PROMITHEAS – 4
Knowledge transfer and research needs for preparing
mitigation/adaptation policy portfolios
(Contract No. 265182)
Development and assessment of
Mitigation / Adaptation
Climate Change policy portfolios for
Azerbaijan
Draft Final
Author: Enver SHIRINBAYLI
Scientific Research Institute of Geotechnological Problems of Oil, Gas and Chemistry
Co-authors: Dr. Popi KONIDARI, Anna FLESSA M.Sc., Eleni-Danai MAVRAKI MSc.
National and Kapodistrian University of Athens - Energy Policy and Development Centre
Baku, 2013
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PROMITHEAS-4: “Knowledge transfer and research
needs for preparing mitigation/adaptation policy portfolios”
This document is part of the relevant report prepared for the FP7 funded project
“PROMITHEAS-4: Knowledge transfer and research needs for preparing
mitigation/adaptation policy portfolios”, coordinated by Prof. Dimitrios MAVRAKIS,
Energy Policy and Development Centre (Greece). The whole report contains twelve
(12) documents for each one of the emerging economies that participate in the
project: Albania, Armenia, Azerbaijan, Bulgaria, Estonia, Kazakhstan, Moldova,
Romania, Russia, Serbia, Turkey and Ukraine.
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PROMITHEAS-4: “Knowledge transfer and research
needs for preparing mitigation/adaptation policy portfolios”
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PROMITHEAS-4: “Knowledge transfer and research
needs for preparing mitigation/adaptation policy portfolios”
CONTENTS
Contents ____________________________________________________________ 5
List of Tables ________________________________________________________ 6
List of Figures _______________________________________________________ 6
Abbreviations ________________________________________________________ 8
Introduction ________________________________________________________ 10
Objectives of the Azerbaijan climate change policy ___________________________ 10
Spectrum of climate change mitigation options for Azerbaijan _________________ 11
Spectrum of adaptation needs in Azerbaijan ________________________________ 14
References _____________________________________________________________ 18
Business – As – Usual Scenario (2000 – 2050)_____________________________ 20
BAU scenario description ________________________________________________ 20
References _____________________________________________________________ 26
Key assumptions ________________________________________________________ 28
Energy Demand ________________________________________________________ 35
Global warming potential (GHG emissions) _________________________________ 40
References _____________________________________________________________ 41
Optimistic Scenario (2000 – 2050) ______________________________________ 42
Optimistic scenario description ___________________________________________ 42
References _____________________________________________________________ 46
Key assumptions ________________________________________________________ 48
Energy Demand ________________________________________________________ 51
Transformation ________________________________________________________ 54
Global warming potential (GHG emissions) _________________________________ 55
References _____________________________________________________________ 56
Pessimistic Scenario (2000 – 2050) ______________________________________ 57
Pessimistic scenario description ___________________________________________ 57
References _____________________________________________________________ 60
Key assumptions ________________________________________________________ 61
Energy Demand ________________________________________________________ 64
Transformation ________________________________________________________ 67
Global warming potential (GHG emissions) _________________________________ 68
References _____________________________________________________________ 69
Results of Long – Range Energy Alternatives Planning System (LEAP) ________ 70
Energy Demand ________________________________________________________ 70
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Transformation ________________________________________________________ 71
Assessment of the three developed scenarios for Azerbaijan, through the multi criteria method AMS ___________________________ Error! Bookmark not defined.
General comments ________________________________ Error! Bookmark not defined.
Required data ____________________________________ Error! Bookmark not defined.
Assignment of grades ______________________________ Error! Bookmark not defined.
Results __________________________________________ Error! Bookmark not defined.
References _______________________________________ Error! Bookmark not defined.
Conclusions __________________________________ Error! Bookmark not defined.
ANNEX I ____________________________________ Error! Bookmark not defined.
LIST OF TABLES
Table 1: United Nations projections for the Azerbaijan population (UN, 2010). _____________ 28
Table 2: Projections for the Azerbaijan GDP (IMF, 2011). _______________________________ 28
Table 3: Current feed – in – tariffs. __________________________________________________ 33
Table 4: Total emissions for the country. _______________________ Error! Bookmark not defined.
Table 5: Emissions per sector for the country. ___________________ Error! Bookmark not defined.
Table 6: Other environmental effects for the country under each scenario, __ Error! Bookmark not
defined.
Table 7: Water use for cooling (Energy sector). __________________ Error! Bookmark not defined.
Table 8: Mean CEI for each sector depending on the policy instruments of the BAU scenario.
_____________________________________________________ Error! Bookmark not defined.
Table 9: Mean CEI for each sector depending on the selected policy instruments of the OPT
scenario. _____________________________________________ Error! Bookmark not defined.
Table 10: Mean CEI for each sector depending on the selected policy instruments of the PES
scenario. _____________________________________________ Error! Bookmark not defined.
Table 11: Overall cost efficiency for the three scenarios. ___________ Error! Bookmark not defined.
Table 12: Equity measurement. _______________________________ Error! Bookmark not defined.
Table 13: AMS results for each scenario. _______________________ Error! Bookmark not defined.
LIST OF FIGURES
Figure 1: Demographics: Population. ________________________________________________ 28
Figure 2: Economy: GDP real. ______________________________________________________ 30
Figure 3: Average annual household income. __________________________________________ 31
Figure 4: Final energy demand in households. _________________________________________ 35
Figure 5: Final energy demand in agriculture. _________________________________________ 35
Figure 6: Final energy demand in industrial sector. ____________________________________ 36
Figure 7: Final Energy Demand in Transport sector per fuel. ____________________________ 37
Figure 8: Electricity generation. _____________________________________________________ 38
Figure 9: Share of fuels in heat production. ___________________________________________ 39
Figure 10: GHG emissions per sector. ________________________________________________ 40
Figure 11: Precipitation in OPT scenario. _____________________________________________ 48
Figure 12: Temperature in OPT scenario. ____________________________________________ 49
Figure 13: Energy demand of the household sector in OPT scenario. ______________________ 51
Figure 14: Energy demand of the agricultural sector in OPT scenario. _____________________ 52
Figure 15: Energy demand of the industrial sector in OPT scenario._______________________ 52
Figure 16: Energy demand of the transport sector in OPT scenario. _______________________ 53
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PROMITHEAS-4: “Knowledge transfer and research
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Figure 17: Power plants capacity in OPT scenario. _____________________________________ 54
Figure 18: GHG emissions for OPT scenario. __________________________________________ 55
Figure 19: Precipitation in PES scenario. _____________________________________________ 61
Figure 20: Temperature in PES scenario. _____________________________________________ 62
Figure 21: Energy demand of the household sector in PES scenario. _______________________ 64
Figure 22: Energy demand of the agricultural sector in PES scenario. _____________________ 65
Figure 23: Energy demand of the industrial sector in PES scenario. _______________________ 65
Figure 24: Energy demand of the transport sector in PES scenario. _______________________ 66
Figure 25: Power plants capacity in PES scenario. _____________________________________ 67
Figure 26: GHG emissions for PES scenario. __________________________________________ 68
Figure 27: Energy demand for all scenarios. __________________________________________ 70
Figure 28: Electricity generation for all scenarios. ______________________________________ 71
Figure 29: GHG emissions for all scenarios. ___________________________________________ 72
Figure 30: ClimAMS-2012. ___________________________________ Error! Bookmark not defined.
Figure 31: Environmental performance of the scenarios. __________ Error! Bookmark not defined.
Figure 32: Political acceptability. ______________________________ Error! Bookmark not defined.
Figure 33: Feasibility of implementation. _______________________ Error! Bookmark not defined.
Figure 34: Final grades. _____________________________________ Error! Bookmark not defined.
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ABBREVIATIONS
ADB
CDM
DNA
EBRD
EC
EE
EIA
ENP
EPR
EU
GEF
GDP
GHG
HESs
IPCC
MoU
NC
NMVOCs
R&AE
RES
SAARE
SOCAR
SOFAZ
TESs
UN
UNDP
UNECE
UNFCCC
Asian Development Bank
Clean Development Mechanism
Designated National Authority
European Bank for Reconstruction and Development
European Commission
Energy Efficiency
Energy Information Agency
European Neighboring Partnership
Environmental Progress Report
European Union
Global Environmental Fund
Gross Domestic Product
Greenhouse Gas
Hydro energy Systems
Intergovernmental Panel on Climate Change
Memorandum of Understanding
National Communication
Non-Methane Volatile Organic Compounds
Renewable & Alternative Energy
Renewable Energy Sources
State Agency for Alternative and Renewable Energy Sources
State Oil Company of the Azerbaijan Republic
State Oil Fund
Thermal Energy Systems
United Nations
United Nations Development Programme
United Nations Economic Committee for Europe
United Nations Framework Convention on Climate Change
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INTRODUCTION
Objectives of the Azerbaijan climate change policy
Azerbaijan ratified the United Nations Framework Convention on Climate Change
(UNFCCC) in 1995 and the Kyoto Protocol in 2000. As a non-Annex I Party to the
UNFCCC, Azerbaijan does not have quantitative commitments for reducing GHG emissions.
The country has not undertaken so far any quantitative objectives in Renewable Energy
Sources (RES) or in Energy Efficiency (EE).
The first programme relevant to climate change policy issues was the State Program “On
utilization of Alternative and Renewable Energy Sources in Azerbaijan Republic” that was
published on October 21, 2004 as President’s Direction No. 462). It did not include
quantitative objectives for Renewable Energy Sources (RES).
The State Program for Development of Fuel and Energy Sector in Azerbaijan (20052015) followed with the objective (affecting also the climate change policy): To increase the
existing generating capacities of the country’s power system at 6500-7000 MW by 2015
through construction of new thermal and power plants; modernization of the existing
generating units and utilization of renewable power sources (small water power plants, wind,
solar power, thermal waters, etc.) (Republic of Azerbaijan, 2005).
The State Program on Poverty Reduction and Sustainable Development in the Republic of
Azerbaijan for 2008-2015 (Decree No. 3043 of the President of the Republic of Azerbaijan,
dated of September 15, 2008) had the following climate change policy relevant objective:
-
Reduction by 20% of the conditional fuel used for 1 KW of energy so as to reduce greenhouse (GHG) emissions in the energy sector by 2015. The indicator against which the
comparison will be done is the quantity of conditional fuel used for 1 KW of energy in
2006 which was 386 gr1 (Republic of Azerbaijan, 2008).
In 2011 the new State Agency for Alternative and Renewable Energy in Azerbaijan
announced the following targets for 2020: 20% share of renewable energy in electricity (10%
in 2011: 9,8% hydropower, 0,2% other RE) and 9,7% share of renewable energy in all
energy consumption (2,3% in 2011) (State Agency for Alternative and Renewable Energy,
2011). These figures became more specific in 2012 by the State Agency for Alternative and
Renewable Energy ie by 2020 the solar and wind are expected to account more than two third
of RES consumption (solar 38%, and wind 32%), with potentials of 5000MW for solar,
4500MW for wind, 1500MW for bioenergy, 800MW for geothermal and 350MW for small
hydro plants, (The State Agency on Alternative and Renewable Energy Sources, 2012).
The second National Communication (NC) to the UNFCCC secretariat was prepared by
the National Hydrometeorological Department under Ministry of Ecology and Natural
Resources of the Republic of Azerbaijan with the assistance of the United Nations
Development Programme (UNDP)/GEF and was under inter-ministerial consultation at the
time of the review (UNECE, 2009). It was published in 2010 and it includes a Greenhouse
Gas (GHG) inventory for the years from 1990 to 2005, climate change scenarios and
adaptation measures. Based on this NC, the preparation of a national action plan on mitigation
and another one on adaptation is being planned (UNECE, 2009).
The Azeri climate change policy will be probably developed due to cooperation with EU.
Azerbaijan, as a key strategic energy partner for EU both as a producer and transit country
received as assistance a 14 million EUR budget support programme to reform its energy
1
Another interpretation is that: Efforts will be taken to reduce the fuel used to generate 1 kWh of electric power
from 386 grams of conventional fuel to 260 grams at thermal power plants by introducing new generating
capacities and improving the characteristics of the old generating units.
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PROMITHEAS-4: “Knowledge transfer and research
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market and legislative framework, improve energy efficiency and promote new and
renewable energy sources (RES) (EC, 2012; EC, 2010). All these on the basis of the defined
priorities in the European Neighboring Partnership (ENP) Action Plan and the Memorandum
of Understanding (MoU) aimed at establishing a partnership on energy between Azerbaijan
and the EU, signed in Brussels on 7 November 2006. The harmonization of the Azeri
legislation with EU law is an important component of their cooperation, initiated by signing
the MoU on Strategic Partnership between the European Union and Republic of Azerbaijan in
the field of Energy in 2007 (UNECE, 2007). The EU legislation has been studied and taken
into account when drafting new legislation. Many EU directives in environmental areas have
already been translated into Azeri (UNECE, 2011). In 2010 Azerbaijan confirmed at high
political level its commitment and policy priority to engage the country more forcefully into
the development of RES (notably wind, solar and hydro), and of Energy efficiency (EC,
2010).
Azerbaijan is encouraged to fully implement the Cancun and Durban agreement and in
particular devise a low carbon development strategy including update information on target or
actions that it will implement (EC, 2012).
Spectrum of climate change mitigation options for Azerbaijan
The energy and industrial sectors are the main sources of CO2 emissions (Ministry of
Ecology and Natural Resources of the Republic of Azerbaijan, 2010). CO2 emissions in the
Energy sector come from the burning of fuel for the production of energy, oil and gas
extraction, transport, and human settlements (Ministry of Ecology and Natural Resources of
the Republic of Azerbaijan, 2010).
Energy production is based on natural gas, fuel oil and water resources. The energy
sources are dominated by fossil fuels with small reliance on hydroelectric power (18%) and
minimal use of other RES types (less than 1%) (Spurgeon J. et al., 2011). According to
estimations the national natural gas reserves will last through the 2070s, and oil reserves well
beyond 2100 with the assumption that the country does not export any of these resources
(Spurgeon J. et al., 2011). More specifically, BP and the U.S. Energy Information Agency
(EIA) estimated in 2009 the proven oil reserves to be about 7 billion barrels and the
reserves/production ratio at 29,3 years (UNECE, 2011). On the other hand estimates of the
State Oil Company of the Azerbaijan Republic (SOCAR) increases the proven oil reserves at
17,5 billion barrels (UNECE, 2011). This discrepancy is caused by different classification
systems and methods used in the estimations. The oil reserves of Azerbaijan account for
somewhere between 0,6% and 1,5% of the world’s total oil reserves. Gas reserves estimates
vary from 0,85 trillion m3 to 1,35 trillion m3. In 2008, domestic gas production was 16,2
billion m3, of which about one-third (5,55 billion m3) was exported (UNECE, 2011). Since oil
and gas are the major Azeri exports, the reserves could possibly be used up in the next few
decades (Spurgeon J. et al., 2011).
