Energy Efficiency Policy in Azerbaijan: A Roadmap

Energy efficiency is playing an increasingly important role in Azerbaijan's energy transition. A new legal framework and corresponding policies and strategies, as well as a new dedicated fund for energy efficiency, signal that Azerbaijan is moving towards a more rational use of its domestic and imported energy resources. This is an opportune moment for Azerbaijan to implement all adopted policies and develop targeted actions on energy efficiency aligned with the country's climate commitments, building on progress made to date. Action on energy efficiency is more pertinent than ever for Azerbaijan. As host of COP 29 in 2024, Azerbaijan can both demonstrate and encourage leadership in this area.

Progress on energy efficiency can also support the long-term strategic development of Azerbaijan's economy and energy sector while reducing the country's exposure global fossil fuel market fluctuations. Improving Azerbaijan's energy efficiency is not without challenges, however. Longstanding and substantial natural gas and electricity subsidies have disincentivised investments and action on energy efficiency. Reliance on natural gas for energy and economic growth has also limited diversification and increased exposure to global fossil market volatility. In this context, and to support Azerbaijan's journey towards greater efficiency across its economy, this report examines the country's energy efficiency status. It provides a series of recommendations, in the form of a summary roadmap, designed to offer inputs on energy efficiency strategy formulation and policymaking over the coming decades to 2040.