As the world gathers for the United Nations Framework Convention on Climate Change (UNFCCC) Conference of the Parties, or COP29, in Baku, Azerbaijan finds itself in a unique and challenging position. Like last year’s host, the United Arab Emirates (UAE), Azerbaijan is not only a major player in fossil fuel production but also a country highly vulnerable to the effects of climate change. This combination of characteristics gives Azerbaijan a perspective that is both pragmatic and deeply intertwined with the issues that COP29 aims to address. Chief among these is the urgent need for robust climate financing, embodied in the New Collective Quantified Goal (NCQG), which is expected to supersede the long-standing yet insufficient $100 billion annual target.
Climate finance remains a critical issue at COP29. The NCQG, set to replace the previous $100 billion target established in 2009 at the Copenhagen summit, has been the focal point of pre-COP discussions. Developing nations argue that the target should be in the trillions, pointing to the dire need for financial support in adapting to climate impacts and implementing sustainable energy systems. However, wealthy nations have expressed reluctance to increase their commitments substantially, leading to tense pre-summit negotiations.
The history of the $100 billion goal highlights the challenges of securing climate finance. While the pledge was only met in 2022, after several extensions, it still falls short of the actual financial needs identified by developing countries. According to UN data, the developing world requires upwards of $2 trillion annually to implement meaningful climate action, including resilience initiatives, adaptation projects, and energy transitions. But despite the ambition expressed in various COP negotiations, the financing needed to achieve these goals remains largely theoretical.
As COP29 unfolds, one of its primary objectives will be to transform this theory into actionable commitments. Achieving consensus on the NCQG could catalyze unprecedented financial flows into climate action, but doing so will require overcoming significant resistance and negotiating roadblocks.
For Azerbaijan, this year’s COP presents an opportunity to highlight its unique energy profile and the transitional challenges it faces. With oil and gas comprising over 90% of its exports, Azerbaijan is heavily dependent on fossil fuels. At the same time, the government has pledged to increase the share of renewables in its energy mix, targeting 30% by 2030, up from the current 20%, which is mostly hydropower.
To meet these targets, Azerbaijan has launched several solar and wind energy projects and has attracted investments from global renewable energy giants. However, its simultaneous lobbying to increase gas exports to the European Union (EU) presents a paradox. The dual pursuits of expanding fossil fuel exports while boosting renewable energy reflect the difficult choices energy-exporting countries must make as they transition away from fossil fuels.
Energy transition in Azerbaijan is not just a technical issue but a matter of political and economic survival. As global demand for oil and gas plateaus—predicted by the International Energy Agency (IEA) to peak by 2030—countries like Azerbaijan face pressure to diversify their economies. This will likely involve significant domestic restructuring, new investments in clean energy, and a careful balancing of competing interests in an era when fossil fuel reliance is increasingly becoming a liability.
The global energy system is undergoing a transformation of unprecedented scale and speed. In 2023, solar deployment reached an astonishing 347 gigawatts (GW), highlighting the momentum of renewable energy. By 2027, solar power—augmented by energy storage solutions—is expected to be the cheapest electricity source in most regions globally, making the economic case for renewables stronger than ever.
For the first time, clean energy growth is meeting virtually all new electricity demand. This shift has catalyzed a steady decline in coal use worldwide, and other fossil fuels are set to follow as economies and energy sectors adjust to new realities. China, for instance, is on track to generate more solar energy by the early 2030s than the total current electricity demand in the United States, underscoring the changing dynamics of global energy.
Yet this transformation also brings significant challenges. Upgrading grid infrastructure to accommodate intermittent renewables like wind and solar is an enormous task. Supply chains for critical minerals—such as lithium, cobalt, and rare earth elements—must be scaled up and diversified, as these are essential components of solar panels, wind turbines, and battery storage. Additionally, the social implications of this shift are profound. Communities and countries that depend on fossil fuel industries for jobs and revenue face an uncertain future. Addressing the needs of these vulnerable populations is essential to achieving a “just transition” that leaves no one behind.
Hosting COP29 places Azerbaijan in the global spotlight, offering it a platform to showcase its progress toward renewable energy integration while grappling with its reliance on fossil fuels. However, as an energy exporter, Azerbaijan must confront a fundamental question: Can it lead on climate action while continuing to invest in fossil fuel infrastructure?
Azerbaijan’s strategic position as a bridge between Asia and Europe makes it a significant player in regional energy markets, but also complicates its path toward a low-carbon future. In recent years, the government has made strides in renewables, supported by investments in wind and solar farms. However, it remains cautious about scaling back its lucrative gas exports, especially as Europe seeks alternatives to Russian gas supplies.
For Azerbaijan, COP29 represents a crossroads. It can either leverage its influence to champion a sustainable transition or risk lagging behind as global energy demand shifts towards renewables. The decisions made in Baku could set a precedent for how energy-producing nations manage their transitions.
The importance of the NCQG cannot be overstated. The transition to renewable energy requires substantial financing, particularly for the developing world, which lacks the resources to fund its own energy transformations. The NCQG aims to establish a framework that can mobilize the trillions of dollars necessary to support adaptation, resilience, and low-carbon transitions in these nations.
However, the negotiation process is fraught with complications. Developed countries, which are expected to bear most of the financial burden, are concerned about the economic impact of such a large commitment. Developing nations, in contrast, argue that without substantial support, they will be unable to meet climate targets and manage the social and economic disruptions caused by climate change.
The NCQG is expected to address these divergent views by establishing clear, measurable targets and accountability mechanisms. If successful, it could lay the foundation for a more equitable distribution of climate finance, enabling developing countries to leapfrog directly into clean energy systems without relying on fossil fuels.
Climate action goes beyond financial contributions; it requires addressing systemic issues that affect the pace and sustainability of the energy transition. For example, fossil fuel-dependent countries need assistance to diversify their economies, ensuring that their populations do not bear the brunt of the transition. Moreover, global supply chains for renewable energy components must be strengthened to avoid bottlenecks and vulnerabilities that could hinder progress.
International cooperation is essential to overcome these obstacles. In this context, COP29 will not only focus on financial commitments but also on establishing frameworks for knowledge-sharing, technology transfer, and policy alignment. A global agreement that fosters collaborative efforts could accelerate progress and ensure that countries do not pursue climate goals in isolation.
COP29 in Baku marks a critical juncture in the global climate conversation. The challenges are immense, but so are the opportunities. With renewable energy becoming more affordable and accessible, the world is at a tipping point. The question is no longer whether we will transition to a low-carbon future, but how quickly and equitably we can make this shift.
As negotiations unfold, the outcome of COP29 could determine the trajectory of climate action for the coming decade. A robust NCQG, coupled with frameworks that address the structural needs of a just transition, could pave the way for meaningful progress. Success in Baku would send a powerful message that the global community is committed to addressing climate change head-on, even in the face of daunting challenges.
