Economy-wide and environmental benefits of green energy development in oil-rich countries: Evidence from Azerbaijan

Abstract

Azerbaijan, which is an oil/ gas-rich country, has been taking full advantage of its energy potential and taking steps towards creating green energy and turning it into an export. The Green Energy Corridor, in which Azerbaijan plays the main role, aims to connect Azerbaijan with Europe in its first stage. In the second stage, this corridor will connect Central Asia with Europe, which will involve the laying of an electric cable under the Black Sea and the Caspian Sea. This will allow Azerbaijan and other Central Asian countries to export zero-carbon electricity to the European market. If Azerbaijan is successful in this field, it will not only serve the sustainability of the country’s economy in the post-oil era, but will also contribute to the reduction in carbon emissions, leading to global benefits. The aim of this article is to assess the socioeconomic, ecological, and political benefits of green energy deployment in Azerbaijan. An economic cost-effectiveness analysis was conducted for selected green energy projects (large-scale wind and solar power plants). We also argue that green transition projects, which seem expensive and difficult to realise today, will be justified in the near future.