The power system is the oldest and most developed in southern Caucasus region (EBRD,
2009). It has an installed generating capacity of about 7100 MW, out of which thermal power
stations (using residual fuel oil, and by natural gas) contribute 6100 MW (almost 80%) and
hydropower stations make up most of the balance (EBRD, 2009; republic of Azerbaijan,
2008)). A significant portion of the installed generating capacity is not actually available
because of the old infrastructure, the deficiency of spare parts, and the lack of scheduled
maintenance (EBRD, 2009). More than 35% of Azerenerji power stations have been
operating for more than 30 years, while about half of the turbo-generators and boilers are in
use for more than 40 years (EBRD, 2009; Republic of Azerbaijan, 2008). This situation
results in high fuel consumption, low thermal efficiency and high emissions.
A significant part of the generation is lost during transmission because of the inefficient
distribution network (Republic of Azerbaijan, 2008). The thermal power plants are largely
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fuelled by oil and emit mainly NOx and SO2. This set as an option for the energy sector to
switch eventually all thermal power plants to natural gas fuel (Republic of Azerbaijan, 2008).
In 2010, the sector with the highest share of the final energy consumption was the
household sector with 50,9%, followed by the transport sector with 25,3% and the industrial
sector with 11% (Energy Charter Secretariat, 2011).
The country has the opportunity to decrease reliance and possible future shortfalls in
fossil fuel supplies by expanding the renewables sector, and meeting the targets established
by the EU by 2020 (Spurgeon J. et al., 2011). The country will also improve energy security
over the longer term, have potential employment benefits, and will create potential for
increased energy access in remote areas. An analysis by Spurgeon et al. in 2011 estimated that
Azerbaijan could save up to 35 million Euros annually from avoided GHG emissions costs by
reducing fossil fuel dependency.
Exploitation of RES
There is considerable potential for the development of RES, particularly wind, solar and
biomass, but there are considerable obstacles (low feed-in tariffs and management inertia due
to institutional capture by the oil and gas industry) (Spurgeon J. et al., 2011). The share of
small hydropower can increase due to considerable number of appropriate sites around the
country, but few feasibility studies have been completed (Spurgeon J. et al., 2011). There was
interest in renewables other than hydropower, and a few studies were performed, but actual
projects focused on infrastructure (EBRD, 2009).
Renewable fuels (liquid and gaseous), solid and municipal waste are not used yet
(Srebotnjak T., Hardi P. 2011). The share of RES in total primary supply of energy in 2011
was 1,9% with the following distribution: 98,1% hydro and 1,5% renewable combustible
and waste (Sopian K, et all, 2011).
Hydro
Much of the potential for hydro-electricity production is untapped (ADB, 2009; Ministry
of Industry and Energy of Azerbaijan Republic, 2004). The country’s rivers could feasibly be
exploited to produce 40 billion kWh, with a technically favorable potential of 16 billion kWh,
5 billion kWh of which is shared by small hydropower plants (Ministry of Industry and
Energy of Azerbaijan Republic, 2004).
The share of the hydro power generation capacity in the overall power system was in
2009, 17,8% (ADB, 2009). The hydro power stations in 2003 produced 2,4 billion kWh of
total electricity (ADB, 2009). This amount represented for that year the 11,4% of overall
electricity generation (ADB, 2009).
The construction of hydro power plants will facilitate the regulation of flood waters,
production of environmentally sound electricity generation and the creation of new irrigation
systems (ADB, 2009). Small Hydro Power Plants (PPP) on rivers (estimation for 61 small
HPPs) can generate up to 3,2 billion kWh annually (ADB, 2009). These HPPs can be installed
on irrigation canals, rivers with unregulated flow and water reservoirs that are underconstruction. Their use in electricity supply of activities and settlements that are remote from
transmission lines and substations of countrywide grid system can resolve electricity
problems, as well social problems (ADB, 2009).
Biomass
The available sources for biomass include (ADB, 2009): combustive industrial wastes;
wastes of forestry and wood-working; agricultural and organic wastes; domestic and
communal wastes; wastes processed from areas polluted with oil and petroleum products.
More than 2 million tons of solid domestic and production wastes are annually collected
in waste treatment sites in the country (ADB, 2009).Their utilization (processing) would
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partially resolve the problems in heating public buildings in Baku and other large industrial
cities (ADB, 2009). An estimated 83% of the total municipal waste stream in the country is
collected, of which 50% is landfilled, 30% recycled and 20% is dumped (Spurgeon et al.,
2011).
Agricultural residues can be used for biomass combustion or gasification (EBRD, 2009).
Wastes from animal manures can be used for biogas production (EBRD, 2009). There may
also be potential for methane production from landfills. In 2009 Azerbaijan was the largest
amongst Republics of the former USSR and fourth in the world in production of raw cotton
(EBRD, 2009). The waste of cultivating cotton and cereal crops is used as a fuel in private
household equipment by the population of Azerbaijan uses. No large scale projects were
identified, although it is feasible to further utilize these residues in a larger application
(EBRD, 2009). The Ministry of Environment and Natural Resources of Azerbaijan has
expressed interest in developing biogas energy use, and has sponsored pilot projects in Lerik,
Guba, and Ismayilly, Siyaku, Nakhchivan and Piran using solar energy (EBRD, 2009).
Wind
Many regions in Azerbaijan have the potential for wind power facilities (ADB, 2009).
There is estimation of 800 MW annual wind power capacities (equivalent to 2,4 billion kWh
of electricity) due to its geographical location, nature and economic infrastructure (ADB,
2009). This amount corresponds to the saving up of 1 million tons of conventional fuel and
more importantly, the prevention of emitting large quantity GHG emissions (ADB, 2009).
Solar
Climate conditions in Azerbaijan allow the production of electric and heat energy using
solar power (ADB, 2009). The annual number of sunshine hours in Azerbaijan is 2400-3200
hours (ADB, 2009). The estimated solar power is 1500-2000 kWh/m2 allowing to be
considered as one of the efficiency factors for attracting investments in solar power (ADB,
2009).
Geothermal
The country is rich with thermal waters which are located at the Great and Small
Caucasus, the Absheron Peninsula, Talish mountain zone, Kur lowland and Caspian-Guba
area (ADB, 2009). Exploitation of thermal waters in these areas would partially cover
domestic and other heat energy needs (ADB, 2009). It can be also used as thermal energy to
heat extensive greenhouses (ADB, 2009).
Energy efficiency
The State Program for the Development of Fuel Energy Complex for the period 2005–
2015 was adopted in 2005 (Republic of Azerbaijan, 2005). One component aims at reducing
the environmental impact of energy generation by upgrading and increasing the energy
efficiency of thermal plans. However, there are no other relevant to energy efficiency
mitigation actions estimations.
Mitigation through emission trading
Azerbaijan is eligible for CDM projects. The country is encouraged to build capacity and
engage in the new carbon market mechanism to be developed following the 17 th Conference
of Parties to the UNFCCC (EC, 2012).
The sectors with the highest emission reduction potential in Azerbaijan concern the: i)
energy sector: landfill gas, renewable energies; ii) industry: energy efficiency and iii) forestry
(BMU, 2008).
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Fuel switch
The country is planning a transition from oil to gas in many energy and industrial
installations (UNECE, 2011).
Other mitigation options
None.
Spectrum of adaptation needs in Azerbaijan
Climate change damage to key economic activities, like energy, tourism and agriculture
can be limited if mitigation options are implemented. They can also prevent or limit the need
for population relocation, particularly in areas vulnerable to flooding close to the Caspian Sea.
In addition, contributing to the mitigation of climate change impacts will benefit Azerbaijan
by avoiding future stresses on its natural environment (Spurgeon J. et al., 2011).
A. Energy sector
The energy sector is particular sensitive to climate change due to impacts on: i) the
availability of cooling water for power generation; ii) the potential for hydropower, wind and
solar power; iii) the productivity of crops for bio-energy; iv) the energy use for heating and
cooling in households (Pilli-Sihvola P., et al., 2010; Isaac M., van Vuuren D.P., 2009). More
specifically:
Gas-fired power plants
An increase in temperature due to climate change influences the gas turbines
performances, leading to a decrease in generation or higher fuel consumption (Schaeffer R. et
al., 2012). For temperature projections regarding the RCP 3 (A2 and B2 IPCC SRES
scenarios) the overall energy requirement would be only 2% higher than the base year
(Schaeffer R. et al., 2012).
Thermal power plants
Thermal power plants require significant amounts of water making them vulnerable to
fluctuations in water supply. Each kWh generated via steam cycle requires 90-100L of water
(Schaeffer R. et al., 2012). Power plants will increasingly compete with other water users
(agriculture and public supply) in water-stressed areas (Schaeffer R. et al., 2012).
Hydropower
Hydropower generation depends directly on the availability of water resources. Reservoir
storage capacity can compensate for seasonal or annual variations in water inflow (Schaeffer
R. et al., 2012).
Biofuels
Crops used as raw materials to produce liquid biofuels (ethanol and biodiesel) are
affected by temperature, rainfall; CO2 levels (Schaeffer R. et al., 2012). The increase in
production of biomass as an energy source needs to be assessed also under a water
management perspective. Since plants used for biomass production are often water intensive,
water scarcity problems or water use conflicts may emerge (EEA, 2009).
Energy Demand sectors
One of the energy demand sectors that will be affected by climate change impacts is the
residential sector (households). The energy use of the residential sector regarding heating and
cooling depends on temperature (Isaac M., van Vuuren D.P., 2009). Adaptation needs for this
sector require the implementation of:
-
Technical options. For the operation of the thermal power plants the reduction of the
water demand is possible by increasing the efficiency of the cooling systems or by
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-
increasing the overall efficiency of the plant operation (EEA, 2009). These coincide also
with the aforementioned mitigation options for this sector in Serbia. For the operation of
the hydropower plants the availability of the water recourses is ensured by dam safety,
improved discharge facilities, usage of water storage facilities to harness water and
avoidance of flood damage (EEA, 2009). These concern adaptation needs in the water
management sector. For biomass production, agricultural practices and crop choice might
be modified in order to adapt to the impacts (EEA, 2009).
Diversification: The vulnerability of the electricity production system is reduced by
broadening the range of power plant types and fuels in the generation mix and by using a
mix of centralized and decentralized supply patterns (EEA, 2009).
Management of energy demand. Increasing energy efficiency is a very effective measure
for mitigation and adaptation – if less electricity is consumed, less water is required for
cooling (EEA, 2009).
B. Agricultural sector
Agriculture is an important sector for the country since: i) it contributed by 6,3% to the
GDP in 2008 (Spurgeon J. et al., 2011) and ii) a considerable portion of the population lives
in rural areas employed in this sector (State, 2008).
The total area harvested was 1.3 million hectares in 2008 with cereals at 0,9 million
hectares and other crops at 0.4 million hectares (Spurgeon J. et al., 2011). Much of the
agricultural cropland in Azerbaijan suffers from degradation (Spurgeon J. et al., 2011).
Agriculture is short of water most years. The country is highly dependent on irrigation
for most of its agricultural production also due to the low level of precipitation in some parts
of Azerbaijan (UNECE, 2011). The agricultural irrigated land in 2008 was 1,432 million
hectares, about 30% of the total utilized agricultural area of the country (Spurgeon J. et al.,
2011; UNECE, 2011). In 2008, 5,47 billion m3 of water were used for irrigation. Irrigation’s
share of total water abstraction increased from 42% in 2002 to 46,6% in 2008 (UNECE,
2011).
About one-third of irrigation is mechanical corresponding to 349400 hectares. About
147700 hectares are irrigated from boreholes equipped with submersible pumps, and about
68200 hectares require diesel pumping stations (UNECE, 2011). Irrigation channels were
built during the Soviet era to irrigate the sovkhozes and kolkhozes (UNECE, 2011). As a
result of poor infrastructure, water losses are substantial, accounting for 35% of total water
abstraction in 2008 (UNECE, 2011).
The main adaptation needs for this sector are (UNECE, 2011; Republic of Azerbaijan,
2008):
- Improvement of the access of agricultural producers to credit, equipment and other vital
inputs and services, while ensuring that land is used in an environmentally sustainable
way.
- Institutional reforms aiming at improving management efficiency.
- Review policy of exempting agricultural producers from taxes so as to promote
employment and self-employment in rural areas, and the access of people involved in
agriculture to finance-credit sources.
- Improvement of the insurance mechanism to reduce damage to agricultural employers as
a result of natural disasters (Republic of Azerbaijan, 2008).
C. Forestry sector
Approximately 11,5% of the national territory is forested (figure of 20072), but this
percentage declines (Spurgeon J. et al., 2011; Republic of Azerbaijan, 2008). External sources
2
Azerbaijan did not submit a country report to FAO for the 2010 Forest Resources Assessment so there is no upto-date publicly available data on its forests, except for data from a forestry meeting in 2005 and internal data of
the Ministry (UNECE, 2011).
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estimate that up to 1,8 million m3 of fuelwood is cut each year with little institutional capacity
available to address this (Spurgeon J. et al., 2011). Official statistics indicate that the country
is reaching the EU targets for protected areas and deforestation (Spurgeon J. et al., 2011).
According to the State Program on Poverty Reduction and Sustainable Development in the
Republic of Azerbaijan for 2008-2015 one of its objectives is to increase the proportion of
forest areas in total land area to 12,5% by 2015.
Since 2003, the Government has carried out some forest restoration and protection
activities, but there is no up-to-date publicly available data on forest resources (UNECE,
2011). The forests are owned by the State and cannot be used for commercial logging because
of their importance for soil protection, watershed protection and other services (UNECE,
2011).
D. Water resources
The country has approximately 8350 rivers, with a total length of 33165 km (Spurgeon J.
et al., 2011). 30% of the rivers are judged to be of good quality, 30% slightly polluted and
40% seriously polluted (Spurgeon J. et al., 2011; UNECE, 2011). Azerbaijan’s two main
rivers, the Kura River (length 1515 km), and its tributary, the Araz River (1072 km), both
originate from the mountains of north-east Turkey (UNECE, 2011). They are also two of the
five pollution hotspots of the entire Caspian Sea (UNECE, 2011).
Azerbaijan suffers already from considerable water scarcity, because the water resources
are limited compared to other countries located in South Caucasus (Spurgeon J. et al., 2011).
More than three quarters of the Azeri renewable water resources are generated outside of the
country (BMZ, 2010). Water per area and per person in Azerbaijan is 7,7 and 8,3 times less,
respectively, than in Georgia and 2,2 and 1,7 times less than in Armenia (Spurgeon J. et al.,
2011).
National total water resources vary from 28,5 to 35km3 (including ground waters) (Spurgeon
J. et al., 2011). The number4 is further reduced in arid years to approximately 27 to 22,6 km3.
The majority these resources is surface water (30-32 km2), 70% of which comes from rivers
in neighbouring countries (Georgia, Turkey, Iran and Armenia) (Spurgeon J. et al., 2011;
UNECE, 2011). The country receives approximately 100,000 m3/year of water per km2. The
Kura is the largest river with around 26 km3 of transboundary flow and 7 km3 of local flow,
and 790km length within Azerbaijan. The Kura and Aras Rivers provide approximately half
of the drinking water and 60% of the irrigation water in the country (BMZ, 2010). There are
more than 10,000 small local rivers in Azerbaijan. All rivers flow into the Caspian Sea
(Spurgeon J. et al., 2011).
