Azerbaijan, a significant player in the global energy market, has taken its first steps towards marshalling climate finance ahead of the UN COP29 summit, which it will host in November. The country plans to raise “at least” $500 million for green projects, marking a significant move towards sustainability.
Under the working title of “Climate Investment Fund for Future,” Baku aims to kickstart this initiative with a contribution from Azerbaijan’s state oil company, Socar. According to a senior COP29 official, the fund seeks to attract further capital from other fossil fuel producers, creating a collaborative effort to address climate challenges.
While the $500 million target is modest compared to the $30 billion fund announced by the United Arab Emirates at COP28 in Dubai, which aims to mobilise $250 billion in private sector investment by 2030, Azerbaijani officials emphasize that their fund represents a crucial starting point. The fund is designed to enable fossil fuel companies to contribute by setting up a mechanism for lump-sum donations or revenue portions, facilitating a structured approach to climate finance.
This initiative follows Azeri President Ilham Aliyev’s earlier statements this year defending the country’s “god-given” oil and gas reserves. Aliyev argued that fossil fuels would remain essential due to European energy demand, indicating a nuanced approach to balancing economic interests with climate responsibilities.
However, several diplomats and negotiators have privately voiced concerns about Azerbaijan’s genuine commitment to transitioning away from fossil fuels. The country, heavily reliant on oil and gas revenues, appears reluctant to fully embrace the shift required to achieve net-zero emissions by 2050. This skepticism is rooted in the broader context of the UN climate process, which saw almost 200 countries agree at COP28 in Dubai to transition away from fossil fuels “in a just, orderly and equitable manner,” yet with little concrete progress since then.
A senior COP29 official noted that any returns on investments from Azerbaijan’s climate-oriented fund would be reinvested into the fund. There is also ongoing discussion about allocating 50% of the capital specifically for developing countries most affected by extreme weather events. This approach aligns with the broader goals of equitable climate action and support for vulnerable nations.
“We will, once the concept is ready, reach out to the parties we think could be potential contributors,” the official stated, emphasizing the inclusive nature of the initiative. He also clarified that the fund would not constitute a levy on fossil fuel companies but rather a voluntary contribution mechanism.
The recent UN climate talks in Bonn in June, serving as a midpoint before the COP29 summit, ended with significant discord between developing and developed nations over a new goal for climate finance. This tension underscores the complex dynamics at play in global climate negotiations, with historical emissions and economic growth trajectories fueling debates about responsibilities and contributions.
The previous $100 billion-a-year target set in 2009 was finally achieved last year, albeit two years behind schedule and following a reclassification of existing aid. Major donors like the EU and US are now urging economically advanced nations such as China and Saudi Arabia to increase their contributions. However, this push faces strong resistance, highlighting the ongoing challenges in achieving a consensus on climate finance.
This stalemate has left UN climate negotiators frustrated, casting a shadow over the prospects for upgrading climate targets at COP29 to effectively tackle the consequences of global warming. As Azerbaijan prepares to host the upcoming summit, the success of its climate investment fund initiative may play a pivotal role in shaping the future of global climate finance and cooperation.
