Commission for Europe (UNECE), shared his insights in an exclusive interview with AZERTAC.

- As stated at COP29, Azerbaijan also plans to become a country exporting electricity generated from renewable energy sources. How do you assess the capabilities of our country in this direction?

-Azerbaijan, like its neighbors in the region, has significant untapped potential for renewable -energy development, in particular solar and wind, onshore and, much more importantly, offshore. Investing in renewable energy resources can make an important contribution to decarbonizing the economy, alongside the phasing out of fossil fuels, investing in energy efficiency and the deployment of low-carbon energy technologies. Oil and gas dominate the total energy supply at 98%, leaving renewable energy’s share at a minor fraction. This makes Azerbaijan an important emitter of CO2 in the region, with the energy sector representing about 85% of total emissions. Azerbaijan must scale low-carbon deep electrification across all sectors. With electricity demand expected to rise significantly over the next decade and natural gas accounting for the majority of power generation, to achieve carbon neutrality by mid-century, Azerbaijan must substantially increase its renewable energy generation.

Our experience tells us that three issues constitute important roadblocks for capital to flow at the level required: climate projects sponsors and investors’ criteria are misaligned; funding requirements are hard to address as markets are fragmented and sectors are not mature, and investors’ risk perception is high and foreign currencies volatility is high. Aiming to address some of these gaps, at COP29 UNECE joined the International Renewable Energy Agency (IRENA), the Ministry of Energy of Azerbaijan, and the COP29 Presidency to accelerate the shift to renewable energy and scale up transition finance in Central Asia.

- What contribution can Azerbaijan make to the implementation of the global green agenda and how in this light do you assess the measures implemented in Azerbaijan to develop green energy? What support will the UNECE provide to Azerbaijan in this direction?

-The Presidency initiatives presented at COP29 demonstrate a strong commitment to supporting sustainable development. UNECE participated in the preparation and launch of the COP29 Presidency Energy Initiatives on Green Energy Zones and Corridors, Storage and Grids, and Hydrogen, and on Water for Climate: Integrating Water Solutions into Nationally Determined Commitments and National Adaptation Plans. To zoom in on one area, developing green energy infrastructure has a key role to play because green corridors, energy storage and grids are fundamental elements of interconnected networks. Facilitating the interplay of low- and zero-carbon technologies and energy interconnectivity supports the global energy transition and achieving the Sustainable Development Goals.

Enhancing regional energy connectivity and energy trade through cooperation is essential if we want to build a just, resilient and secure energy system. An integrated and interconnected network underpins a more reliable, affordable and sustainable energy supply. This, in turn, will support the deep decarbonization of energy systems that we urgently need.

Linking the energy grids of different regions, and facilitating the sharing and distribution of renewable energy resources, also enables the integration of large-scale renewable energy capacities into our energy systems. UNECE stands ready to support Azerbaijan in cooperation with UNIDO and UNESCAP in further developing this important initiative on Green Energy Zones and Corridors, Storage and Grids.

– My next question concerns finances. According to the adopted decision, by 2035 the amount provided by developed countries should be increased to at least 300 billion USD. What is your attitude to this document? Will it help in solving climate problems?

- Climate finance is a critical issue. The IEA estimates that USD 5 trillion are needed yearly from now till 2030 only in the energy sector, to maintain the objective of 1.5° degrees maximum of climate warming as aimed by the Paris Agreement. However, we are very far from that target: 2023 saw USD 1.8 trillion invested in the energy transition. While this was an increase of 17% over the previous year, much greater efforts are needed from all actors – governments, but also the private sector who have a key role to play. Among its member States with economies in transition, UNECE facilitates the showcasing of energy transition projects to investors – which we did at COP29 building on the experience of COP 27 and 28 - and fosters the development of transition finance instruments. 10 projects from Central Asia and the Western Balkans seeking financing of USD 15 billion, were shortlisted for showcasing at COP29. These projects have also benefited from the UNECE Public-Private Partnerships (PPP) and Infrastructure Evaluation and Rating System (PIERS), which assists governments, private companies, and financial actors to align their PPP and infrastructure projects with the SDGs and to integrate climate change mitigation and adaptation measures in their evaluation and scoring process. Since its launch in 2022, the PIERS methodology has been applied to over 220 projects across 50 countries. In fact, many of UNECE’s norms, standards and conventions provide practical tools to support Member States’ climate change mitigation and adaptation efforts, to leverage financing, and to strengthen collaboration.

Dialogues among member States and other key stakeholders are important in this respect to advance a just transition approach, in the framework of building resilient, carbon-neutral energy systems and sustainable resource management. This is an increasingly important dimension of cooperation under the UNECE Committee on Sustainable Energy.

- How attractive is our country in terms of investing in the field of renewable energy?

- Azerbaijan, as said before, has a great potential for the development of renewable energy. We have seen recently some large investment funds taking notice of this potential and starting to look at opportunities for large-scale projects. This is welcome but a lot more is needed to decarbonize Azerbaijan’s economy and energy sector. More should be done to improve the investment climate and facilitate local sponsors launch small to medium scale projects to complement the utility-sized ones. This would as well create the conditions for smaller foreign funds and investors to come to the country and contribute to its decarbonization. A special look should be taken at hydrogen. Azerbaijan has a great interest in developing a hydrogen industry and is very active in our Task Force on Hydrogen. It has all the elements to be an important producer of low-carbon hydrogen which in our view should be considered firstly for industrial domestic uses as feedstock. Alternative uses of hydrogen as well as exports should be considered as a second step.

- Is it possible to convert public transport in Azerbaijan to solar panels (railway and automobile sectors)? What conditions need to be created for this transition?

- In addition to its work on the sustainable energy transition, transport is among the key sectors where UNECE norms, standards, conventions and policy cooperation support countries to advance sustainable development. Decarbonizing transport was in fact an important focus of our engagement at COP29, where UNECE joined forces with ICAO and IMO, who perform a function equivalent to that of the UNECE Inland Transport Committee (ITC) for their respective modes. The ITC Strategy, adopted in February 2024, can help countries decarbonize road transport and facilitate the shift to rail and inland waterway transport, as well as to develop public transport and active mobility. The Transport, Health and Environment Pan-European Program (THE PEP), jointly supported by UNECE and WHO/Europe, further supports countries to put in place sustainable transport policies.