‘Hosting COP29 in Baku boosted the transition to renewables and green energy infrastructure. On the one hand, the government continued to highlight the energy corridor and gas exports to Europe, mainly due to security concerns and export revenues, while on the other hand it created political momentum for renewable energy goals,’ says Parviz Garibzade, an independent energy policy expert, serving as the Azerbaijan Country Expert for the International Energy Agency (IEA) through the EU4Energy Programme.

Before COP29, the Azeri government set a target of 30% of electricity generation to come from renewable energy by 2030. Due to the signing of numerous investment agreements, the target was upped in 2025 to 33.7% by 2027 and 38% by 2030. By January 2026, the country had already achieved 20.75% of installed capacity. ’Based on existing agreements, in the coming six years we will dramatically increase capacity from solar and wind to have 6 GW of wind and solar capacity by 2030, alongside further hydropower development. We have good potential for renewables, on and offshore, with abundant sunlight and wind,’ adds Garibzade.

Azerbaijan was one of the first countries to exploit its oil reserves, but such production has dwindled – dropping by almost a half between 2010 and 2024, to 540,000 b/d – forcing a pivot towards natural gas in recent decades, producing 51.5bn m³ in 2025. The lion’s share of gas came from the Shakh Deniz field, run by a consortium led by BP, at 27.9bn m³; followed by the Azeri-Chirag-Gunashli (ACG) fields at 14.1bn m³, and the Absheron field, also operated by a BP-led consortium, at 1.6bn m³ (all offshore fields). The state energy firm SOCAR accounted for 7.9bn m³ of total gas production.

Half of natural gas production is exported, at 25.2bn m³ last year, the same amount as in 2024. European countries are the biggest market, at 12.9bn m³, or 51%, followed by Türkiye at 9.6bn m³, which includes 5.6bn m³ transported through the Trans-Anatolian Natural Gas Pipeline (TANAP). Some 2.3bn m³ of exports were to Georgia, while Syria accounted for 0.5bn m³ of Azerbaijan gas sales.

Azerbaijan, it appears, has learned from another regional oil exporter which recently hosted COP – the United Arab Emirates (UAE).  

‘Azerbaijan has followed a similar path to the UAE in seeking to optimise domestic hydrocarbon use in order to free up greater volumes for export and strengthen foreign currency inflows,’ notes Dr Justin Dargin, Senior Non-resident Fellow at the Middle East Council on Global Affairs in Doha, Qatar.

He says that around 85–90% of Azerbaijan’s power generation remains gas-based, so expanding renewables allows Baku to preserve a gas-centric export strategy to Europe while improving domestic efficiency. ‘In that sense, Azerbaijan’s renewable push should not be viewed as disingenuous, it has a clear national interest. Like the UAE, it recognises the economic and strategic benefits of integrating renewables alongside hydrocarbons,’ he explains.

While the COP meeting in Baku saw a slew of agreements, memorandums of understanding (MoUs) and other pledges on renewable energy, it also saw a return of oil and gas as part of overall discussions, as occurred in Dubai at COP28, notes Dr Cyril Widdershoven, Director for Energy, Geopolitics and Supply chains at the Cyprus-based think tank Strategy International.  

‘If the world normally looks at Azerbaijan, then renewables are not the first thing it thinks of but its oil and gas and gas exports to Europe, and all the geopolitical issues that surround it. COP29 did increase interest in renewable energy projects inside Azerbaijan but still, most of the hard-core projects we see are natural gas related,’ Widdershoven states.  

That said, in 2021 Azerbaijan committed to reducing its greenhouse gas emissions by 40% by 2050. And this January (2026), at the annual World Economic Forum meeting in Davos, Switzerland, the Azeri President Ilham Aliyev announced the country’s plan to increase its renewable energy capacity to 8GW by 2032, according to Garibzade. Most of the renewable energy-generated electricity will be exported to Europe.  

Ahead of COP29, in March 2024 Azerbaijan joined the Global Methane Pledge to reduce methane emissions. And at the event, its government announced it would spearhead the COP29 Green Energy Pledge on Green Energy Zones and Corridors to promote regional cooperation and infrastructure for clean energy export to Europe.

The government also promised to establish the Karabakh and Eastern Zangezur Economic Regions (in the west of the country, near Armenia and Iran) as net zero emissions zones by 2050. These regions will host some of the country’s Green Energy Zones, with Karabakh comprising the Armenian-controlled Nagorno-Karabakh, under full Azerbaijan control since a 2023 war against the breakaway Republic of Artsakh.

The region is slated as a ‘Green Energy Zone’ with a master plan developed by the government and Japan’s Tokyo Electric Power Services Company (TEPSCO). This initiative is a cornerstone of Azerbaijan's national strategy to significantly increase the share of renewables in its energy mix.  

‘We have an action plan that involves the relevant ministries in the process,’ says Garibzade.

