Development and Assessment of Climate Change Policy Portfolios for Azerbaijan

1. Scientific Research Institute “Geotechnological problems of oil, gas and Chemistry” (GPOGC)underAzerbaijan State Oil Academy Development and Assessment of Mitigation / Adaptation Climate Change policy portfolios for Azerbaijan

2. CONFERENCE of PROMITHEAS – 4 Development and Assessment of Mitigation / Adaptation Climate Change policy portfolios for Azerbaijan  Was held on 11th of June 2013 JW Marriott Absheron Baku Chairman: Prof.D.Mavrakis Co-chairman: Prof. E.Ramazanova Governmental Participants: The Government of Azerbaijan, Ministry of Education, Ministry of Ecology and National resources, Azerbaijan National Academy of Sciences, Institute of Radiation Problems, State Oil Company of Azerbaijan Republic, State Agency on Alternative and Renewable Energy Resources, UNDP, National aerospace agency, International Ecoenergy Academy

3. Team members: Prof. Elmira Ramazanova, Dr.Haji Malikov, Enver Shirinbayli, Aynura Huseynova, Aysel Sadiqli

4. Scientific Research Institute "Geotechnological Problems of Oil, Gas and Chemistry“ wasestablished under decree of Cabinet of Ministers in 1992 • fundamental scientific research projects in the field of engineering, chemical sciences and applied directions; • carrying out technological processes in order to meet the highest standards set in science and technology; • Improvingscientific qualifications of scientific and teaching staff and post-graduate students; Director - Professor Elmira Ramazanova, Vice-president of National Oil Committee of Azerbaijan Republic, corresponding-member of Azerbaijan National Academy of Sciences The main directions of of the Scientific Research Institute are:

5. Objectives of the Azerbaijan climate change policy Azerbaijan ratified the United Nations Framework Convention on Climate Change (UNFCCC) in 1995 and the Kyoto Protocol in 2000. As a non-Annex I Party to the UNFCCC, Azerbaijan does not have quantitative commitments for reducing GHG emissions. The country has not undertaken so far any quantitative objectives in Renewable Energy Sources (RES) or in Energy Efficiency (EE). The first programme relevant to climate change policy issues was the State Program “On utilization of Alternative and Renewable Energy Sources in Azerbaijan Republic” October 21, 2004

6. Data collection Azerbaijan, as a key strategic energy partner for EU both as a producer and transit country received as assistance a 14 million EUR budget support programme to reform its energy market and legislative framework, improve energy efficiency and promote new and renewable energy sources (RES) (EC, 2012; EC, 2010). The harmonization of the Azeri legislation with EU law is an important component of their cooperation, initiated by signing the MoU on Strategic Partnership between the European Union and Republic of Azerbaijan in the field of Energy in 2007 (UNECE, 2007). Many EU directives in environmental areas have already been translated into Azeri (UNECE, 2011). In 2010 Azerbaijan confirmed at high political level its commitment and policy priority to engage the country more forcefully into the development of RES (notably wind, solar and hydro), and of Energy efficiency (EC, 2010).

7. Business – As – Usual scenario description The State Program “On utilization of Alternative and Renewable Energy Sources in Azerbaijan Republic and State Programme on “Socioeconomic Development of the Regions of Azerbaijan for the period 2009–2013” attracted considerable resources for the development of energy, water and sanitation infrastructure in the country since the first Environmental Progress Report (EPR) (UNECE, 2011).

8. Optimistic scenario description This scenario is consistent with the intention of the country to promote its RES and support the efficient use of energy. A first step towards these Azeri climate policy components was the Presidential Order “On preparation of National Strategy on the use of Alternative and RES for 2012-2020” (29 December 2011) (State Agency for Alternative and Renewable Energy Sources, 2012).

9. Pessimistic scenario description The Pes scenario is structured by: • the mitigation/adaptation policy instruments that the country has set into force after 1st January 2011; • no other additional policy instruments apart from those already decided to be implemented and in line with the EU climate change policy; the EU policy instruments will be adjusted to the needs and priorities of the examined country and • the minimum exploitation of the potential of Azerbaijan in energy efficiency and renewable energy sources by limiting the possible technological options only to the energy and residential sector and to hydropower and solar power.

