In response to growing environmental concerns and the increasing prevalence of obsolete vehicles, many nations are prioritizing sustainable vehicle disposal practices. Azerbaijan, in particular, has made significant strides towards achieving this objective by introducing comprehensive strategies aimed at efficient vehicle waste management and responsible recycling. A central element of these efforts is the establishment of the Vehicle Disposal Fund, which was introduced in early 2024. This fund is instrumental in regulating the disposal process, ensuring that decommissioned vehicles are safely processed in an environmentally sound manner. In December 2024, Azerbaijan's President, Ilham Aliyev, signed a decree approving the national budget for 2025, which included a substantial increase in funding for the Vehicle Disposal Fund, underscoring the government's commitment to sustainable practices and economic development.

Understanding Vehicle Disposal

Vehicle disposal refers to the environmentally responsible recycling or destruction of vehicles that are no longer usable. This process applies not just to cars but to a wide range of vehicles, including buses, ships, and even planes. The goal of vehicle disposal is twofold: first, to remove obsolete vehicles that pose safety or environmental hazards; second, to recover valuable materials, such as metals, plastics, and electronics, which can be recycled and reused.

The Vehicle Recycling Fund: Purpose and allocation

The Vehicle Recycling Fund in Azerbaijan was established through a decree signed by President Ilham Aliyev on January 27, 2024. The fund was created to support the systematic and environmentally friendly disposal of old vehicles in the country. In 2025, the state allocated 50 million manats to the fund, a figure that represents a 100% increase compared to the previous year. This fund is designed to cover various expenses related to vehicle disposal, including paying individuals for disposing of their vehicles, reimbursing car sellers for discounts given on new local vehicles when buyers provide proof of vehicle disposal, and supporting the operational costs of the disposal process.

The fund's resources come from multiple sources:

- Disposal fees: Collected from individuals or companies disposing of vehicles.
- Loans and grants: Provided by various financial institutions or international organizations.
- Voluntary donations: From both legal entities and individuals.
- Allocations from international donors: Supporting sustainable environmental initiatives.

These funds are managed by Tamiz Shahar Open Joint Stock Company, a state-run enterprise responsible for overseeing the implementation of the vehicle disposal program. The fund is not only a key mechanism for managing vehicle waste but also a tool to stimulate the local vehicle market by encouraging the purchase of new, environmentally friendly vehicles.

How the Fund works

The operations of the Vehicle Recycling Fund are carefully outlined to ensure transparency and efficiency. For instance, a one-time payment is given to individuals who dispose of their old vehicles in an environmentally friendly manner. Additionally, when new locally produced vehicles are sold with a discount to customers who provide a disposal confirmation, the fund reimburses the sellers the discounted amount. This encourages consumers to participate in the vehicle disposal program by trading in their old vehicles for newer, more sustainable models.

The fund also supports the operational aspects of the disposal process. This includes promoting the proper disposal of vehicles, incentivizing individuals and companies to participate in the program, and electronicizing services to streamline the entire process.

What is the Vehicle Recycling Fund's contribution to the country's economy and ecology?

The decision to allocate 50 million manats to the Vehicle Recycling Fund for 2025 reflects Azerbaijan’s growing commitment to both environmental sustainability and economic development. This increased funding comes at a time when the country faces increasing challenges related to environmental pollution and the growing number of obsolete vehicles. According to experts, vehicle emissions are one of the leading contributors to air pollution in major urban centers. Therefore, incentivizing the disposal of old, inefficient vehicles can significantly improve air quality and contribute to public health.

Moreover, the fund plays a key role in promoting the local automotive industry. By offering financial incentives for purchasing new, locally manufactured vehicles, the fund not only supports sustainability but also stimulates domestic production and consumption. This is particularly important in an era of global economic uncertainty, as fostering local industries can help buffer the country against external economic shocks.

While the increased allocation of funds for 2025 is a promising step toward enhancing vehicle disposal practices in Azerbaijan, the success of the initiative will depend on the efficient management and distribution of resources by Tamiz Shahar Open Joint Stock Company. To maximize the impact of the Vehicle Recycling Fund, it is crucial that the program’s beneficiaries—both individuals and businesses—fully understand and engage with the disposal process. Public awareness campaigns and targeted incentives will play a key role in fostering widespread participation. Ultimately, if executed effectively, this initiative could serve as a model for sustainable vehicle disposal practices, contributing to improved environmental quality, economic resilience, and the growth of Azerbaijan’s automotive sector.