Approximately 450 lakes with an area of 394km2 have total renewable capacity of 0,03 to
0,05km3 per year. Ten lakes have a surface area of more than 5km3, the largest of which is
Sarisu Lake with an area of 65,6km2 and a capacity of 59Mm3. The total capacity of
exploitative ground water is estimated to be 8-9km3 per year. Groundwater recharge provides
a further 6.5km2 (to surface waters), although 4,4 km2 of this also flows as surface water
(Spurgeon J. et al., 2011). The annual amount of water per person varies from 950-1000
m3/year up to 3500 m3/year (Spurgeon J. et al., 2011). There is limited provision of
desalinated water (some on Chilov Island in the Caspian Sea), although there are plans for
additional desalination capacity using Caspian Sea water. Around 0,2km2 of wastewater was
treated for reuse in 2005 (Spurgeon J. et al., 2011).
Water resources of 0,08km3 are from nine glaciers, while there are 135 reservoirs with
total water storage of 21,5km3 and a useful capacity of 12,4km3. 52000km of irrigation canals
assist the distribution (Spurgeon J. et al., 2011).
3
According to the Hydrometeorology Service, this figure was computed around three decades ago, and the current
exact overall surface reserves are not known (UNECE, 2011).
16
PROMITHEAS-4: “Knowledge transfer and research
needs for preparing mitigation/adaptation policy portfolios”
The water resources of the Republic are shared unequally (Spurgeon J. et al., 2011). The
lack of water is not observed in the Sheki-Zaqatala and Khachmaz-Kelbejer mountain areas.
However, in the Qobustan-Absheron and Kur-Araz lowlands where irrigation is developed,
water scarcity is a concern. Long-term decreases in the level of the Caspian Sea are likely,
due to extensive consumptive use of the Volga River (the major contributor to the water
body) (Spurgeon J. et al., 2011).
The estimated water withdrawal for 2005 shoes agricultural use (76%) and (19%) industrial
use and comparatively little municipal use (Spurgeon J. et al., 2011). In 2008, the largest
contribution for the use of recycled water was for the production of electricity, gas and water,
while industry needs were mainly covered by recycled water. Most water loss occurs in
agriculture, followed by production of energy, gas and water (UNECE, 2011). These two
activities are also the leading sources of discharges of sewerage waters into reservoirs. The
percentage of treated water is only some 3% of the water discharged, specifically 8% for the
extracting industry and 20% for the manufacturing industry (UNECE, 2011).
The main problems for water resources due to climate change are (Spurgeon J. et al., 2011):
-
Sea level rise: The Caspian Sea coastline of Azerbaijan is vulnerable to fluctuations in
water levels, particularly the Absheron Peninsula, the most populated region of the
country. The Caspian Sea level might rise by 1,2 to 1,5 meters by 2020-2040 inundating
130-160 km² (BMZ, 2010). If the sea level continues to rise, coastal areas in Azerbaijan
will suffer from floods and saltwater intrusion in groundwater (BMZ, 2010).
-
Water resource availability and scarcity: there are forecasts for reduction in the
availability of water by around 25%, while simultaneously associated desertification and
forest fires are likely to increase in frequency and extent.
-
Increased risk of flooding: The inland and the Caspian Sea coast will experience probably
increased frequency of high intensity precipitation events, fluctuations in sea levels,
damaging property, farmland and potential loss of life.
Since 2004, there has been progress in securing water availability, irrigation, water and
sanitation cycle, and flood protection infrastructures, due to significant investments from
multilateral and bilateral institutions and from the State Oil Fund (UNECE, 2011). The State
budget for the running costs of the institutions involved in water resources management has
also increased. As a result, the population in rural areas using improved drinking water
sources increased by 10% (UNECE, 2011).
According to the 2nd National Communication of the country to UNFCCC the following
measures are foreseen for the adaptation needs of this sector (Ministry of Ecology and Natural
Resources of the Republic of Azerbaijan, 2010):
- reducing water leakages in water management facilities;
- introduction of additional sources of water;
- use of hydrologic cycle water, including groundwater;
- regulation of flows;
- taking protective engineering measures in stream beds of lakes and rivers against floods;
- building small HESs on mountain rivers and construction of new water impoundments;
- building small HESs on existing irrigation channels;
- clean-up of river channels, etc.
17
PROMITHEAS-4: “Knowledge transfer and research
needs for preparing mitigation/adaptation policy portfolios”
References
ADB, 2009. A Roadmap for Renewable Energy in Azerbaijan - 2009. R-CDTA 7274: Azerbaijan
Alternative Energy Sector Analysis and Roadmap. Available at: http://greenazerbaijan.org/wpcontent/uploads/2011/03/Azerbaijan-Alternative-Energy-Sector-Analysis-and-Roadmap-2009.pdf
BMZ, 2010. Adaptation to Climate Change in the Kura-Aras River Basin - River Basin Snapshot Draft
for
Discussion.
Available
at:
http://www.kfwentwicklungsbank.de/DE_Home/Sektoren/Wasser/Klimawandel/Kura-Aras.pdf
Cakmak A.M., Evrim Ergun Cagdas Av. Dr., 2011. Global Renewable Energy Guide. Available at: ş
http://www.cakmak.av.tr/pdf/Global%20Renewable%20Energy%20Guide%202011.pdf
EBRD,
2009.
Azerbaijan,
Country
Profile.
Available
at:
http://ws223.myloadspring.com/sites/renew/Shared%20Documents/2009%20Country%20Profiles/Azerbaijan.pdf
EBRD,
2009.
Azerbaijan.
Country
at:http://www.ebrd.com/downloads/legal/irc/countries/azerbaijan.pdf
profile.
Available
EBRD, 2010. Strategy for Azerbaijan 2010 – 2013, as approved by the Board of Directors at its
meeting
on
7
December
2010.
Available
at:
http://www.ebrd.com/downloads/country/strategy/azerbaijan_2010.pdf
EC, 2007. European Neighbourhood and Partnership Instrument – Azerbaijan, National Indicative
Programme
2007-2010.
Available
at:
http://ec.europa.eu/world/enp/pdf/country/enpi_nip_azerbaijan_en.pdf
EC, 2010. Commission Staff Working Document, Accompanying the Communication from the
Commission to the European Parliament and the Council, Taking stock of the European
Neighbourhood Policy (ENP) - Implementation of the European Neighbourhood Policy in 20072013:Progress Report Azerbaijan. Brussels, 12/05/2010, SEC(2010) 519. Available at:
http://ec.europa.eu/world/enp/pdf/progress2010/sec10_519_en.pdf
EC, 2012. Joint Staff Working Document, Implementation of the European Neighbourhood Policy in
Azerbaijan, Progress in 2011 and recommendations for action - Accompanying the document, Joint
Communication to the European Parliament, the Council, the European Economic and Social
Committee and the Committee of the Regions, Delivering on a new European Neighbourhood Policy,
Brussels,
15.5.2012,
SWD(2012)
111
final.
Available
at:
http://ec.europa.eu/world/enp/docs/2012_enp_pack/progress_report_azerbaijan_en.pdf and
http://ec.europa.eu/world/enp/documents_en.htm#3
Energy Charter Secretariat, 2011. Azerbaijan Follow-up-in-depth Review of the Investment Climate
and
Market
Structure
in
the
Energy
Sector.
Available
at:
http://mie.gov.az/main/mie/files/Azerbaijan_ICMS_2011_ENG+(1).pdf
EEA, 2011. European Neighbourgood and Partnership Instrument – Shared Environmental Information
System,
Azerbaijan
Country
Report.
Available
at:
http://www.google.gr/url?sa=t&rct=j&q=azerbaijan%2C%20cdm%20criteria%2C%202010&source=w
eb&cd=60&cad=rja&ved=0CF8QFjAJODI&url=http%3A%2F%2Fenpiseis.ew.eea.europa.eu%2Fproject-activities%2Fcountry-folders%2Fazerbaijan%2Fenpi-seis-countryreport-azerbaijan-final.pdf%2Fdownload&ei=VTg9UJiSMuKA0AXcxIGQBQ&usg=AFQjCNF_RqEPsrw3W4-aceac_oyt4DReQ
http://www.un-az.org/undp/doc/20100406_EE_Outcome_Evaluation_Final.pdf
Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU), 2008. Country
Profiles for CDM and JI Project Development: Europe and Central Asia – Environmental Series.
Available
at:
http://www.bmu.de/fileadmin/bmuimport/files/pdfs/allgemein/application/pdf/country_profiles.pdf
Government of Azerbaijan, 2009. Decree of Azerbaijan Republic dated April 14, 2009 - State Program
on socio-economic development of regions of the Republic of Azerbaijan for 2009-2013 years.
Available
at:
http://www.cled.az/pdf/others/Azerbaijan%20Regional%20Development%20Programe%20for%20200
9-2013.pdf
Ministry of Ecology and Natural Resources of the Republic of Azerbaijan, 2010. 2 nd National
Communication to UNFCCC. Available at: http://unfccc.int/resource/docs/natc/azenc2.pdf
18
PROMITHEAS-4: “Knowledge transfer and research
needs for preparing mitigation/adaptation policy portfolios”
Ministry of Industry and Energy of Azerbaijan Republic, Guidebook on legislation regulating small
hydropower in Azerbaijan. Available at: http://www.un-az.org/doc/guide_book.pdf
Republic of Azerbaijan, 2008. State Program on Poverty Reduction and Sustainable Development in
the
Republic
of
Azerbaijan
for
2008-2015.
Available
at:
http://www.cled.az/pdf/others/Azerbaijan%20Poverty%20Program%20for%202008-2015.pdf
Republic of Azerbaijan, 2005. State Program for Development of Fuel and Energy Sector in Azerbaijan
(2005-2015)Presidential
Decree
of
February
14,
2005.
Available
at:
http://www.carecprogram.org/uploads/docs/AZE-Fuel-and-Energy-Strategy-en.pdf
Spurgeon James, Cooper Emily, Kock Beaudry, Verdiyev Rafig, 2011. Analysis for European
Neighbourhood Policy (ENP) Countries and the Russian Federation on social and economic benefits of
enhanced environmental protection – AZERBAIJAN, COUNTRY REPORT. Available at:
http://www.environment-benefits.eu/pdfs/Azerbaijan-ENPI%20Benefit%20Assess.pdf
State
Agency
for
Alternative
and
Renewable
Energy,
2011.
Available
http://eeas.europa.eu/delegations/azerbaijan/documents/page_content/2_-_jamil_malikov__re_strategy_in_azerbaijan.pdf
at:
The International Fund for Agricultural Development, 2010. Republic of Azerbaijan – Integrated Rural
Development Project, PROJECT DESIGN REPORT - Volume I: Main Report, Near East and North
Africa
Division,
Programme
Management
Department.
Available
at:
http://www.ifad.org/operations/projects/design/102/azerbaijan.pdf
The
State
Agency
on
Alternative
and
Renewable
http://www.abemda.az/uploads/ABEMDA%20prezintation.pdf
Energy
Sources,
2012
United Nations Economic Commission for Europe, 2011. 2 nd Environmental Performance Review,
Azerbaijan.
Available
at:
http://www.unece.org/fileadmin/DAM/env/epr/epr_studies/azerbaijan%20II.pdf
19
PROMITHEAS-4: “Knowledge transfer and research
needs for preparing mitigation/adaptation policy portfolios”
BUSINESS – AS – USUAL SCENARIO (2000 – 2050)
BAU scenario description
General comments
The current status of the Azeri climate change policy demonstrates a limited number of
steps for its development after the ratification of the Kyoto Protocol in 2000 and until the end
of 2010. Efforts to implement international commitments regarding climate change, focused
on programmes, which included activities to identify suitable RES, measures on climate
change mitigation and actions for improved climate monitoring; but so far neither a
comprehensive mitigation nor an adaptation strategy has been worked out (UNECE, 2011).
The State Program “On utilization of Alternative and Renewable Energy Sources in
Azerbaijan Republic and its continuation the State Programme on “Socioeconomic
Development of the Regions of Azerbaijan for the period 2009–2013” attracted considerable
resources for the development of energy, water and sanitation infrastructure in the country
since the first Environmental Progress Report (EPR) (UNECE, 2011).
More specifically:
-
For the RES component the country continued implementing the “State programme on
the use of alternative and renewable energy 2004-2013” (EC, 2010). However, activities,
including studies on potential alternative renewable energy sources and capacity-building
measures, were launched only in 2008–2009 (UNECE, 2011). The country established in
2009 the “State agency of alternative and renewable energy sources”. Azerbaijan
commissioned a 50 MW wind farm and continued the development of projects
particularly in the area of wind power and small hydro (EC, 2010).
-
For mitigation through emission trading the country took steps to prepare further Clean
Development Mechanism (CDM) projects, but only one CDM project was registered at
UN level5. The national CO2 efficiency is still low, but cost-effective reduction of GHG
emissions is possible through CDM (UNECE, 2011).
-
The Azeri inventory system of emissions is based on annual emission reports. The reports
are to be submitted by the operators of emission sources (more than 12,000 sources
registered). They will also concern estimates of emissions from mobile sources, based on
fuel consumption. Emissions from households are not included. Emission projections
based on advanced modeling techniques are not being developed for air pollutants
(UNECE, 2011).
-
The National Programme on the Rehabilitation and Expansion of Forests (published in
2008) has measures for climate change mitigation and the State Programme on
Hydrometeorology includes actions for improved climate monitoring. However no
comprehensive mitigation or adaptation strategy has been worked out (UNECE, 2011).
On the other hand the country implemented further its energy policy as defined by the
“State programme on fuel-energy complex development for 2005-2015” (EC, 2010).
Azerbaijan continued to invest in power generation and distribution infrastructure. Access to
electricity is now almost universal and the quality of services improved significantly (EBRD,
2010). It advanced work towards the new energy sector legislation, which aims at a measure
of approximation with EU rules (EC, 2010).
Regarding developments in the energy sector in July 2009, the Tariff Council increased
gas tariffs and Azerigas, the national gas company, was integrated into SOCAR. In 2009,
Azerbaijan also rehabilitated further electricity and gas infrastructure, put new electricity
generators into operation and progressed on the reduction of network losses. Azerbaijan was a
5
http://www.cdmpipeline.org/
20
PROMITHEAS-4: “Knowledge transfer and research
needs for preparing mitigation/adaptation policy portfolios”
signatory to the Statute of the International Renewable Energy Agency, established on 26
January 2009 (Cakmak A.M., Evrim Ergun Cagdas Av. Dr., 2011). Azerbaijan commissioned
a second electricity link with Iran and continued to work towards an Azerbaijan-GeorgiaTurkey electricity interconnection (EC, 2010).