‘COP29 did increase interest in renewable energy projects inside Azerbaijan but still, most of the hard-core projects we see are natural gas related.’ – Dr Cyril Widdershoven, Director for Energy, Geopolitics and Supply Chains at the Cyprus-based think tank Strategy International 

Currently, solar and wind power projects are in development with Saudi Arabia’s ACWA Power, the UAE’s Masdar, BP and Nobel Energy, and Chinese companies. Hydropower has also been developed, with 38 plants of a total 307 MW capacity being developed in the Green Energy Zones. ‘BP, who have been here [in Azerbaijan] since the 1990s, has an agreement in the Eastern Zangezur region [bordering Armenia] for a new solar park, of 240 MW, that is expected to be operational by year end,’ notes Garibzade.  

In addition, Masdar has been in the country since 2023, developing Azerbaijan’s first large-scale solar power plants, a 445 MW facility at Bilasuvar south of Baku and a 315 MW facility at Neftchala on the Caspian coast. Two further wind and solar plants are to be developed: the 240 MW Absheron–Garadagh wind power plant, north of Baku, backed by Saudi Arabia’s ACWA Power, with funding from the European Bank for Reconstruction and Development (EBRD) and the OPEC Fund for International Development; and BP and SOCAR’s 240 MW Shafag solar power plant in the south-west. All were commissioned in 2026, according to Garibzade.

That said, Azerbaijan has more to do to achieve its ambitions. ‘Since 2020, Azerbaijan has more than doubled the share of renewable electricity generation, moving from around 5–6 % to the low-teens today, so there is clear traction. The open question is whether existing momentum is sufficient to meet stated targets. At present, it does not appear so,’ says Dargin. ‘Progress will depend heavily on grid modernisation and investment in transmission infrastructure.’ Indeed, he argues that Azerbaijan’s grid still lacks the flexibility required for large-scale renewable integration, and regulatory frameworks remain underdeveloped.

While tax incentives and public-private partnerships (PPPs) are in place, and MoUs drawn up, ‘which look fantastic on paper', overall the electricity sector is 'dominated by state owned industries, and still heavily gas centric’, continues Dargin. ‘More market liberalisation will be required for the transition to renewable energy to not be a marginal but significant source of its power generation mix. The deeper factors to reform the sector are lagging,’ he adds.

Storage is a further issue to be addressed. ‘Modernisation has been made in grid capacity, but renewable energy is not stable, so needs more energy storage. This summer a state company will finish construction of an energy storage project with capacity of 250 MW in batteries, in two locations,’ according to Garibzade: in Absheron near Baku, and Agdash in central Azerbaijan.  

Increased capacity will also be needed as the 10 million population country’s domestic energy demand increases, as well as to attract AI companies to establish data centres as the government recently proposed. Overall, renewable energy targets are considered realistic, says Widdershoven, if market conditions are right and Azerbaijan can attract the funding.

The EBRD seems to be listening. It has invested €4bn in Azerbaijan through 195 projects, including renewables, connectivity and sustainable infrastructure, and providing a $100mn Green Economy Financing Facility to support private sector partners develop energy efficiency, renewable energy, resource efficiency, circular economy and climate resilience.

However, with hydrocarbons still accounting for 45% of the country’s GDP and 85% of export revenues, Baku wants to capitalise on its resources while it can, particularly with oil production forecast to drop from around 600,00 b/d in 2025–2026, to 500,000 b/d by 2030, according to the International Monetary Fund (IMF). Baku is eager to ramp up gas exports to a Europe wanting to wean itself off Russian gas given Moscow’s invasion of Ukraine, following a 2022 agreement to double exports to 20bn m³. With 12.9bn m³ exported last year, the 20bn m³ target was rolled back to 2027, the same year the EU has pledged to stop Russian gas imports.  

‘Gas production will increase as we have agreements to develop gas fields, and also with European companies to sell the gas, but as European [public investment institutions] lack EU authorisation for new oil and gas investments, while simultaneously demanding more gas, this contradiction is affecting long-term investment security,’ comments Garibzade.

However, as the EU seeks to abide by its tightening posture towards Russian energy exports, political pressures may encourage European banks to lend more for Azerbaijan energy projects, including hydrocarbons. ‘I am 100% sure this will change in the next two years as Europe needs oil and gas. Azerbaijan is not going to be the full solution, but it could become much more attractive for the EU than it ever was before,’ says Widdershoven.  

Baku will also have to move fast to secure its potential in renewable energy, however, given the EU has been shifting between enthusiastic environmentalism and more pragmatic economic policies. ‘If Azerbaijan is not able to up production in the next three to five years, and the winds change again in the EU, heading towards a Green Deal 2.0, then they will have missed their chance to be a substantial renewable energy supplier to the EU,’ concludes Widdershoven.  

• Further reading: ‘What did COP29 achieve for climate finance?’ COP29 closed having brokered several new climate finance agreements, including a new finance goal, to help countries to protect their people and economies against climate disasters. Reaction to the agreements was mixed.
• ‘COP29 week 2: A mixed bag of debate, new initiatives and criticism’. Mixed messages came from the first days of COP29 in Baku, Azerbaijan. Despite an agreement at COP28 to transition faster from fossil fuels, there was talk of a controversial ‘gas swap’ scheme being held by Azerbaijan.