World Bank, Azerbaijan explore monetization of carbon emission quotas

"The World Bank plans to discuss monetization of carbon emission quotas with Azerbaijan."

Azernews reports that Florian Kitt, the World Bank's energy specialist, said this during the second annual report meeting of the Azerbaijan Rapid Technical Assistance Facility (AZTAF) funded by the European Union (EU) and managed by the World Bank (WB).

“As I mentioned earlier, carbon and climate finance will be key to making the energy transition more affordable. We recently held our first workshop to look at the landscape of carbon and climate finance around the world. Admittedly, if you do not work deeply in this area, this picture can sometimes be quite confusing," he said.

According to him, there are several instruments such as carbon taxes and carbon markets.

"We are trying to find an optimal solution for Azerbaijan together with the government. Our goal is not to simply copy the experience of others, but to develop an approach that will be effective for the country and its economy. As part of the development of an energy transmission project called Azure, which involves the connection of one gigawatt of wind and solar power plants, we plan to discuss with the government the possibility of monetizing carbon dioxide emissions. At the same time, we will take into account the current legislation of Azerbaijan to ensure the successful implementation of the project," he noted.

Florian Kitt also added that the World Bank is ready to support Azerbaijan in increasing the efficiency of the heating system.

"Approximately 30 percent of energy consumption in the world falls on the share of buildings. In Azerbaijan, this figure is close to 38 percent only in the residential sector. If we add industry and other sectors, the indicator will reach 50 percent. The average energy consumption of buildings in Azerbaijan is close to 0.85 gigajoules," he said.
Kitt noted that the Ministry of Energy of the Republic of Azerbaijan presented a plan of future measures to increase the efficiency of the heating system.

"We are ready to provide support in solving these issues, and as the World Bank, we are ready to discuss and provide financial support in the form of loans to the project in this direction," he said.

In addition, Florian Kitt said that carbon and climate finance play a key role in supporting the ambitious strategy of the Azerbaijani government to expand the use of renewable energy.

"Energy efficiency is the most accessible and fastest measure to reduce rapidly growing energy consumption due to the increase in heating, cooling and the use of cars. It can help reduce costs, allocate funds for other types of economic activity and support Azerbaijan's energy sector diversification strategy", - he said.

The energy expert noted that wind, solar, geothermal and bioenergy are areas that require special attention.

"We appreciate the support of our European partners who agree on the importance of promoting these themes in order to successfully implement Nationally Determined Contributions (NDCs) and transition to a new economic framework based on renewable energy rather than oil and gas," he added.