Azerbaijan

Implementation period: 2024-2025 Funding amount: US$200,000 Window: Just-in-Time

Azerbaijan is advancing its climate policy agenda as part of its broader development goals. The country has passed a national development strategy titled, Azerbaijan 2030: National Priorities for Socio-Economic Development. As part of its climate commitments under the Paris Agreement, by 2030, Azerbaijan has pledged to reduce its emissions by 35% and is working towards the gradual elimination of fossil fuel subsidies by the same year. These steps reflect growing political will to align economic development with climate resilience.  

Objectives & Activities

In support of these priorities, the PMI Program in Azerbaijan is supporting the country to strengthen its readiness for domestic carbon pricing and participation in international carbon markets under the Paris Agreement’s Article 6, including:

• Assessing existing carbon price incentives—both direct and indirect—to support decision-making on instrument choice, potential impacts, and overall carbon pricing design
• Developing analysis to identify potential exposure to the European Union (EU) Carbon Border Adjustment Mechanism (CBAM), outlining associated risks and opportunities
• Evaluating carbon pricing instruments and developing recommendations on the most suitable options for Azerbaijan
• Preparing a technical report to assess Azerbaijan’s potential and readiness to participate in carbon market mechanisms under Article 6 of the Paris Agreement, with actionable recommendations and a proposed stepwise approach
• Delivering workshops to engage government stakeholders on carbon pricing and to build institutional capacity for implementation and coordination