Policy Portfolio for the BAU scenario
Azerbaijan has no schemes of subsidies aimed to encourage energy efficiency and no
specific obligations to purchase renewable energy (Energy Charter Secretariat, 2011). There
is no established market for renewable energy. According to the legislation generating
companies may sell energy in the wholesale market at the tariffs approved by the Tariff
Council (Energy Charter Secretariat, 2011). The following orders and resolutions reflect this
situation.
Laws for RES
Presidential Order on “Privatization of Small Hydropower Plants” (No. 844, issued on
December 21, 2001)6
It concerned the privatization of nine small hydropower plants (Guba, Gusar, Sheki,
Chichekli [Zurnabad], Mughan, Zeykhur, Nugadi, Balakan, and Chinarly) (Ministry of
Industry and Energy of Azerbaijan Republic, 2004).
Decree No. 187, of the Cabinet of Ministers of the Azerbaijan Republic (date: 15 October
2005)
Imports of wind appliances and their parts are free from customs duties and VAT (Energy
Charter Secretariat, 2011; Cakmak A.M., Evrim Ergun Cagdas Av. Dr., 2011).
Tariffs
The promotion of the RES is affected by the current tariff structure which is under the
following decrees and decisions:
-
Decree of the President of the Republic of Azerbaijan dated December 26, 2005, № 341,
“On Approval of Statute of the Tariff (price) Council of the Republic of Azerbaijan”7,
-
Resolution of the Cabinet of Ministers dated December 30, 2005, № 247 on “Rules for
organization of state control over formation and application of the tariffs (prices) applied
for the state regulation”8
The government established a medium-term tariff policy that incorporates a transition to
full cost recovery for utility service providers with a 10% return on equity (Energy Charter
Secretariat, 2011). This allows utilities to become financially self-sustaining. The Tariff
Council chaired by the Minister of Economic Development determines retail and wholesale
tariffs, gas and fuel supply prices (Energy Charter Secretariat, 2011). This tariff structure
strongly favors the domestic consumer, who is the principal customer for Azernergy’s
electricity production. Rates to industrial and commercial consumers are considerably higher
(ADB, 2009).
The tariff rates are low, when compared internationally, and the rate paid for purchasing
RES into the grid system—around 6q—are below the 24q or so paid in Germany (and other
parts of Europe) to encourage production and help make the industry viable (EBRD, 2010;
6
7
8
http://e-qanun.az/print.php?internal=view&target=1&docid=2908&doctype=0# - original, in Azeri
www.tariffcouncil.gov.az
www.tariffcouncil.gov.az
21
PROMITHEAS-4: “Knowledge transfer and research
needs for preparing mitigation/adaptation policy portfolios”
ADB, 2009). The tariff council increased gas tariffs for households in July 2009 but tariffs
for large industrial users remained unchanged (EBRD, 2010)
In 2011 the wholesale price of electricity produced by private small hydropower stations
(i.e., the hydropower stations with a generation capacity of 50 to 10000 kW) is 0,025 AZN
per kW/hour (approx. 0,03 cents US$) while the wholesale price of electricity produced by
wind power stations is 0,045 AZN (approx 0,056 cents US$) (Cakmak A.M., Evrim Ergun
Cagdas Av. Dr., 2011).
The tariff also has to reflect the fact that the fuel costs of Azerenergy are heavily
subsidized at present, though this could change. The rates for electricity were last increased in
2007, and face the distinct possibility of substantial rises, such as were seen (x100%) in June
of 2009 for gas (though not to Azerenergy (ADB, 2009). In 2009, the Tariff Council of
Azerbaijan developed a wind tariff model that would make wind more attractive to investors
(EBRD, 2009).
Licences
Pursuant to the Licensing Rules, any legal entities and individuals who intend to work in
design, construction and operation of small hydropower stations (with a capacity of 50 to
10,000 kW) and energy-generating facilities from (i) geothermal waters and (ii) wind, sun,
and biomass with a capacity exceeding 10 kW, must obtain a special permit (license) from the
Ministry (Cakmak A.M., Evrim Ergun Cagdas Av. Dr., 2011). The Ministry evaluates the
application and decides within 30 business days, which may be extended up to an additional
15-day term (Cakmak A.M., Evrim Ergun Cagdas Av. Dr., 2011). If the applicant fails to start
the implementation of the project within one year of the date of the license then the Ministry
may revoke it (Cakmak A.M., Evrim Ergun Cagdas Av. Dr., 2011).
Presidential Decree on “Creation of a State Agency for Alternative and Renewable Energy”
(17th July 2009)9
It concerned the establishment of a new Agency for the RES in Azerbaijan. This agency
was based in the Ministry of Industry and Energy (ADB, 2009).
Resolution of the cabinet of Ministers of the Azerbaijan Republic on Approval of the "Rules of
Issuing Special Permission to Activity Concerning Alternative and Renewable Energy
Sources" May, 2010.
No available information.
Laws for Energy Efficiency
Presidential decree on “Improving management in the field of the heating supply of the
Azerbaijan Republic” (8 June 2006, No. 847)
No available information.
Laws for emission trading
Presidential Decree - № 727 dated 1 April, 2005
This Decree nominates as Designated National Authority (DNA) the Ministry of Ecology
and Natural Resources (MENR) for the Clean Development Mechanism (CDM) and its
Climate Change and Ozone Centre acts as the secretariat. Azerbaijan has signed memoranda
9
http://e-qanun.az/print.php?internal=view&target=1&docid=23635&doctype=0 original, in Azeri
22
PROMITHEAS-4: “Knowledge transfer and research
needs for preparing mitigation/adaptation policy portfolios”
with Denmark and Germany and plans to sign further memoranda with other countries. A
carbon fund has been planned but not yet established. Thirty-four projects with a potential
reduction of 19 million tons of CO2 eq have been proposed, but only one project have been
registered10 (UNECE, 2011).
Policy instruments for the transport sector
Customs tariffs differentiate between new and used vehicles. Import duty on new vehicles
(less than a year) is charged at a rate of 0,4 US$ per cm3 of engine volume, while for used
vehicles is 0,7US$. This differentiation between new and used cars is not strong enough to
discourage the import of polluting vehicles and provide incentives for fleet renewal.
Decree “On Activities to comply with the European Standards and Requirements for
emissions in Atmosphere of Harmful Substances from Transport in Azerbaijan (import and
production in the Republic)” (No. 45 as of 06.03.2010)
The Cabinet of Ministers adopted this decree so as to endorse the Action Plan concerning
Compliance with the European Standards and Requirements for Harmful Substances
Emissions in the Atmosphere from Automobile Transport. From July 1, 2010 all automobiles
exploited since that date should apply the environmental standard Euro-2 for harmful
substances emissions (EEA, 2011). Starting from 2013 the EURO 3 level will be applied. The
Ministry of Transport is also considering the introduction of a low emission zone in the centre
of Baku (UNECE, 2011). Imports of vehicles not in compliance with the Euro-2 standard are
banned from of July 2010 (UNECE, 2011).
Adaptation
Policy instruments for water management
The majority of water-related laws in Azerbaijan have not changed since 2003, and
almost no amendments were introduced (UNECE, 2011)11. There is lack of a specific water
policy and water strategy documents in Azerbaijan. Usually the national programmes and the
action plans contain components addressing water issues and together form the water policy
(UNECE, 2011). The main obstacle is the numbers of actors involved in water issues and the
limited communication among them. The legal framework for water in Azerbaijan has not
kept up with the existing institutional infrastructure which is being developed (UNECE,
2011).
Water fees
The tariff Regulation concerns also water tariffs. Water use fees collected by the State
Company play a limited role in financing the main water infrastructure, which is almost
completely reliant on budgetary allocations. Fees are approved by the Tariff Council, and
there are no plans to increase them.
Main characteristics of the policy portfolio
The weaknesses of this policy portfolio are the following:
-
The State programme on the use of alternative and renewable energy 2004-2013”
expresses the intention to offer incentives for investments in RES, but detailed incentives
10
http://www.cdmpipeline.org/
Environmental legislation which specifies the environmental criteria and standards required to be met for
irrigation related investments includes the Law on Amelioration and Irrigation, (1996), the Land Code No. 217
(1999), Water Code No. 418 (1997), and Forest Code (1997) (The International Fund for Agricultural
Development, 2010).
11
23
PROMITHEAS-4: “Knowledge transfer and research
needs for preparing mitigation/adaptation policy portfolios”
were not elaborated, thus leaving a gap in implementing the Programme and attracting
investment (UNECE, 2011). There appears to be lack of interest and of governmental
support of RES development due to favorable status of the power sector in the country,
and the dominance of the oil and gas industry (EBRD, 2009). Investments in pilot and
demonstration projects are low, but some have expressed interest. Also, lack of technical
capacity to act regarding the investment interests prevented further action. Additionally,
the electrical infrastructure is in poor condition. The improvement of the electrical
infrastructure through investments may make future development of renewables more
accessible (EBRD, 2009).
-
The greatest problem in the tariff area was the lack of a comprehensive, clear tariff
methodology reflecting a clearly stated strategy on the nature of energy production (ADB,
2009; EBRD, 2009). The situation improved lately since the tariffs in the energy sector
became more cost reflective; collection rates created better conditions for efficiency and
improved incentives for better environmental management (UNECE, 2011). There was
overall progress in the utilities sector for charging users regarding the effective use of
resources and for metrification and tariff changes. However, collection rates in utilities
are still unsatisfactory and there is no independent tariff-setting process (UNECE, 2011).
The State Agency for Alternative and Renewable Energy in Azerbaijan is unlikely to
house the tariff-setting function, which will likely remain with the Tariff Commission in
the Ministry of Economic Development. The tariff structure is a key instrument in making
policy work in this sector with regard to R&AE (ADB, 2009).
-
The Renewable and Alternative Energy (R&AE) field lacks of any oversight body—
being dispersed among many ministries and agencies with no coordination mechanism
(ADB, 2009). The State Agency for Alternative and Renewable Energy may overcome
this problem and provide focus, coordination and direction since it is still in the process of
being designed and offers the possibility of a substantial administrative improvement in
achieving policy goals (ADB, 2009). This Agency would appear pivotal and would be a
logical base for technical and other capacity-building assistance (ADB, 2009).
-
The tariff structure does not recognize the contribution of R&AE to stated government
policies. A modified tariff structure could incorporate these benefits as a real return to the
social and broadly economic climate of the country (ADB, 2009).
-
Technology-based emission limit values or generally binding quantified requirements to
reduce emissions are not applied (UNECE, 2011).
-
Best available techniques (BATs) are defined but can not be taken into consideration
during the permit issuing procedure. Existing legal provisions do not create a sufficient
basis for permit issuing, especially the absence of technology-based emission limit
values, but also the lack of guidance on BATs. The role of EIA in the permit issuing
process is not fully defined and depends on decisions by the competent authority
(UNECE, 2011).
-
A more favorable investment climate through administrative, legal and economic reform
could have been established, along with a mechanism for using the CDM returns for those
actually reducing the carbon emissions, directly or indirectly. The system is complex and
murky at the moment (ADB, 2009). Simplified modalities and procedures for small-scale
CDM project activities would reduce the administrative burden (UNECE, 2011).
-
For the implementation of CDM in Azerbaijan the problems are: low incentives for
companies in view of the booming economy and the burdensome administrative process
connected with the risk of rejection at some point of the process are perceived as the main
bottlenecks (UNECE, 2011).
24
PROMITHEAS-4: “Knowledge transfer and research
needs for preparing mitigation/adaptation policy portfolios”
-
The incorporation of CDM savings in the generation of alternative energy and whether
these can be realized directly by the power producer12 remains a problem. The CDM
framework in Azerbaijan is very complex and incompletely understood (ADB, 2009).
The main outcomes of this policy portfolio are:
-
Electricity consumption fell from 20,1 % in 2007 down to 14,9% in 2010 due to the
implementation of a metering programme and switching from electricity to gas heating in
the residential sector (Energy Charter Secretariat, 2011).
-
Energy generated from renewable sources in 2009 constituted 12,4% of all power
generated in Azerbaijan, all of which is from hydropower stations operated by Azerenerji.
Data from privately-owned hydropower stations and other renewable energy sources is
unavailable (Cakmak A.M., Evrim Ergun Cagdas Av. Dr., 2011).
-
For the time interval 2003 - 2009, a declining trend of emissions from stationary sources
was observed, whereas emissions from mobile sources increased by almost 64%, which is
due to the development of the vehicle fleet. In 2008, the emissions from mobile sources
were twice as high as those from stationary sources. At an aggregate level, due to these
opposing trends, there is no significant tendency over time in total emissions, although
significant year-by-year fluctuations occur (UNECE, 2011).
12
The producers create savings and should benefit from them in terms of returns on their investment. These
savings are real in cash terms and should feature in the investment plans of private companies (ADB, 2009).
25
PROMITHEAS-4: “Knowledge transfer and research
needs for preparing mitigation/adaptation policy portfolios”
References
ADB, 2009. A Roadmap for Renewable Energy in Azerbaijan - 2009. R-CDTA 7274: Azerbaijan
Alternative Energy Sector Analysis and Roadmap. Available at: http://greenazerbaijan.org/wpcontent/uploads/2011/03/Azerbaijan-Alternative-Energy-Sector-Analysis-and-Roadmap-2009.pdf
BMZ, 2010. Adaptation to Climate Change in the Kura-Aras River Basin - River Basin Snapshot, Draft
for
Discussion.
Available
at:
http://www.kfwentwicklungsbank.de/DE_Home/Sektoren/Wasser/Klimawandel/Kura-Aras.pdf
Cakmak A.M., Evrim Ergun Cagdas Av. Dr., 2011. Global Renewable Energy Guide. Available at: ş
http://www.cakmak.av.tr/pdf/Global%20Renewable%20Energy%20Guide%202011.pdf
EBRD,
2009.
Azerbaijan,
Country
Profile.
Available
at:
http://ws223.myloadspring.com/sites/renew/Shared%20Documents/2009%20Country%20Profiles/Azerbaijan.pdf
EBRD,
2009.
Azerbaijan.
Country
at:http://www.ebrd.com/downloads/legal/irc/countries/azerbaijan.pdf
profile.
Available
EBRD, 2010. Strategy for Azerbaijan 2010 – 2013, as approved by the Board of Directors at its
meeting
on
7
December
2010.
Available
at:
http://www.ebrd.com/downloads/country/strategy/azerbaijan_2010.pdf
EC, 2007. European Neighbourhood and Partnership Instrument – Azerbaijan, National Indicative
Programme
2007-2010.
Available
at:
http://ec.europa.eu/world/enp/pdf/country/enpi_nip_azerbaijan_en.pdf
EC, 2010. Commission Staff Working Document, Accompanying the Communication from the
Commission to the European Parliament and the Council, Taking stock of the European
Neighbourhood Policy (ENP) - Implementation of the European Neighbourhood Policy in 20072013:Progress Report Azerbaijan. Brussels, 12/05/2010, SEC(2010) 519. Available at:
http://ec.europa.eu/world/enp/pdf/progress2010/sec10_519_en.pdf
EC, 2012. Joint Staff Working Document, Implementation of the European Neighbourhood Policy in
Azerbaijan, Progress in 2011 and recommendations for action - Accompanying the document, Joint
Communication to the European Parliament, the Council, the European Economic and Social
Committee and the Committee of the Regions, Delivering on a new European Neighbourhood Policy,
Brussels,
15.5.2012,
SWD(2012)
111
final.
