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Akbar Novruz
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As we move on from the previous week, let's take a moment to
consider the important developments in global energy markets and
within Azerbaijan. This week has been eventful, with fluctuations
in oil prices driven by geopolitical tensions and valuable insights
shared at Baku Climate Week. These events have the potential to
significantly impact the future of energy, both on a local and
global scale.
Baku Climate Action Week: Glimpse into Azerbaijan's
COP29 agenda
From September 30 to October 4, Azerbaijan hosted the inaugural
Baku Climate Action Week , marking a significant
event in the run-up to COP29 . The gathering set
the stage for COP29's climate agenda and gave insight into
Azerbaijan's approach to tackling global climate challenges.
During the event, Mikayil Jabbarov ,
Azerbaijan's Minister of Economy, addressed the economic
complexities of transitioning to renewable energy. He cited the
IMF's 2023 report, which noted that global fossil fuel subsidies
reached a staggering $7 trillion-about 7.1% of the global economy.
These figures underscore the global reliance on traditional energy
sources, even as countries push for a greener future.
Afgan Isayev , Vice President of SOCAR,
highlighted the delicate balance between ending fossil fuel
subsidies and ensuring affordable energy access. While removing
subsidies could promote energy efficiency and combat climate
change, it also risks inflating energy prices, placing an economic
burden on consumers.
Global Oil Market: Geopolitical shocks provoke "Black
Gold"
The week kicked off with Brent oil prices dipping below $70 per
barrel on October 1, marking a bearish start to the week. However,
as media outlets reported that Iran was poised to launch
retaliatory strikes against Israel, the global energy markets
reacted swiftly. By mid-day, oil prices surged to $73 per barrel.
When footage of Iranian rockets targeting Israel hit the airwaves,
the London Stock Exchange closed with Brent oil trading at
$75.35.
Although the rocket attacks resulted in minimal casualties, with
only one confirmed death-a Palestinian civilian-the fear of further
escalation rattled the market. The next day, oil crossed the $76
mark as Israel threatened retaliation, pushing prices even higher.
By October 3, the price of Brent oil had climbed to $78 per barrel
as concerns mounted over potential strikes on Iran, a major player
in the global oil market.
The unpredictability of military and political moves, rather
than supply and demand factors, is now a key driver of oil price
volatility. This development makes it increasingly difficult to
forecast where prices will go next. As it stands out, for now, oil
prices in global markets declined, while Azerbaijani crude under
the "Azeri Light" brand has gained value.
Cost of Energy Transition: A daunting
challenge
Jabbarov shared insights into the long-term costs of the global
energy transition. He noted that over the past 20 years,
investments in green energy amounted to $10 trillion. However,
achieving net-zero emissions by 2050 would require an astronomical
$250 trillion-roughly $10 trillion annually. These numbers
highlight the enormity of the challenge facing global leaders at
COP29, where discussions will center on how to mobilize the
necessary funds for a sustainable energy future.
Azerbaijan's "Green Energy" vision
Parviz Shahbazov , Azerbaijan's Minister of
Energy, outlined the country's ambitious plans to increase the
share of renewable energy to 33% of total energy production by
2027. Azerbaijan has already made significant strides with the
completion of a 230 MW solar power plant. Future plans include the
construction of two additional solar power stations with a combined
capacity of 340 MW and a 100 MW plant, the results of which will be
revealed ahead of COP29.
In the liberated areas, Azerbaijan has also advanced its green
energy goals, with eight new solar and wind power stations set to
reduce carbon emissions by 2.9 million tons annually.
Baku's trade turnover growth: Catalyst for investment
opportunities
Alongside climate and energy discussions, Baku's trade
turnover growth is also garnering attention as a driver of
economic opportunity. Azerbaijan's trade turnover has grown
steadily, with Baku emerging as a key hub for investment,
especially in sectors like energy and logistics.
One of the main factors contributing to this growth is
Azerbaijan's strategic role in transcontinental trade corridors,
particularly the North-South Corridor, and its
participation in the Middle Corridor , which
connects Asia and Europe. Azerbaijan's increasing trade activity
has become a catalyst for foreign investments, bolstering its
already strong economic ties with countries such as Russia and
Türkiye.
As Baku becomes more integrated into global logistics and energy
supply chains, its economic opportunities grow, attracting
international businesses and fostering innovation in key sectors.
This dynamic could further accelerate as COP29
approaches, presenting Azerbaijan as not only a player in global
climate talks but also as a lucrative investment destination.
Finally, the recent volatile energy landscape has clearly
demonstrated the significant interplay between geopolitical events
and global energy markets. Baku Climate Week has provided
Azerbaijan with a valuable platform to showcase its unwavering
commitment to renewable energy and its readiness to host COP29. As
the world progresses towards a greener future, Azerbaijan's
balanced approach to energy transition, addressing both
opportunities and challenges, is poised to exert a substantial
influence on global discussions.
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