Azerbaijan began to export oil and crude oil to the global energy markets in September 1994 after the signing of the “Contract for the Century” between Azerbaijani and 13 international energy companies. Azeri natural gaz is a key source of energy for Europe, as a “transitional fuel”, because it emits less CO2 than coal and other fossil fuels. Shahmar Hajiyev, Senior Advisor at Center of Analysis of International Relations (AIR Center), and Robert Tyler, Senior Policy advisor at New Direction Foundation.
Because natural gas can quickly respond to sudden rises in demand and compensate for any dips in solar power supply, it supports Europe’s initiatives in renewable energy. Natural gas was included in the EU’s “Green New Deal” ‘taxonomy of clean energy sources by the European Commission. The Trans Adriatic Pipeline (TAP), which is the European leg the Southern Gas Corridor, has been crucial to Europe’s energy security and diversification.
Since the beginning of the year, intense negotiations have been held between the EU and Azerbaijan to explore the possibility of increasing Azerbaijani gas exports to Europe and to strengthen cooperation in the area of green energy. The “Memorandum of Understanding in the Field of Energy” signed by Azerbaijan on July 18, 2022 provided the foundation for the increase in the export of natural gas and green electricity from Azerbaijan. The MoU states that Azerbaijan will increase its imports of Azerbaijani gas to Europe by at most 20 billion cubic meters per year (bcm), by 2027. The MoU opened up new possibilities for green energy development to support electricity exports between Europe and the region.
It is important to note that green energy is derived from renewable energy technologies. This makes it an environmentally-friendly and clean source of energy. The REPowerEU plan was published by the European Commission on 18 May 2022. It is based upon three pillars: reducing energy consumption, producing clean energy, and diversifying EU’s energy supply. The Commission proposes to raise the directive’s target for renewable energy to 45% by 2030. This is in order to scale up renewable energy in power generation and industry as well as transport. The support of green energy initiatives in Azerbaijan can strengthen the mutually beneficial partnership between all parties.
Azerbaijan is interested in supporting green energy projects to diversify its energy production. The country has been pursuing sustainable energy development through the creation and gradual decarbonization of its energy sector. The country’s renewable energy production aims to contribute to a sustainable energy future through the generation of more electricity from renewable sources. This will help to reduce the amount of natural gas used in electricity production, and increase its export to Europe. Two important renewable energy project agreements were made with ACWA Power in Saudi Arabia and Masdar energy companies in the United Arab Emirates (UAE). Masdar will build a 230 MW solar power station and ACWA Power will build a 240 MW Khizi Absheron wind power facility. This will help to support sustainable energy and increase the country’s green energy export potential. These two projects will be crucial in increasing the percentage of renewable energy in the country’s electricity system to 30% by 2030.
In the context of EU-Azerbaijan cooperation in energy, Ilham Aliyev, president of Azerbaijan, attended a plenary meeting to sign the “Agreement for strategic partnership on Green Energy” in Romania on 17/12/2022. Azerbaijan and its partners have demonstrated strong cooperation at the Bucharest plenary meeting, which saw participation by Klaus Iohannis, Prime minister of Georgia Irakli Garibashvili and Viktor Orban, Prime Minister from Hungary, and President of European Commission Ursula von der Leyen.
The document signed envisages the export of electricity from Azerbaijan through an underwater electric cable that runs under the Black Sea, from Georgia to southeastern Europe. Azerbaijan is keen to develop renewable energy and export its electricity to European consumers, as we have already noted. Aliyev, president of stated that Azerbaijan plans to be a major supplier of electricity to Europe, mostly green energy. Azerbaijan has more than 27 gigawatts in wind and solar power, and 157 gigawatts in wind power in the Azerbaijani section of the Caspian Sea. We plan to combine with one of our country’s strategic investors to implement 3 gigawatts and 1 gigawatts solar power by 2027. 80 percent will be exported. We plan to add at least 6 gigawatts of capacity by 2037. This shows that Azerbaijan is not only a natural gas exporter, but also a green energy exporter to European energy markets.
Ursula von der Leyen, President of the European Commission, also stated that “To integrate growing shares of renewables, it is necessary to strengthen electricity interconnections. This is why the Black Sea Electric Cable between Romania, Georgia and Azerbaijan was so important. I can only speak for this ambitious project. It would link us on both the Black Sea and towards the Caspian Sea. It will increase our supply security by bringing electricity from renewable sources into the European Union via Romania, and Hungary.
As regional partners, Georgia and Azerbaijan will also implement a strategic project linking the South Caucasus with Europe. As the electricity mix in these countries, particularly Hungary, is largely dependent on fossil fuel, this green energy deal is crucial for Romania and Hungary. Imports from Azerbaijan are expected to help balance the electricity mix and reduce natural gas consumption for electricity production.
The ongoing conflict in Ukraine makes diversifying the EU’s energy resources even more important. Many Western European countries assumed that Russia would continue to supply cheap energy to Europe, ignoring the growing tensions at Europe’s eastern frontier. Countries like Germany, France and the Netherlands, which for the longest time enjoyed economic growth on the assumption that cheap Russian energy could be used to produce industrial output, are now forced to diversify their imports. The EU must look further for new sources of energy after Russia’s sanctions.
Early work was already underway in Central and Eastern Europe to diversify their energy imports. This was with the countries of The Three Seas Initiative. A coalition of 12 EU member states, the Three Seas Initiative has already built new LNG terminals for Poland and Croatia with the aim of importing American gas. They are also a leader in promoting improved energy relations with South Caucasus.
In summary, energy resources have become increasingly important in the relations between Azerbaijani and the West. Numerous energy projects increase Azerbaijan’s geopolitical significance. Azerbaijan’s support for green energy will help to balance the use natural gas and renewables in electricity production. This will increase the country’s potential for export and production. Europe is also seeking to accelerate the green energy transition in order to support sustainable development through energy savings and diversification. The Black Sea submarine electricity cable project has shown that regional cooperation is essential for the implementation of strategic projects. Signing the final peace agreement between Armenia and Azerbaijan would enable Yerevan to participate in inter-regional projects that would help Armenia’s economic growth and prosperity.
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