Available
at:
http://ec.europa.eu/world/enp/docs/2012_enp_pack/progress_report_azerbaijan_en.pdf and
http://ec.europa.eu/world/enp/documents_en.htm#3
Energy Charter Secretariat, 2011. Azerbaijan Follow-up-in-depth Review of the Investment Climate
and
Market
Structure
in
the
Energy
Sector.
Available
at:
http://mie.gov.az/main/mie/files/Azerbaijan_ICMS_2011_ENG+(1).pdf
EEA, 2011. European Neighbourgood and Partnership Instrument – Shared Environmental Information
System,
Azerbaijan
Country
Report.
Available
at:
http://www.google.gr/url?sa=t&rct=j&q=azerbaijan%2C%20cdm%20criteria%2C%202010&source=w
eb&cd=60&cad=rja&ved=0CF8QFjAJODI&url=http%3A%2F%2Fenpiseis.ew.eea.europa.eu%2Fproject-activities%2Fcountry-folders%2Fazerbaijan%2Fenpi-seis-countryreport-azerbaijan-final.pdf%2Fdownload&ei=VTg9UJiSMuKA0AXcxIGQBQ&usg=AFQjCNF_RqEPsrw3W4-aceac_oyt4DReQ
Government of Azerbaijan, 2009. Decree of Azerbaijan Republic dated April 14, 2009 State Program on socio-economic development of regions of the Republic of Azerbaijan for 2009-2013
years.
Available
at:
http://www.cled.az/pdf/others/Azerbaijan%20Regional%20Development%20Programe%20for%20200
9-2013.pdf
Ministry of Ecology and Natural Resources of the Republic of Azerbaijan, 2010. 2 nd National
Communication to UNFCCC. Available at: http://unfccc.int/resource/docs/natc/azenc2.pdf
Ministry of Industry and Energy of Azerbaijan Republic, Guidebook on legislation regulating small
hydropower in Azerbaijan. Available at: http://www.un-az.org/doc/guide_book.pdfRepublic of
Azerbaijan, 2008. State Program on Poverty Reduction and Sustainable Development in the Republic
of
Azerbaijan
for
2008-2015.
Available
at:
http://www.cled.az/pdf/others/Azerbaijan%20Poverty%20Program%20for%202008-2015.pdf
26
PROMITHEAS-4: “Knowledge transfer and research
needs for preparing mitigation/adaptation policy portfolios”
Republic of Azerbaijan, 2005. State Program for Development of Fuel and Energy Sector in Azerbaijan
(2005-2015)Presidential
Decree
of
February
14,
2005.
Available
at:
http://www.carecprogram.org/uploads/docs/AZE-Fuel-and-Energy-Strategy-en.pdf
Spurgeon James, Cooper Emily, Kock Beaudry, Verdiyev Rafig, 2011. Analysis for European
Neighbourhood Policy (ENP) Countries and the Russian Federation on social and economic benefits of
enhanced environmental protection – AZERBAIJAN, COUNTRY REPORT. Available at:
http://www.environment-benefits.eu/pdfs/Azerbaijan-ENPI%20Benefit%20Assess.pdf
State
Agency
for
Alternative
and
Renewable
Energy,
2011.
Available
http://eeas.europa.eu/delegations/azerbaijan/documents/page_content/2_-_jamil_malikov__re_strategy_in_azerbaijan.pdf
at:
The International Fund for Agricultural Development, 2010. Republic of Azerbaijan – Integrated Rural
Development Project, PROJECT DESIGN REPORT - Volume I: Main Report, Near East and North
Africa
Division,
Programme
Management
Department.
Available
at:
http://www.ifad.org/operations/projects/design/102/azerbaijan.pdf
The
State
Agency
on
Alternative
and
Renewable
http://www.abemda.az/uploads/ABEMDA%20prezintation.pdf
Energy
Sources,
2012
United Nations Economic Commission for Europe, 2011. 2 nd Environmental Performance Review,
Azerbaijan.
Available
at:
http://www.unece.org/fileadmin/DAM/env/epr/epr_studies/azerbaijan%20II.pdf
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PROMITHEAS-4: “Knowledge transfer and research
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Key assumptions
The key assumptions used for the development of scenarios are similar to those used in
previously published studies and papers for Azerbaijan. The categories of the key parameters
are common for all scenarios and are divided as follows:
Demographics
According to the “2010 World Population Prospects” of the United Nations the population
of 49 countries is expected to decrease for the period 2011-2050, while 44 of them are
expected to continue decreasing for the period 2050-2100. The version “medium variant” of
the population projections will be used for the BAU scenario
Table 1: United Nations projections for the Azerbaijan population (UN, 2010).
Variant
Medium
20052010
1,35
2010
-2015
1,19
Average annual rate of change (%)
20152020203020402020
2025
2035
2045
0,96
0,64
0,43
0,34
20452050
0,33
20502055
0,09
Figure 1: Demographics: Population.
Economy
Gross Domestic Product
GDP is characterized as a key driver of energy demand in all regions (World Energy
Outlook 2010, IEA). It is assumed to grow worldwide by 3,2% per year on average over the
period 2008-2035. In general, the non-OECD countries continue to grow fastest (World
Energy Outlook 2010, IEA).
Table 2: Projections for the Azerbaijan GDP (IMF, 2011).
Year
Annual percent change of GDP (%)
2011
2,8
2012
2,5
2015
0,9
2017
3,1
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PROMITHEAS-4: “Knowledge transfer and research
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Azerbaijan is an economy that has completed its post-Soviet transition into a major oil
based economy (with the completion of the Baku-Tbilisi-Ceyhan Pipeline). Azeri GDP grew
41,7% in the first quarter of 2007, possibly the highest of any nation worldwide (RBC, “CIS
Statistics Committee reveals average GDP growth”, 2007). Azerbaijan is considered as one of
the most dynamic and strongest economies in the Commonwealth Independent States (CIS)
region and a leading regional investor (UN, 2011). The country reached the 55th position (out
of a total of 142 countries) in the 2011-2012 Global Competitiveness Index, outperforming all
its CIS neighbors (UN, 2011).
Azerbaijan produced 8 bln AZN - GDP, in January-February, 2012, up 0,5% from year
earlier (CESD, 2012a). State Statistical Committee says, during the reporting period, GDP in
the non-oil sector grew by 7,1% to 42,6%, while GDP in the oil and gas sector declined by
4,5% (CESD, 2012a). In this case, 60,5% of GDP have fallen to the share of industry, 2,5% –
agriculture, hunting and forestry (an increase of 2,8%), 5% – transport (1,6%), 5% –
construction 6,9% – wholesale and retail trade, repair of motor vehicles, household appliances
and personal items (9%), 1,3% – hotel and restaurant services (17,7%), 1,6% – the ICT sector
(14,1%), 11,3% – social and other spheres (CESD, 2012a).
The most recent forecasts regarding the GDP of Azerbaijan are the following:
-
UNIBANK in its regional forecasts, quotes an increase growth of 5,5% for 2017 slightly
less than the 2011 IMF projection for the same year (UNIBANK, 2011);
-
IMF presented an increase of 0.42% for 2012 (IMF, 2011);
-
The Government of Azerbaijan adjusted its previous official forecast of 5,7 % GDP
growth in 2012 to 2,5 % (CESD, 2012c);
-
ADB adjusted GDP Growth Rate for Azerbaijan from 4,1 % to 3,0 % according to
updated Asian Development Outlook (CESD, 2012c).
For the BAU scenario the GDP growth rate remains constant until year 2050 based on
projections of the table above.
Energy sector
Compared to the other countries in the region the impact of the global economic
downturn was much less severe on Azerbaijan (UN, 2011; EBRD, 2010). Nevertheless, oil
production declined in 2011 leading to a sharp slowdown trend in GDP growth, with the
lowest growth rate dropping to 0,2% from 5% in 2010 (UN, 2011). An increasing proportion
of the national budget is financed from oil revenues, so when global oil prices are higher then
there is also increase in revenues to the budget and the State Oil Fund (UN, 2011). 92% of
Azerbaijan’s export in the first half of 2012 was attributed to oil and oil products (CESD,
2012b).
For the period 2001-2009, Azerbaijan invested to the development of the oil and gas
sector, which resulted to an averaged 16% GDP growth per year (Ciarreta A, Shahriyar N.,
2012). It is indicative that for the 2003-2009 period the average GDP growth was 27% due to
strong oil and gas production gains, high international oil prices and sharply higher public
spending. The oil sector accounted for 42% of value added (of GDP), 90,7% of total gross
exports and 83,9% of total foreign investment in 2009 (Ciarreta A, Shahriyar N., 2012).
Industrial sector
Azerbaijan’s industrial production was reduced by 3% in the first half of 2012 compared
to the same period of 2011 because of reduction in the oil sector (CESD, 2012b).
Mineral
The mining and quarrying sectors accounted for 44,8% of the GDP in 2009, compared to
52,7% of the previous year 2008 (US Geological Survey Minerals Yearbook, 2009). For both
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PROMITHEAS-4: “Knowledge transfer and research
needs for preparing mitigation/adaptation policy portfolios”
years (2009 and 2008) almost all the output in these sectors was derived from the production
of oil and natural gas. The production of refined petroleum products accounted in 2009 for
2,2% of the GDP compared with 2,7% of the previous year (US Geological Survey Minerals
Yearbook, 2009). In 2009, the production of other mineral products was less than 1% of the
GDP (US Geological Survey Minerals Yearbook, 2009).
Figure 2: Economy: GDP real.
GDP per capita
Projections of this key driver are based on those of GDP and population. LEAP calculates
them automatically based on the projections of the other two key drivers as they are defined
for each scenario.
GDP distribution per sector
The GDP distribution per sector was based on the historical data. This distribution was
assumed the same for the BAU scenario.
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PROMITHEAS-4: “Knowledge transfer and research
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Average annual household income
Figure 3: Average annual household income.
Gini coefficient
Measures of income inequality are based on data on people's household disposable
income. a decline. The data on the Gini coefficient will be used for assessment of policy
portfolios in AMS method.
Climate Statistics
Review of information about the region13
A number of global and regional, climate and hydrology models have been developed to
assess temperature, precipitation and runoff levels for different climate scenarios. According
to forecasted scenarios, from 2021 to 2050 Azerbaijan will undergo a yearly mean
temperature increase of 1,5°C-1,6°C, or approximately 0,3°C every 10 years. Precipitation is
likely to increase by 10-20 % by 2050, relative to the period 1961-1990 (Spurgeon J. et al.,
2011).
Using data provided by the National Hydrometeorology Department of MENR, yearly
temperature and precipitation abnormalities from 1991 to 2000 have been analyzed. Over the
past 10 years the mean temperature has increased by 0,41°C. (UNECE, 2011) The increase
observed from 1961 to 1990 was 0,34°C, which means that the increase from 1991 to 2000
was 3 times faster Transmission and distribution losses were reduced to less than 15 per cent
in 2006 from close to 20 per cent in 2003 (UNECE, 2011).
Review of information about Azerbaijan
Over the last few years global climate warming has became evident in Azerbaijan.
Rainstorms, river flooding, floods, cold summers and weak winters are examples of that. In
13
Due to no available information about the respective variable, relevant information regarding the region is taken
into consideration.
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PROMITHEAS-4: “Knowledge transfer and research
needs for preparing mitigation/adaptation policy portfolios”
2009, total precipitation in Azerbaijan’s regions increased in comparison with previous years.
(FAO, 2010)
Azerbaijan, like other countries, takes certain measures against global climate warming.
Against the background of climate warming, regional changes have also taken place. Such
changes can be the identified from the 100-year observation data of the 16 most
representative meteorological stations (FAO, 2010). The trend analysis results show that over
the 100-year period the air temperature increased by 0,5–0,6°C (FAO, 2010). During the
period from 1961 to 1990, the increase in warming amounted to 0,3–0,6°C (FAO, 2010).
Precipitation
Annual precipitation in Azerbaijan ranges from 383 to 523mm with an average of about
435mm. During the year, days with precipitation are decreasing (Ministry of Ecology and
Natural Resources, 2010). By 2050, precipitation will increase 10-20% compared to its level
during the period of 1961 to 1990 (Ministry of Ecology and Natural Resources, 2010). An
increase in precipitation of 20% to 80% from West to East, respectively, is forecast, while in
Nakhchivan, precipitation will likely decrease by 20% (Ministry of Ecology and Natural
Resources, 2010).
Projections from two models refer to an increase and of two others to a reduction, while a
fifth model shows insignificant changes. However, they largely agree that precipitation will
increase in winter and decrease in summer (BMZ, 2010).
Temperature
The annual mean air temperature in Azerbaijan ranges from 11,1o C to 13,4oC, with an
average of 12,3oC. The yearly mean temperature increase for the period 2021 to 2050 is
estimated at 1,50°C-1,60°C, or approximately 0,30°C every 10 years (Ministry of Ecology
and Natural Resources, 2010). Between 2071 and 2100 the temperature is projected to
increase by 5°C in most parts of the country (Ministry of Ecology and Natural Resources,
2010). For the period 2021-2050 the number of days with mean temperatures above 10oC is
expected to rise by 100-700%, for an additional 10 to 35 such days per year, during 20712100 the number of days with mean temperatures above 10oC will rise by 1100-1500% over
the baseline figure, for an additional 25 to 80 such days per year (Ministry of Ecology and
Natural Resources, 2010).
According to forecasted scenarios, from 2021 to 2050 Azerbaijan will undergo a yearly
mean temperature increase of 1,50°C-1,60°C, or approximately 0,30°C every 10 years.
Precipitation is likely to increase by 10-20% by 2050, relative to the period 1961-1990
(Spurgeon J. et al., 2011). Models projections refer to an increase in temperature by 4,1-5,8°C
by 2100 (BMZ, 2010). Azerbaijani specialists project an increase of only 2°C, considering
“the regional peculiarities of real climatic parameters change and global background” (BMZ,
2010).
Frequency of extreme events
Flash floods
No information available for Azerbaijan.
Heat Waves
No information available for Azerbaijan.
Frost days
No information available for Azerbaijan.
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PROMITHEAS-4: “Knowledge transfer and research
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Water Resources
Water resources are estimated at approximately 39 km3. About 29,3 km3 of these are
surface waters and 8,8 km3 are groundwater (Ministry of Ecology and Natural Resources of
the Republic of Azerbaijan, 2010). No data are available for Azerbaijan and no assumptions
were inserted.
Surface waters
25-30% of the national surface water resources originate from within Azerbaijan’s
borders (Ministry of Ecology and Natural Resources of the Republic of Azerbaijan, 2010).
Azerbaijan is among the countries with the lowest available water resources because the per
capita share of water resources is about 1000 m3 per year (Ministry of Ecology and Natural
Resources of the Republic of Azerbaijan, 2010).