10. Conclusions: BAU scenario The BAU scenario concerns evolution of the already implemented mitigation and adaptation policy instruments in Azerbaijan until the year 2050 and serves as the reference against which the outcomes of the other scenarios are compared. The currently implemented Azeri mitigation climate policy has only one main component, the promotion of RES. There are no specific obligations to purchase renewable energy, only defined tariffs exist for the generating companies so as to sell energy in the wholesale market The adaptation climate policy concerns water management with only one policy instrument implemented, that of water fees.

11. OPT scenario • The Optimistic scenario concerns the time evolution of an enhanced mitigation/adaptation policy portfolio that Azerbaijan will implement during the time interval 2011 - 2050. This enhanced policy portfolio takes into account the policy instruments adopted after 1st January 2011 as well as plans of the country and supports: • efficient technologies targeting to the maximum reduction of GHG emissions • infrastructure for the adaptation towards the minimum – in size and extent - expected climate change impacts.

12. PES scenario The Pessimistic scenario concerns the time evolution of a mitigation/adaptation policy portfolio that the country will implement up to 2050 without exploiting fully the national potential in energy efficiency and renewable energy sources and by facing the worse expected impacts of climate change, taking into account the policy instruments adopted after 1st January 2011. This scenario assumes less ambitious mitigation policy by limiting the possible technological options only to a selected number of sectors with the highest energy efficiency potential and the most promising for the country types of RES. Given that the country has not approved any policies beyond 2020, it will be assumed under this scenario that the ones adopted before 2020 will be extended until 2050, as well as that minimum additional policies will be enforced after 2020.

13. Assessment of the three developed scenarios for Azerbaijan, through the multi - criteria method AMS General comments The three scenarios have been assessed trough the multi criteria method AMS. This method is combines three multi-criteria methods: Analytical Hierarchy Process (AHP), Multi-Attribute Utility Theory (MAUT) and Simple Multi-Attribute Ranking Technique (SMART) (Konidari and Mavrakis, 2007; 2006). AMS is developed for evaluating climate policy instruments (PI) or relevant Policy Mixes (PM) and with suitable modification for evaluating their interactions as well.

15. Mean CEI for each sector depending on the policy instruments of the BAU scenario

16. Results The overall final score for each policy portfolio is presented in figure 30. The results for each scenario are presented in Table 13. AMS results for each scenario.

17. In Azerbaijan is used still the old system of USSR on inventory of emissions of polluting substances in atmosphere is used. (A management under the control of pollution of atmosphere, Reference: GIDROMETISDAT, 1979). • For preparation of national inventories and national data on emissions creation in the countries of the special groups, prosecuting these subjects on the basis of official bodies is expedient: • To carry out actions for training of experts for improvement of the account of emissions; • There will be useful an establishment of constant contacts of national groups on emissions with similar groups of other countries, participation in seminars, courses on training and an exchange of experience; • The reporting on emissions of the enterprises to make opened; • To make accessible data of gaugings of concentration of components in emissions at the enterprises that will help accumulation of the information for working out of issue factors

18. Several documents are already in the preparation process and include the following: • -Timely action to improve weather forecasts, food security, freshwater resources, a rapid response to an emergency or disaster, early warning systems and insurance coverage can reduce damage from future climate change and bring many immediate practical benefits. • -The ability of Azerbaijan to adaptation (and most CIS countries), it is particularly important because the economy is heavily dependent on climate-sensitive sectors such as agriculture. They are also less able to adapt in comparison with more industrialized countries. • Avoid economic losses. Without adaptive temperature increase of 2,5 º C may reduce the gross domestic product at 0.5-2%, with losses in most developing countries will be high • - Methods of adaptation are vital. Adaptation at the national level include the development of effective implementation of adaptation strategies .

19. Thank You for Your attention!