Azerbaijan actively addresses global challenges by implementing continuous measures to combat climate change. The country is making significant strides in transitioning to green energy, as evidenced by President Ilham Aliyev's declaration of this year as the "Year of Solidarity for the Green World." Additionally, Azerbaijan will host the UN COP29 conference in November, highlighting its commitment to environmental issues.

For several years, the Azerbaijani government has prioritized green energy initiatives. A key focus has been on enhancing energy efficiency, which is almost as crucial as adopting renewable energy sources to ensure energy security.

But what exactly is energy efficiency?

Energy efficiency refers to reducing energy consumption without compromising the quantity and quality of production or hindering economic development and well-being. In broader terms, it encompasses strategies to minimize energy losses—whether from electricity, heat, natural gas, gasoline, or diesel—while promoting waste recovery and valorization. It also involves modern technologies and alternative measures, including increased reliance on renewable energy sources.

The pursuit of energy efficiency not only conserves resources but also fosters sustainable economic development, facilitates the transition to a green economy, and ensures environmental safety. By producing competitive and affordable industrial and agricultural goods, energy efficiency improves consumer access to energy and reduces waste and unnecessary costs in communal services. Without effective energy efficiency measures, a country may struggle with excessive energy expenditures, hindering its economic growth and social welfare.

Ultimately, energy efficiency is a cornerstone of Azerbaijan's energy security policy, encompassing various sectors of the economy. By using energy resources effectively and efficiently, Azerbaijan can bolster its energy security, enhance GDP performance, strengthen economic competitiveness, protect the environment, and minimize waste and unnecessary costs in public services.

Azerbaijan’s legislative framework supporting energy efficiency

A robust legislative framework is essential for effectively implementing energy security measures. Without proper regulation and oversight, efforts to enhance energy efficiency may prove ineffective. In this context, the Ministry of Energy of Azerbaijan has established a comprehensive legislative foundation for energy efficiency. In 2021, this framework culminated in the adoption of the law titled "On the Efficient Use of Energy Resources and Energy Efficiency." It’s important to note that this law was developed with support from the European Union under the "EU4Energy" program, in collaboration with the Energy Charter, and officially came into force on July 1, 2022.

The law encompasses advanced tools and establishes key principles for state policy in energy efficiency. It regulates relationships within the realms of energy production, storage, transmission, distribution, sale, and consumption, applying to both public institutions and private entities, including end consumers.

In addition to strengthening the legislative framework, Azerbaijan has developed several strategic documents that integrate energy efficiency measures. Notable among these are "Azerbaijan 2030: National Priorities for Socio-Economic Development," the "Strategy for Socio-Economic Development (2022-2026)," the "State Program on the Great Return to the Liberated Territories," and the "Action Plan for Establishing a Green Energy Zone in the Liberated Territories (2022-2026)."

Moreover, significant steps are being taken to enhance efficiency throughout the energy production and supply chain. This includes the creation of new production capacities that meet modern standards, reducing losses in transmission and distribution systems, and improving existing energy production facilities through restoration and reconstruction efforts.

The effectiveness of these initiatives relies on a variety of factors, including a strong legislative framework, clear programs and goals, established standards and norms, education and information dissemination, the application of energy efficiency tools, accessibility to technological innovations, modern management principles, and incentive mechanisms. Together, these elements are crucial for ensuring energy efficiency in Azerbaijan.

Advancing energy efficiency in Azerbaijan with the AZTAF Program

As previously mentioned, the European Union has played a pivotal role in shaping Azerbaijan's energy security legislation. One of its key initiatives is the Azerbaijan Rapid Technical Assistance Facility (AZTAF) program, funded by the EU and implemented by the World Bank.

At an informal meeting for journalists on October 10, details about the AZTAF program were shared, highlighting its focus on enhancing energy efficiency, particularly in public buildings.

Yasemin Orucu, a senior energy expert from the World Bank, emphasized the potential financial benefits of implementing energy efficiency measures in these public facilities. She noted that Azerbaijan could generate an annual income of $509 million from the export of additional natural gas, currently used for electricity production, by improving energy efficiency.

The expert also pointed out that Azerbaijan has the technical capacity to reduce electricity consumption by up to 50% through effective energy efficiency measures in public buildings. This could lead to savings of approximately $154 million each year in energy supply costs. The initiative aims to enhance the energy efficiency of 45,000 public buildings, encompassing a total area of 40 million square meters.

Orucu stated, "We propose to initiate energy efficiency measures in the residential sector and gradually expand these efforts to other areas. Our estimates suggest that improvements in public buildings could lead to energy savings of between 0.9% and 3.1% of total annual consumption, translating to an additional 644 million cubic meters of natural gas per year and up to $509 million in extra revenue."

The AZTAF program, which runs from 2022 to 2025, has an allocated budget of €5.25 million. It aligns with the "Azerbaijan 2030: National Priorities for Socio-Economic Development" framework and encompasses a range of programmatic and demand-driven activities that offer advisory and analytical support to the Azerbaijani government, while also building capacity. These initiatives correspond to the four key priorities of the EU-Azerbaijan partnership: strengthening institutions and governance, fostering economic development and market opportunities, enhancing connectivity, promoting energy efficiency and environmental protection, and facilitating movement and contact among people.

Through its nine technical assistance activities, the AZTAF program is committed to supporting Azerbaijan in its journey toward improved energy efficiency and sustainable development.

In conclusion, promoting the efficient use of energy resources and instilling energy efficiency as a habitual practice among end users is vital for Azerbaijan's sustainable development. This approach not only enhances the country’s economic growth and export potential but also improves the availability of energy resources for consumers while safeguarding the environment. To achieve these objectives, energy efficiency must be integrated across all stages of the energy lifecycle, from production to consumption, ensuring a holistic and impactful transition toward a more sustainable future.