Ground Waters
High potential for groundwater use in low water seasons is estimated since only 5 million
m3 per day or 20% of these resources are tapped (Ministry of Ecology and Natural Resources
of the Republic of Azerbaijan, 2010).
Policies and Measures
Feed – in – tariff system
The tariff rates are low, when compared internationally, and the rate paid for purchasing
RES into the grid system—around 6q—are below the 24q or so paid in Germany (and other
parts of Europe) to encourage production and help make the industry viable (ADB, 2009).
Table 3: Current feed – in – tariffs.
Type of Power
Plant
Small
Hydropower
Wind Onshore
Installed capacity
P (kW)
Encouraging measures –
Feed In Tariff (c€/kWh)
50 to 10000 kW
0,0263
0,045
Land management
No policy instruments.
Surface of forest land
Approximately 11% of the national territory is covered by forests, which is about half of
the normal standard in world forestry practice (Ministry of Ecology and Natural Resources,
2010). Due to the lack of gas and other sources of energy in rural regions, the use of wood for
fuel has increased. In the past the import of wood and coal from Russia prevented
considerably tree logging. Large-scale logging is not possible in lowland woodlands due to
their limited area. Most forests grow on steep slopes where logging poses a threat of erosion.
According to reports by the Forestry Development Department, national woodlands consist
of: conifers (13,7 thousand hectares), broadleaved (848,3 thousand hectares) and others (softleaved trees prevail in the latter group and constitute about 53,9 thousand hectares) (Ministry
of Ecology and Natural Resources, 2010).
Global trends
Crude oil price
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PROMITHEAS-4: “Knowledge transfer and research
needs for preparing mitigation/adaptation policy portfolios”
Projections for the crude oil prices regarding the Reference scenario of the IEA, World
Energy Outlook 2010 will be used.
Natural gas price
Projections for the crude oil prices regarding the Reference scenario of the IEA, World
Energy Outlook 2010 will be used.
Coal price
Projections to be used.
EUA price
Projections about literature.
ERU price
Projections about of the EUA price.
CER price
Projections about the ERU price are similar to those of the EUA price.
Adaptation
Water Use
No updated information is available for Azerbaijan.
Hydropower needs in water
The hydropower potential of rivers in Azerbaijan is 40 billion kWh and technically
feasible potential is 16 billion kWh (State Agency in Alternative and Renewable Energy
Sources, 2012). 5 billion of the aforementioned amount is small hydro power plants (State
Agency in Alternative and Renewable Energy Sources, 2012).
The construction of hydropower plants is important in solving issues such as flood control,
clean production of electricity and creation of new irrigation systems (State Agency in
Alternative and Renewable Energy Sources, 2012). Building of 61 small hydropower plants is
planned. The use of small hydropower plants in electricity supply of settlements located far
from power lines and substations of the Unified Energy System may solve the problem of
power supply and also of other social problems14 .
14
http://www.abemda.az/?id=188&lang=3
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PROMITHEAS-4: “Knowledge transfer and research
needs for preparing mitigation/adaptation policy portfolios”
Energy Demand
Households
The main used energy source is natural gas followed by electricity, oil, coal and heat. The
increase in energy demand for this sector is linked with the increase in the average annual
household income.
Figure 4: Final energy demand in households.
Agriculture
Agriculture is the main user of land and water and therefore one of the most vulnerable
sectors in the region’s economy (Schlickenrieder J. et al., 2011). The main used energy source
is oil followed by electricity, natural gas, coal and heat. The increase in energy demand for
this sector is linked with the growth rate of GDP real.
Figure 5: Final energy demand in agriculture.
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PROMITHEAS-4: “Knowledge transfer and research
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Industry
The main used energy source is natural gas followed by oil, coal and biomass. The
increase in energy demand for this sector is linked with the growth rate of GDP real.
Figure 6: Final energy demand in industrial sector.
Services
No data on services.
Transport
This category includes aviation, automobile transport, railways and shipping. Its main
emissions are: CO2, CH4, N2O, NOx, CO and NMVOC gases (Ministry of Ecology and
Natural Resources, 2010). Emissions from the transport sector have been rapidly increasing
since 1999, according to calculations based on the amount of consumed fuel (Ministry of
Ecology and Natural Resources, 2010). CO2 emissions in this sector were lower in 2005 than
in the baseline year 1990; Only in aviation there is increase (109,7%) (Ministry of Ecology
and Natural Resources, 2010). Decrease for CO2 emissions from railways is attributed to the
greater variety of transport types used in railway operations. In shipping, the replacement of
vessels with new and relatively larger ones led to reduced emissions (Ministry of Ecology and
Natural Resources, 2010).
The main used energy source is oil followed by coal. The increase in energy demand for
this sector is linked with the growth rate of GDP real.
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PROMITHEAS-4: “Knowledge transfer and research
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Figure 7: Final Energy Demand in Transport sector per fuel.
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PROMITHEAS-4: “Knowledge transfer and research
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Transformation
Transmission and Distribution losses
There is a small increase in line resistance with increasing mean temperatures coupled
with negative effects on line sag and gas pipeline compressor efficiency due to higher
maximum temperatures (IPCC, 2007). Assuming that no modernization is planned, the
growth of T&D losses will follow the historical growth (2000 – 2010) for BAU scenario.
Electricity generation
Energy production is based on natural gas, fuel oil and water resources (Ministry of
Ecology and Natural Resources, 2010). The system comprises 10 Thermal Energy Systems
(TESs) and 6 Hydro Energy Systems (HESs) (Ministry of Ecology and Natural Resources,
2010). The thermal-electric stations are of two types: condensation and heating (Ministry of
Ecology and Natural Resources, 2010). Retrofitting at the majority of these stations resulted
in the reduction of GHG emissions, and other such projects are envisioned for implementation
as part of CDM (Ministry of Ecology and Natural Resources, 2010).
Azerbaijan’s total energy production increased from 27,9 million to 74,9 million oil
equivalent mainly due to oil and gas production. The country’s total energy consumption in
2009 was about 15,7 million tons, with a significant part of its production exported (Ciarreta
A, Shahriyar N., 2012).
Figure 8: Electricity generation.
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PROMITHEAS-4: “Knowledge transfer and research
needs for preparing mitigation/adaptation policy portfolios”
Heat production
Figure 9: Share of fuels in heat production.
Coal transformation
No information.
Oil Refining
Only historical data are presented (graph in current accounts about historical production,
etc.), because there is no information about this sector for the future. No change is assumed
for the BAU scenario.
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PROMITHEAS-4: “Knowledge transfer and research
needs for preparing mitigation/adaptation policy portfolios”
Global warming potential (GHG emissions)
The below graph shows the GHG emissions which are attributed to each “energy
consuming” sector.
Figure 10: GHG emissions per sector.
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PROMITHEAS-4: “Knowledge transfer and research
needs for preparing mitigation/adaptation policy portfolios”
References
CESD, 2012c. Center for Economic and Social Development - Azerbaijan Economy in the First Ten
Months
of
2012.
Available
at:
http://cesd.az/new/wpcontent/uploads/2012/11/Azerbaijan_Economy_first_ten_months_2012.pdf
CESD, 2012b. Center for Economic and Social Development - Azerbaijan Economy in the First half of
2012.
Available
at:
http://cesd.az/new/wpcontent/uploads/2011/05/Azerbaijan_Economy_first_half_2012.pdf
CESD, 2012a. Avaible at: http://cesd.az/new/2012/03/azerbaijan-gdp-in-the-first-2-months-of-2012/
FAO, 2010.Forests and Climate Change Working Paper 8 Forests and Climate Change in
Eastern Europe and Central Asia. Avaible at: http://www.fao.org/docrep/014/k9589e/k9589e00.pdf
RBC, “CIS Statistics Committee reveals average
http://www.rbcnews.com/free/20070403193147.shtml
GDP
growth”,
2007.
Avaible
at:
Management and Privatization of State and Public Land in Azerbaijan, Dr. Elshad Khanalibayli, 2008.
Avaible at: http://www.fig.net/commission7/verona_fao_2008/papers/10_sept/5_2_khanalibayli.pdf
Ministry of Ecology and Natural Resources of the Republic of Azerbaijan, 2010. 2 nd National
Communication to UNFCCC. Available at: http://unfccc.int/resource/docs/natc/azenc2.pdf
UN, 2011. United Nations – Azerbaijan, 2011 Annual Resident Coordinator Report. Available at:
http://www.az.undp.org/content/dam/azerbaijan/docs/AZ_2011_RC_Annual%20Report_20120131.pdf
UNIBANK, 2011. Investor Report – Unibank. Available at:
http://www.unibank.az/file/investor/Investors%20Presentation.pdf
U.S. Geological Survey Minerals Yearbook, 2009. Available at:
http://minerals.usgs.gov/minerals/pubs/country/2009/myb3-2009-aj.pdf
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PROMITHEAS-4: “Knowledge transfer and research
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OPTIMISTIC SCENARIO (2000 – 2050)
Optimistic scenario description
General comments
The Opt scenario is structured by: I) the mitigation/adaptation policy instruments that the
country has set into force after 1st January 2011; II) additional policy instruments in line with
the EU climate change policy that can be adjusted to the needs and priorities of the examined
country and III) the maximum exploitation of the potential of the country in energy efficiency
and renewable energy sources.
This scenario is also consistent with the intention of the country to promote its RES and
support the efficient use of energy. A first step towards these Azeri climate policy
components was the Presidential Order “On preparation of National Strategy on the use of
Alternative and RES for 2012-2020” (29 December 2011) (State Agency for Alternative and
Renewable Energy Sources, 2012).
This scenario adopts a more stringent climate change policy following the principles and
the main directions of the EU climate change policy.
Policy portfolio for this scenario
Mitigation
A. Existing policy instruments
Laws for RES
Presidential Order on “Preparation of State Strategy on Use Of Alternative and Renewable
Energy Sources for 2012-2020” (date: 29 December 2011)15
For ensuring the preparation of the State Strategy on the use of Alternative and
Renewable Energy Sources in the country during the time interval 2012-2020 the amount of 1
(one) million manta from the State budget of the Republic of Azerbaijan in 2011 will be
allocated to the State Agency for Alternative and Renewable Energy of the Ministry of
Industry and Energy of Azerbaijan Republic from the Reserve Fund of the President of the
Republic of Azerbaijan. The State Agency for Alternative and Renewable Energy Sources
(SAARE) under the Ministry of Industry and Energy jointly with other central and local
executive power bodies, local and international companies are to prepare and submit Draft
State Strategy for 6-month period16.
Laws for energy efficiency
None.
B. Additional policy instruments
Policy instruments linked with climate change policy issues
Integrated Pollution Prevention and Control policy instrument
The introduction of IPPC and BAT concepts as well as technology-based emission limit
values and other technical requirements will allow assist the country in reducing GHG
15
http://e-qanun.az/print.php?internal=view&target=1&docid=22844&doctype=0 and http://www.abemda.az/
http://www.azerbaijan.az/portal/newsen.html?action=GetFullNews&ldid=2005-0726&ltid=21:41:54&ndid=2012-02-01&nid=4
16
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PROMITHEAS-4: “Knowledge transfer and research
needs for preparing mitigation/adaptation policy portfolios”
emissions and improving energy efficiency in most productive sectors. Application of Best
Available Techniques (BAT) would lead also to increase of the technological level of the
country. EU BAT reference documents could be taken into account where possible when
defining guidance for national BAT.
Laws for RES
The existing policy portfolio does not have legal provisions for providing priority to the
renewable energy plants. The Power Station Law mentions that the Government may
subsidize the development of renewable energy producing power plants (Cakmak A.M.,
Evrim Ergun Cagdas Av. Dr., 2011). Based on this the following policy instruments are
proposed:
- Subsidies need to be included in the Azeri climate policy portfolio for supporting
more the RES technologies.
- Tax exemptions for three years or more depending on the amount of investment for
RES projects in the country.
Laws for energy efficiency
Energy efficiency standards (regulatory policy instrument) need to be implemented for all
sectors of the country. The most promising ones probably are the energy, the residential and
the industrial sector. Due to the lack of data the amount of expected energy savings is not
estimated. A 10% reduction in energy consumption of the three aforementioned sectors will
be possible through:
Residential sector
- Building code: It sets energy efficient standards for all the functions inside a building
(hot water, air conditioning, space heating, replacement of lighting lumps with more
efficient ones);
- Energy efficiency standards for household appliances;
- Thermal isolation of buildings.
Industrial sector
- Energy efficiency standards for the used technologies;
- Emission limits for the energy intensive installations;
Energy sector
- Energy efficient standards or emission limits that will require modernization or
replacement of old equipment with more energy efficient one;
- Tax exemptions for the installations that reduce substantially their carbon footprint;
- Subsidies for energy efficient investments. This policy instrument has been used.
Subsidies to energy utilities were in the order of about $320 million in 2006 and these
decreased to zero from 2007 (Energy Charter Secretariat, 2011).
Policy instruments for the transport sector
The total number of registered cars was 271,000 in 1995, but in 2007 it increased by 2,3
times and reached the amount of 616900 (Republic of Azerbaijan, 2008; Republic of
Azerbaijan, 2010). The old stock of cars, poor check and servicing of cars, together with lowquality fuel all contribute in increasing the levels of air pollution. 61% of all air pollutants are
emitted by motor transport (Republic of Azerbaijan, 2008; Republic of Azerbaijan, 2010).
79% of stationary sources of air pollution are located in Baku (Republic of Azerbaijan, 2008;
Republic of Azerbaijan, 2010).
43
PROMITHEAS-4: “Knowledge transfer and research
needs for preparing mitigation/adaptation policy portfolios”
Under the framework of the “Comprehensive Action Plan for Improving the
Environmental Situation for the period 2006–2010” a number of policy instruments were
implemented especially for Greater Baku. These instruments were: licensing of obsolete
vehicles, introduction of transport management system in Baku, completion and upgrading of
transport infrastructure, switch from fuel to gas, and improvement of abatement techniques
(UNECE, 2011).
However, the situation in the country shows that there are an increasing number of new
vehicles, but the age structure of the vehicle fleet is not satisfactory. There is a considerable
number of obsolete highly polluting cars and lorries still in operation (in 2008, 64% of
vehicles were registered before 2005 and 65% were mostly older than 18 years) (UNECE,
2011). In 2008, 70,3% of emissions into the air from mobile sources were registered in Baku
and 6,4% in Ganja. Road infrastructure is not fully sufficient to cope with the rapid increase
in vehicles (UNECE, 2011).
-
-
-
-
Based on this situation the following regulatory policy instruments are proposed:
The country focuses on the improvement of the road infrastructure and the upgrading of
railways. The increase of using the rail mode over the road needs to be encouraged.
In July 2011 an agency for regulator oversight in the road sector was established.
Reinforcing its capacity building will assist to the implementation of the policy
instruments.
Although the system is in place, Azerbaijan has not yet issued cards for digital
tachographs as required under the relevant road transport convention (EC, 2012).
