Renewable Energy Targets and Policies in Traditional Oil-Producing Countries: A Comparison of Azerbaijan and Kazakhstan

Abstract

The clean energy transition has entered the policy discourse and government agenda of the Caspian oil-producing countries of Azerbaijan and Kazakhstan. Both countries have set a target to increase the share of renewable energy sources (RES) in total energy production by 2030. This article presents a comparative analysis of Azerbaijan and Kazakhstan in their paths to a low-carbon sources of energy covering the status of RES, renewable energy targets, and the role of government policy schemes in promoting renewable energy (RE) deployment. The study shows that despite some commonalities in the initial conditions (such as Soviet-era legacies of fossil-fuel-based infrastructure, a high degree of dependence on oil and gas rents, and dominance of state-owned enterprises), Kazakhstan adopted a more targeted regulatory framework and more elaborate policy schemes with regards to renewables than Azerbaijan did. In the latter case, the introduction of relevant renewable legislation has been significantly delayed or implemented only partially. As a result, Kazakhstan has performed relatively more successfully on advancing non-conventional renewable energy targets: non-hydro renewable sources accounted for 3% of total electricity generated in Kazakhstan and made up only 1% of electricity produced in Azerbaijan (as of 2020). This article highlights the following factors that stand out in explaining these variable outcomes: the degree of economic liberalization, quality of governance of the oil and gas sector, regulatory frameworks, and policy support schemes.