JJust a few miles from the site of the next United Nations Climate Change Conference in Baku, Azerbaijan, for more than a century there is a neighborhood known as the “Black City,” where homes and factories were all stained with soot from the oil extracted and refined here on the shores of the Caspian Sea.
Baku was the world’s first oil city; pioneering oil wells were drilled in the 1840s, followed by refineries from 1859. Alfred Nobel and his brothers arrived that decade, building a major oil industry and donating their considerable fortunes to the founding of the Nobel Prize. Baku is proud that oil produced here helped win World War II, supplying the Soviet forces fighting Adolf Hitler on the eastern front.
Baku’s oil wells still stand, piston pumps still hum rhythmically, and refinery flames stand out against the night sky. Today, fossil fuels account for 90 percent of Azerbaijan’s exports, and the oil pioneer remains among the world’s top 10 most oil- and gas-dependent economies.
But gone are the black-stained buildings that gave the city its nickname. A thorough clean-up over the past two decades has transformed central Baku into the White City, with Soviet-era buildings replaced with gleaming beige facades, a style so authentic to the 19th century that it’s hard to believe most of them are only a decade old. The only clue is the few streets where renovation has yet to be completed, where neat new facades contrast with the peeling concrete behind.
Azerbaijan wants to effect a similar transformation in the energy sector, first at home and then in the rest of the world’s oil-dependent economies. President Ilham Aliyev has declared his country is “at an active stage of green transition” and has set a goal of increasing its electricity production from about 7 percent now to 30 percent from renewable sources by 2030. The government is building a vast solar power plant on the plains near Baku, and it also has ambitious plans for an interconnector to export low-carbon electricity to Georgia and then across the Black Sea floor to Romania and Hungary.
“The existence of fossil fuel industries cannot be denied because it is a major source of income for many countries and it cannot be abandoned overnight,” Yalchin Rafiev, Azerbaijan’s lead negotiator at COP29, told the Guardian.
“What matters most is how fossil fuel countries and companies recognize the real challenges related to the climate and act responsibly.”
Azerbaijan is already at a turning point. Oil’s share of exports is declining. But gas exports are more than making up for the shortfall, and huge investments are turning the oil country into a gas powerhouse. Azerbaijan plans to increase its gas production by a third over the next decade.
President Aliyev called it his contribution to saving Europe from Vladimir Putin’s aggression in neighboring Ukraine, telling EU ministers this spring that it was a “gift from God” and that Azerbaijan had a “responsibility” to help Europe.
It is not unusual for an oil-producing country to host a COP. Last year’s host, the United Arab Emirates, boasts the world’s seventh-largest natural gas reserves, and drew much attention when it appointed Sultan Al Jaber, CEO of the country’s national oil company ADNOC, as COP28 president.
Previous chairs have been many fossil fuel producing countries, including the UK in 2021, Qatar in 2012, Canada in 2005 and Brazil in 1992, the year the UN Framework Convention on Climate Change came into force. Next year, Brazil will host COP30 in Belém in the Amazon, even though the country recently joined the oil cartel OPEC+ and has set a goal of increasing production from 3.7 million barrels per day to 4.8 million barrels per day by 2028.
Laurie van den Berg, head of public finance at campaign group Oil Change International, said there was a “cognitive dissonance at the heart of international climate diplomacy” exemplified by the host country. “On the one hand, they’re promising to submit national climate plans in line with the 1.5°C limit, while at the same time increasing fossil fuel production,” she said. “The police trio [UAE, Azerbaijan and Brazil] If we recognise that there is no climate plan that can match a 1.5°C warming by building more coal, oil and gas infrastructure, we risk making a mockery of the unprecedented mobilisation that led to the COP28 decision to phase out fossil fuels.”
For the Azerbaijani government, there is no contradiction in being an oil and gas exporter while striving to limit global temperature rise to 1.5 degrees above pre-industrial levels. Nigar Alpadalai, a senior UN official who holds a key position on the COP29 team, said, “I don’t think it’s good to blame oil. Yes, we are an oil and gas country. This is our history. This is where we started. But we are doing a lot. We are committed to a new paradigm and we have a strong desire.”
Alpadalai added that solving the climate crisis was impossible without cooperation with oil and gas countries. “Isolating oil and gas countries is not the right path. We need solidarity. The climate problem is a global challenge. All countries need to work together to solve it,” he said.
If Azerbaijan wants to move away from fossil fuels, the challenge is immense. Walking through central Baku, you see endless traffic jams filling the lanes of the great modern highways that cut through the capital and the Black and White City’s boulevards. Occasionally a small, battered Lada from the 1980s passes by, a vestige of the Soviet era that now looks out of place outside the many five-star hotels that host oil executives and lobbyists when the Kop comes to town. But the majority of the cars on the road are newer models, shiny and upscale, matching the gleaming apartment buildings.
Despite widespread rural poverty and the recent end of a war with Armenia, the country has a thriving economy and the Aliyev regime, nominally a democracy with elections and a parliament but in reality a dictatorship with no opposition and which represses civil society, wants to keep it that way.
Mohamed Adaw, founding director of the think tank Power Shift Africa, said Azerbaijan’s actions so far were not encouraging. “They are not addressing the real issues of tackling climate change,” he said.
Azerbaijan is a quintessential oil nation, but the government is aware that its people are also suffering from the climate crisis and the effects of oil extraction. The oil industry has not only stained Baku black, it has also polluted the Caspian Sea, on which the city sits, and climate change is exacerbating water stress in the region. “The Caspian Sea’s water level is falling. We can see it with our own eyes,” Alpadalai said.
Last month, Azerbaijan proposed a fund for developing countries affected by climate change, and hoped other countries would contribute. The problem is that contributions would be voluntary, rather than a tax on fossil fuels, as many economists and experts have called for.
A key challenge for COP29 will be to raise the money poorer countries need to cut emissions and deal with the impacts of extreme weather – trillions of dollars a year will be needed for this, but so far wealthy, developed countries have barely made good on their long-standing promise to provide $100bn (£78bn) a year.
For Azerbaijan to succeed at the COP and truly move away from fossil fuels, what happens in Baku must be more than a cover for the facade of an oil-dependent state. Other petrostates have diversified by exploring other mineral resources, expanding tourism and operating as a travel hub like Dubai in the UAE, or using their oil wealth to buy profitable assets abroad like Saudi Arabia and Qatar. For Azerbaijan, quadrupling its renewable energy production from a small base is just the beginning. The entire economy of this petrostate, like the world, needs to be restructured.