In the rail sector, Azerbaijan took first steps to join the Convention OTIF
(Intergovernmental Organisation for International Carriage by Rail)17.
Azerbaijan plans to achieve a higher level of integration with the EU standards through
the completion of the negotiations of a comprehensive air services agreement, which are
to start in 2012 (EC, 2012)18.
Implementation of the same measures in Baku for the whole country.
Customs tariffs differentiate between new and used vehicles are increased. Import duty on
new vehicles (less than a year) is charged at a rate of 0,4 US$ per cm3 of engine volume,
while for used vehicles is 0,9US$.
Azerbaijan was going to implement Euro 2 standards19 in 2010 and then to start
preparations for the Euro 3 standard20 so as to implemented them in 2013 (Context,
2010). For this scenario these standards are considered also.
Policy instruments for the agricultural sector
The number of equipment that is used in Azeri farms is poor, both in the absolute
numbers of available tractor, machinery, and equipment as well as their condition/quality
(The International Fund for Agricultural Development, 2010). Most of the tractors and the
equipment in use are a few decades old, not appropriate for small plots and the type of soil in
particular areas (The International Fund for Agricultural Development, 2010).
17
The government recognises the need for financial viability and operating efficiency of the state railway company
so as to improve services. In July 2009 a presidential decree established the Azerbaijan Railways as a state-owned
closed joint stock company which is expected to commercialise its activities and introduce private sector
participation in a number of railway services such as passenger and freight transport (EC, 2012; EBRD, 2010).
18 In July 2009 Azerbaijan signed the horizontal air services agreement that harmonises existing air services
agreements between Azerbaijan and EU member states with EU law. The authorities also strengthened their
cooperation with the European Aviation Safety Agency and made progress towards convergence with European
safety standards (EBRD, 2010).
19 European emission standards are defined as the acceptable limits for exhaust emissions of new vehicles that are
sold in EU member states. These emission standards are determined through European Union directives staging
the progressive introduction of increasingly stringent standards.
20 Directive 98/69/EC, further amendments in 2002/80/EC.
44
PROMITHEAS-4: “Knowledge transfer and research
needs for preparing mitigation/adaptation policy portfolios”
This sector due to its adaptation needs will need more support. This can be achieved
through: i) Subsidies for purchasing new equipment and machinery, particularly for irrigation
systems and water storage facilities; ii) tax exemptions depending on the investment; and iii)
Awareness campaigns and trainning programmes for climate change, water management and
agriculture.
Laws for emission trading
CDM for industrial and energy sectors.
Adaptation
Policy instruments for water management
Regulatory policy instruments
The State Agency for Water Reserves under the Ministry of Emergency Situations was
established Agency by Presidential order (EEA, 2011).
Resolution of Tariff (price) Council of the Republic of Azerbaijan “On approval of consumer
groups and classification on water rendered by “Azersu” Stock Company” dated 06 January,
2011, numbered 04
Under the Order No. 462 on “State Program on the Utilization of Alternative and
Recyclable Energy Sources” there were amendments for the Tariff system with this
Resolution. The “Azersu” Stock Company and Minutes of the Tariff (price) Council Meeting,
dated January 31, 2011, decided:

Tariffs for water supply for Baku, Sumgait, Ganja, Mingachevir, Shirvan, Khirdalan cities
and Absheron region to be:
-
0,30 AZN (including VAT) for 1m3;
0,25 AZN for other regions (for 1m3 including VAT) and
12,0 AZN for consumer that use water as row material (for 1m3 including VAT).
Main characteristics of this policy portfolio
Energy efficiency standards need to be implemented for all sectors of the country. The
most promising ones probably are the energy, the residential and the industrial sector. Due to
the lack of data the amount of expected energy savings is not estimated. A 10% reduction in
energy consumption of the three aforementioned sectors will be possible. The key
assumptions are presented in the relevant part.
45
PROMITHEAS-4: “Knowledge transfer and research
needs for preparing mitigation/adaptation policy portfolios”
References
ADB, 2009. A Roadmap for Renewable Energy in Azerbaijan - 2009. R-CDTA 7274: Azerbaijan
Alternative Energy Sector Analysis and Roadmap. Available at: http://greenazerbaijan.org/wpcontent/uploads/2011/03/Azerbaijan-Alternative-Energy-Sector-Analysis-and-Roadmap-2009.pdf
BMZ, 2010. Adaptation to Climate Change in the Kura-Aras River Basin - River Basin Snapshot Draft
for
Discussion.
Available
at:
http://www.kfwentwicklungsbank.de/DE_Home/Sektoren/Wasser/Klimawandel/Kura-Aras.pdf
Cakmak A.M., Evrim Ergun Cagdas Av. Dr., 2011. Global Renewable Energy Guide. Available at: ş
http://www.cakmak.av.tr/pdf/Global%20Renewable%20Energy%20Guide%202011.pdf
Context, 2010. The US-Educated Azerbaijan Alumni Association – Elements of Alternative Energy
Policy
and
Implementation
in
Azerbaijan.
Available
at:
http://www.aaa.org.az/images/documents/publication/Context_II_ENG.pdf
EBRD,
2009.
Azerbaijan,
Country
Profile.
Available
at:
http://ws223.myloadspring.com/sites/renew/Shared%20Documents/2009%20Country%20Profiles/Azerbaijan.pdf
EBRD,
2009.
Azerbaijan.
Country
at:http://www.ebrd.com/downloads/legal/irc/countries/azerbaijan.pdf
profile.
Available
EBRD, 2010. Strategy for Azerbaijan 2010 – 2013, as approved by the Board of Directors at its
meeting
on
7
December
2010.
Available
at:
http://www.ebrd.com/downloads/country/strategy/azerbaijan_2010.pdf
EC, 2007. European Neighbourhood and Partnership Instrument – Azerbaijan, National Indicative
Programme
2007-2010.
Available
at:
http://ec.europa.eu/world/enp/pdf/country/enpi_nip_azerbaijan_en.pdf
EC, 2010. Commission Staff Working Document, Accompanying the Communication from the
Commission to the European Parliament and the Council, Taking stock of the European
Neighbourhood Policy (ENP) - Implementation of the European Neighbourhood Policy in 20072013:Progress Report Azerbaijan. Brussels, 12/05/2010, SEC(2010) 519. Available at:
http://ec.europa.eu/world/enp/pdf/progress2010/sec10_519_en.pdf
EC, 2012. Joint Staff Working Document, Implementation of the European Neighbourhood Policy in
Azerbaijan, Progress in 2011 and recommendations for action - Accompanying the document, Joint
Communication to the European Parliament, the Council, the European Economic and Social
Committee and the Committee of the Regions, Delivering on a new European Neighbourhood Policy,
Brussels,
15.5.2012,
SWD(2012)
111
final.
Available
at:
http://ec.europa.eu/world/enp/docs/2012_enp_pack/progress_report_azerbaijan_en.pdf and
http://ec.europa.eu/world/enp/documents_en.htm#3
Energy Charter Secretariat, 2011. Azerbaijan Follow-up-in-depth Review of the Investment Climate
and
Market
Structure
in
the
Energy
Sector.
Available
at:
http://mie.gov.az/main/mie/files/Azerbaijan_ICMS_2011_ENG+(1).pdf
EEA, 2011. European Neighbourgood and Partnership Instrument – Shared Environmental Information
System,
Azerbaijan
Country
Report.
Available
at:
http://www.google.gr/url?sa=t&rct=j&q=azerbaijan%2C%20cdm%20criteria%2C%202010&source=w
eb&cd=60&cad=rja&ved=0CF8QFjAJODI&url=http%3A%2F%2Fenpiseis.ew.eea.europa.eu%2Fproject-activities%2Fcountry-folders%2Fazerbaijan%2Fenpi-seis-countryreport-azerbaijan-final.pdf%2Fdownload&ei=VTg9UJiSMuKA0AXcxIGQBQ&usg=AFQjCNF_RqEPsrw3W4-aceac_oyt4DReQ
Government of Azerbaijan, 2009. Decree of Azerbaijan Republic dated April 14, 2009 - State Program
on socio-economic development of regions of the Republic of Azerbaijan for 2009-2013 years.
Available
at:
http://www.cled.az/pdf/others/Azerbaijan%20Regional%20Development%20Programe%20for%20200
9-2013.pdf
Ministry of Ecology and Natural Resources of the Republic of Azerbaijan, 2010. 2 nd National
Communication to UNFCCC. Available at: http://unfccc.int/resource/docs/natc/azenc2.pdf
Ministry of Industry and Energy of Azerbaijan Republic, Guidebook on legislation regulating small
hydropower in Azerbaijan. Available at: http://www.un-az.org/doc/guide_book.pdfRepublic of
46
PROMITHEAS-4: “Knowledge transfer and research
needs for preparing mitigation/adaptation policy portfolios”
Azerbaijan, 2008. State Program on Poverty Reduction and Sustainable Development in the Republic
of
Azerbaijan
for
2008-2015.
Available
at:
http://www.cled.az/pdf/others/Azerbaijan%20Poverty%20Program%20for%202008-2015.pdf
Republic of Azerbaijan, 2005. State Program for Development of Fuel and Energy Sector in Azerbaijan
(2005-2015)Presidential
Decree
of
February
14,
2005.
Available
at:
http://www.carecprogram.org/uploads/docs/AZE-Fuel-and-Energy-Strategy-en.pdf
Spurgeon James, Cooper Emily, Kock Beaudry, Verdiyev Rafig, 2011. Analysis for European
Neighbourhood Policy (ENP) Countries and the Russian Federation on social and economic benefits of
enhanced environmental protection – AZERBAIJAN, COUNTRY REPORT. Available at:
http://www.environment-benefits.eu/pdfs/Azerbaijan-ENPI%20Benefit%20Assess.pdf
State Agency for Alternative and Renewable Energy Sources, 2012. Renewable Energy Strategy of
Azerbaijan. Presentation by Director Akim Baladov. Available at: http://abemda.az/?lang=3&id=310
and http://www.abemda.az/uploads/ABEMDA%20prezintation.pdf
State
Agency
for
Alternative
and
Renewable
Energy,
2011.
Available
http://eeas.europa.eu/delegations/azerbaijan/documents/page_content/2_-_jamil_malikov__re_strategy_in_azerbaijan.pdf
at:
The International Fund for Agricultural Development, 2010. Republic of Azerbaijan – Integrated Rural
Development Project, PROJECT DESIGN REPORT - Volume I: Main Report, Near East and North
Africa
Division,
Programme
Management
Department.
Available
at:
http://www.ifad.org/operations/projects/design/102/azerbaijan.pdf
The
State
Agency
on
Alternative
and
Renewable
http://www.abemda.az/uploads/ABEMDA%20prezintation.pdf
Energy
Sources,
2012
United Nations Economic Commission for Europe, 2011. 2 nd Environmental Performance Review,
Azerbaijan.
Available
at:
http://www.unece.org/fileadmin/DAM/env/epr/epr_studies/azerbaijan%20II.pdf
UN, 2011. United Nations – Azerbaijan, 2011 Annual Resident Coordinator Report. Available at:
http://www.az.undp.org/content/dam/azerbaijan/docs/AZ_2011_RC_Annual%20Report_20120131.pdf
47
PROMITHEAS-4: “Knowledge transfer and research
needs for preparing mitigation/adaptation policy portfolios”
Key assumptions
The key assumptions used for the development of scenarios are similar to those used in
previously published studies and papers for Azerbaijan. The categories of the key parameters
are common for all scenarios and are divided as follows:
Demographics
Same as in BAU scenario.
Economy
Gross Domestic Product
Same as in BAU scenario.
GDP per capita
Same as in BAU scenario.
GDP distribution sector
Same as in BAU scenario.
Average annual household income
Same as in BAU scenario.
Gini coefficient
Measures of income assessment of policy portfolios in AMS method.
Climate Statistics
Precipitation
According to the information quoted in the respective session of BAU scenario, by 2050,
precipitation will increase by 10% compared to 2010 (Ministry of Ecology and Natural
Resources, 2010).
Figure 11: Precipitation in OPT scenario.
48
PROMITHEAS-4: “Knowledge transfer and research
needs for preparing mitigation/adaptation policy portfolios”
Temperature
According to the information quoted in the respective session of BAU scenario, by 2050,
temperature will increase by 1,5oC.
Figure 12: Temperature in OPT scenario.
Frequency of extreme events
There is no information about this group of key parameters for Azerbaijan.
Water resources
There is no information about this group of key parameters for Azerbaijan.
Policies and Measures
Feed – in – tariff system
For the Opt scenario they follow the time development of the costs as they are presented
by RES technology type.
Land management
Same information as in BAU and in the policy portfolio of OPT.
Global trends
Crude oil price
Projections for the crude oil prices regarding the Reference scenario of the IEA, World
Energy Outlook 2010 will be used.
Natural gas price
Projections for the crude oil prices regarding the Reference scenario of the IEA, World
Energy Outlook 2010 will be used.
Coal price
Projections to be used.
49
PROMITHEAS-4: “Knowledge transfer and research
needs for preparing mitigation/adaptation policy portfolios”
EUA price
Projections about literature.
ERU price
Projections about of the EUA price.
CER price
Projections about the ERU price are similar to those of the EUA price.
Adaptation
Water Use
Same information as in the respective session of BAU scenario.
50
PROMITHEAS-4: “Knowledge transfer and research
needs for preparing mitigation/adaptation policy portfolios”
Energy Demand
Households
Under the policy portfolio of the OPT scenario there are policy instruments, as described
in the relevant session, for achieving energy savings in this sector. There is also change in the
Fuel share. Biomass and geothermal are assumed to have higher shares, while that of natural
gas is assumed to be reduced respectively.
Figure 13: Energy demand of the household sector in OPT scenario.
Agriculture
Under the policy portfolio of the OPT scenario there are policy instruments, as described
in the relevant session, for achieving energy savings in this sector. There is also change in the
“Fuel share”. Biomass is assumed to have higher share, while that of natural gas is reduced
respectively.
51
PROMITHEAS-4: “Knowledge transfer and research
needs for preparing mitigation/adaptation policy portfolios”
Figure 14: Energy demand of the agricultural sector in OPT scenario.
Industry
Under the policy portfolio of the OPT scenario there are policy instruments, as described
in the relevant session, for achieving energy savings in this sector. These are assumed to
concern the most energy intensive industries of the country, which are non metallic minerals,
chemicals, food and tobacco.
Figure 15: Energy demand of the industrial sector in OPT scenario.
52
PROMITHEAS-4: “Knowledge transfer and research
needs for preparing mitigation/adaptation policy portfolios”
Services
No data on services.
Transport
Under the policy portfolio of the OPT scenario there are policy instruments, as described
in the relevant session, for achieving energy savings in this sector. It is also assumed that the
share of biofuels increases and that of oil is reduced.
Figure 16: Energy demand of the transport sector in OPT scenario.
53
PROMITHEAS-4: “Knowledge transfer and research
needs for preparing mitigation/adaptation policy portfolios”
Transformation
Transmission and Distribution losses
Due to modernization, energy saving measures and moderate climate change impacts this
type of losses is assumed to be reduced compared to their historical values.
Electricity generation
Energy production was based on natural gas, fuel oil and water resources in the BAU
scenario. For the OPT scenario small scale hydro, solar and wind energy are also included for
electricity generation based on the available information about the potential of the country in
these RES types.
Figure 17: Power plants capacity in OPT scenario.
Heat production
Due to the lack of information about this sector, there were no assumptions.
Coal transformation
No available information.
Oil Refining
No available information.
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PROMITHEAS-4: “Knowledge transfer and research
needs for preparing mitigation/adaptation policy portfolios”
Global warming potential (GHG emissions)
The graph shows the GHG emissions which are attributed to each “energy consuming”
sector.
Figure 18: GHG emissions for OPT scenario.
55
PROMITHEAS-4: “Knowledge transfer and research
needs for preparing mitigation/adaptation policy portfolios”
References
Biomass
–
Energy
Community
presentation
http://www.eclareon.eu/sites/default/files/biomass_in_serbia_stojadinovic.pdf
-
Danon Gradimir, Furtula Mladen, Mandic Marija, 2012. Possibilities of implementation of CHP
(combined heat and power) in the wood industry in Serbia. Energy, Article in press.
Djurdjevic Dusan Z., 2011. Perspectives and assessments of solar PV power engineering in the
Republic of Serbia. Renewable and Sustainable Energy Reviews 15, pp. 2431-2446.
EC, 2011a. Commission Implementing Decision of 8.7.2011 – Adopting a National Programme on
Serbia under the IPA – Transmission Assistance and Institution Building Component for the year 2011.
Brussels
(8.7.2011),
C(2011)
4972
final.
Available
at:
http://ec.europa.eu/enlargement/pdf/serbia/ipa/2011/comm_native_c_2011_4972_1_en_decision_execu
tion_commision.pdf
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PROMITHEAS-4: “Knowledge transfer and research
needs for preparing mitigation/adaptation policy portfolios”
PESSIMISTIC SCENARIO (2000 – 2050)
Pessimistic scenario description
General comments
The Pes scenario is structured by: I) the mitigation/adaptation policy instruments that the
country has set into force after 1st January 2011; II) no other additional policy instruments
apart from those already decided to be implemented and in line with the EU climate change
policy; the EU policy instruments will be adjusted to the needs and priorities of the examined
country and III) the minimum exploitation of the potential of Azerbaijan in energy efficiency
and renewable energy sources by limiting the possible technological options only to the
energy and residential sector and to hydropower and solar power. These are the sectors with
the highest potential in energy efficiency and these are the most promising for the country
types of RES.
Oil and energy sector are strong contributors of the socio-economic development of the
Republic of Azerbaijan. The country which used to import gas from Russia and Iran, became
a gas exporting country over the last 8 years (Republic of Azerbaijan, 2009). In 2010, the
share of oil sector in GDP was recorded at 48,5%. In 2009, the President of Azerbaijan
“acknowledged that broader national economic development would continue to depend on the
oil and gas sector for the next 10-20 years” (Energy Charter Secretariat, 2011). The energy
sector contributed strongly to the economic growth also through profit payments to the State
Oil Fund (SOFAZ).21 SOFAZ received the highest rating for transparency by the Sovereign
Wealth Fund Institute in 2009 (Energy Charter Secretariat, 2011).
Governmental plans aim to stimulate regional and non-oil economy development
strategies (Energy Charter Secretariat, 2011). Until now, large oil revenues allowed the
government to reduce successfully poverty through the continuous increase of the minimum
salaries and pensions under social transfer programs from SOFAZ. The reduction in the
poverty rate was from 27% to just 2% in 2011 (Ciarreta A, Shahriyar N., 2012). On the other
hand there was no sustainable poverty reduction, since oil revenues are 70% of the state
budget expenditures and such measures are effective for a short-term period. Other means
need to found for maintaining the sustainability of this process while oil–gas revenues are
expected to decrease in the long term (Ciarreta A, Shahriyar N., 2012). However, despite of
cuts, budget expenditure will remain high - in particular for infrastructure investments and
social spending - as part of the governmental response to the economic recession. So, large
transfers from the State Oil Fund which accounted for approximately half of the budget
revenue in 2010, will continue (EBRD, 2010).
The energy sector remains a national priority more considerable than that of climate
change also for the following reason. The EU and Azerbaijan made good progress in
enhancing their energy cooperation including also work for the development of the Southern
Gas Corridor (European Commission, 2012). A Joint Declaration was signed by the European
Commission President Mr. Barroso and the Azerbaijani President Mr. Aliyev in Baku during
January 2011. This document confirmed the Azerbaijan’s commitment to ensure supplies to
the EU. The same year in October, Azerbaijan and Turkey agreed on transit and gas sale
terms regarding the Azerbaijani Shah Deniz II gas field (European Commission, 2012).
Azerbaijan expects with the development of this field to become a substantial contributor to –
and enabler of – the Southern Gas Corridor (European Commission, 2012). Simultaneously,
EU launched negotiations with Azerbaijan and Turkmenistan regarding the construction of
the Transcaspian gas pipeline system (European Commission, 2012).
21
which was established as an extra-budgetary fund to ensure macroeconomic stability, transparency in the
management of oil revenue, and utilizing natural resources in a sustainable manner for the benefit of future
generations (Energy Charter Secretariat, 2011).
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PROMITHEAS-4: “Knowledge transfer and research
needs for preparing mitigation/adaptation policy portfolios”
Policy portfolio for this scenario
Mitigation
A. Existing policy portfolios
The policy instruments already used in the OPT scenario will be included also in this
scenario, but with the following modifications due to the update of certain Laws.
Laws for RES
Presidential Order on “Preparation of State Strategy on Use Of Alternative and Renewable
Energy Sources for 2012-2020” (date: 29 December 2011)22
As in the Opt scenario.
Laws for Energy Efficiency
None.
B. Additional policy instruments
Laws for RES
Financial policy instruments – same as in Opt scenario, but with less financial support.
Laws for Energy efficiency
Energy efficiency standards need to be implemented for all sectors of the country. The
most promising ones probably are the energy, the residential and the industrial sector. Due to
the lack of data the amount of expected energy savings is not estimated. A 5% reduction in
energy consumption of the three aforementioned sectors will be possible through:
Residential sector
- Building code: It sets energy efficient standards for all the functions inside a building
(hot water, air conditioning, space heating, replacement of lighting lumps with more
efficient ones);
- Energy efficiency standards for household appliances;
- Thermal isolation of buildings.
Energy sector
- Subsidies for energy efficient investments. This policy instrument has been used.
Subsidies to energy utilities were in the order of about $320 million in 2006 and these
decreased to zero from 2007 (Energy Charter Secretariat, 2011).
Policy instruments for the transport sector
No national policy instruments will be implemented under this scenario for this sector.
Any improvements in technological performance of vehicles will follow the international
trends as described in the Opt scenario.
Policy instruments for the agricultural sector
None.
22
http://e-qanun.az/print.php?internal=view&target=1&docid=22844&doctype=0 and
http://www.abemda.az/
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PROMITHEAS-4: “Knowledge transfer and research
needs for preparing mitigation/adaptation policy portfolios”
Policy instruments for emission trading
CDM only for the energy sector.
Adaptation
Policy instruments for water management
Regulatory policy instruments
The State Agency for Water Reserves under the Ministry of Emergency Situations was
established Agency by Presidential order (EEA, 2011).
Resolution of Tariff (price) Council of the Republic of Azerbaijan “On approval of consumer
groups and classification on water rendered by “Azersu” Stock Company” dated 06 January,
2011, numbered 04.
As in Opt scenario.
Main characteristics of this scenario
This scenario is a non-climate policy scenario. The key challenges that the country is
facing are: i) promotion of sustainable economic development in the non-oil sector, ii)
improvement of the infrastructure, iii) to secure social development more inclusive by
reducing economic disparities among regions, iv) promotion of good governance, and v)
improvement of the climate for private sector growth (ADB, 2011). The climate policy
priorities are those that coincide with the objectives of energy policy (promotion of RES and
support to energy efficiency) and with the national need to improve water management.
59
PROMITHEAS-4: “Knowledge transfer and research
needs for preparing mitigation/adaptation policy portfolios”
References
ADB,
2011.
Azerbaijan
–
fact
http://www.adb.org/sites/default/files/pub/2012/AZE.pdf
sheet.
Available
at:
Biomass
–
Energy
Community
presentation
http://www.eclareon.eu/sites/default/files/biomass_in_serbia_stojadinovic.pdf
BP, 2012 Statistical review of world energy,
http://www.bp.com/assets/bp_internet/globalbp/globalbp_uk_english/reports_and_publications/statistic
al_energy_review_2011/STAGING/local_assets/pdf/statistical_review_of_world_energy_full_report_2
012.pdf
Ciarreta A, Shahriyar N., 2012, Development trends in the Azerbaijan oil and gas sector: Achievements
and challenges, Energy Policy, 282–292
European Commission, 2012. JOINT STAFF WORKING DOCUMENT, Implementation of the
European Neighbourhood Policy in Azerbaijan Progress in 2011 and recommendations for action Accompanying the document - JOINT COMMUNICATION TO THE EUROPEAN PARLIAMENT,
THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE
COMMITTEE OF THE REGIONS - Delivering on a new European Neighbourhood Policy.
SWD(2012) 111 final, 15.5.2012. Available at:
http://ec.europa.eu/world/enp/docs/2012_enp_pack/progress_report_azerbaijan_en.pdf
Sopian Kamaruzzaman, Ali Baharuddin, Asim Nilofar , 2011, Strategies for renewable energy
applications in the organization of Islamic conference (OIC) countries, Renewable and Sustainable
Energy Reviews, 4706– 4725
Srebotnjak T., Hardi P., 2011, Prospects for sustainable bioenergy production in selected former
communist countries, Ecological Indicators, 1009–1019
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Key assumptions
The key assumptions used for the development of scenarios are similar to those used in
previously published studies and papers for Serbia (SUDES, 2012). The categories of the key
parameters are common for all scenarios and are divided as follows:
Demographics
Same as in BAU scenario.
Economy
Gross Domestic Product
Same as in BAU scenario.
GDP per capita
Same as in BAU scenario.
GDP distribution per sector
Same as in BAU scenario.
Average annual household Income
Same as in BAU scenario.
Gini coefficient
Same as in BAU scenario.
Climate Statistics
Precipitation
According to the information quoted in the respective session of BAU scenario, by 2050,
precipitation will increase by 20% compared to 2010 (Ministry of Ecology and Natural
Resources, 2010).
Figure 19: Precipitation in PES scenario.
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Temperature
According to the information quoted in the respective session of BAU scenario, by 2050,
temperature will increase by 2,2oC.
Figure 20: Temperature in PES scenario.
Frequency of extreme events
There is no information about this group of key parameters for Azerbaijan.
Water resources
There is no information about this group of key parameters for Azerbaijan.
Policies and Measures
Feed – in – tariff system
For the PES scenario they follow the time development of the costs as they are presented
by RES technology type.
Land management
Same information as in BAU and in the policy portfolio of PES.
Global trends
Crude oil price
Projections for the crude oil prices regarding the Reference scenario of the IEA, World
Energy Outlook 2010 will be used.
Natural gas price
Projections for the crude oil prices regarding the Reference scenario of the IEA, World
Energy Outlook 2010 will be used.
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Coal price
Projections to be used.
EUA price
Projections about literature.
ERU price
Projections about of the EUA price.
CER price
Projections about the ERU price are similar to those of the EUA price.
Adaptation
Water Use
Same information as in the respective session of BAU scenario.
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Energy Demand
Households
Under the policy portfolio of the PES scenario there are policy instruments, as described
in the relevant session, for achieving energy savings in this sector. There is also change in the
Fuel share, but half than that in the OPT scenario. Biomass and geothermal are assumed to
have higher shares than those of the BAU scenario, while that of natural gas is assumed to be
reduced respectively.
Figure 21: Energy demand of the household sector in PES scenario.
Agriculture
Under the policy portfolio of the PES scenario there are policy instruments, as described
in the relevant session, for achieving energy savings in this sector. There is also change in the
“Fuel share”. Biomass is assumed to have higher share (half of that in OPT scenario), while
that of natural gas is reduced respectively.
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Figure 22: Energy demand of the agricultural sector in PES scenario.
Industry
Under the policy portfolio of the PES scenario there are policy instruments, as described
in the relevant session, for achieving energy savings in this sector. These are assumed to
concern the most energy intensive industries of the country, which are non metallic minerals,
chemicals, food and tobacco.
Figure 23: Energy demand of the industrial sector in PES scenario.
Services
No data on services.
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Transport
Under the policy portfolio of the PES scenario there are policy instruments, as described
in the relevant session, for achieving energy savings in this sector. It is also assumed that the
share of biofuels increases and that of oil is reduced.
Figure 24: Energy demand of the transport sector in PES scenario.
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Transformation
Transmission and Distribution losses
Due to limited modernization, energy saving measures and more intense climate change
impacts compared to those under the BAU scenario this type of losses are assumed to be
reduced compared to their historical values.
Electricity generation
Energy production was based on natural gas, fuel oil and water resources in the BAU
scenario. For the PES scenario small scale hydro, solar and wind energy are also included for
electricity generation – but with less installed capacities - based on the available information
about the potential of the country in these RES types.
Figure 25: Power plants capacity in PES scenario.
Heat production
Due to the lack of information about this sector, there were no assumptions.
Coal transformation
No available information.
Oil Refining
No available information.
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Global warming potential (GHG emissions)
The graph shows the GHG emissions which are attributed to each “energy consuming”
sector.
Figure 26: GHG emissions for PES scenario.
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References
Biomass
–
Energy
Community
presentation
http://www.eclareon.eu/sites/default/files/biomass_in_serbia_stojadinovic.pdf
-
Danon Gradimir, Furtula Mladen, Mandic Marija, 2012. Possibilities of implementation of CHP
(combined heat and power) in the wood industry in Serbia. Energy, Article in press.
Djurdjevic Dusan Z., 2011. Perspectives and assessments of solar PV power engineering in the
Republic of Serbia. Renewable and Sustainable Energy Reviews 15, pp. 2431-2446.
EC, 2011a. Commission Implementing Decision of 8.7.2011 – Adopting a National Programme on
Serbia under the IPA – Transmission Assistance and Institution Building Component for the year 2011.
Brussels
(8.7.2011),
C(2011)
4972
final.
Available
at:
http://ec.europa.eu/enlargement/pdf/serbia/ipa/2011/comm_native_c_2011_4972_1_en_decision_execu
tion_commision.pdf
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RESULTS OF LONG – RANGE ENERGY ALTERNATIVES
PLANNING SYSTEM (LEAP)
Energy Demand
Figure 27: Energy demand for all scenarios.
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Transformation
Figure 28: Electricity generation for all scenarios.
Global warming
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Figure 29: GHG emissions for all scenarios.
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