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Of Azerbaijan In-Depth Review of the Energy Efficiency Policy of AZERBAIJAN ENERGY CHARTER SECRETARIAT 2013 In-Depth Review of the Energy Efficiency Policy of AZERBAIJAN ENERGY CHARTER SECRETATIAT 2013 Information contained in this work has been obtained from sources believed to be reliable. However, neither the Energy Charter Secretariat nor its authors guarantee the accuracy or completeness of any information published herein, and neither the Energy Charter Secretariat nor its authors shall be responsible for any losses or damages arising from the use of this information or from any errors or omissions therein. This work is published with the understanding that the Energy Charter Secretariat and its authors are supplying the information, but are not attempting to render legal or other professional services. © Energy Charter Secretariat, 2013 Boulevard de la Woluwe, 56 B-1200 Brussels, Belgium ISBN 978-905948-126-8 (English PDF) ISBN 978-905948-125-1 (English Paperback) Dépôt D/2013/7850/3 Reproduction of this work, save where otherwise stated, is authorised, provided the source is acknowledged. All rights otherwise reserved. Cover and layout design: Diana Spotinova for Spotinov print Ltd. Printed by Spotinov print Ltd. Photo on the cover: Old city of Baku, Republic of Azerbaijan The Old City of Baku or Inner City (İçә ri Şә hә r) is the historical centre of Baku. This small town has managed to preserve its ancient architectural and cultural heritage throughout the centuries. It has been classified in 2000 as a World Heritage Site by Unesco and in 2005 as Historical-Architectural Reserve under the Ministry of Culture and Tourism of the the Republic of Azerbaijan. Today, with the increasing construction of skyscrapers and other modern structures, the Old Town has become a tiny part of the capital. At the rear of the photograph is one of the three Flame Towers skyscrapers, which became one of the symbols of "modern" Baku. Source: http://www.leilabellz.com/2012/08/old-city-baku-icri-shr.html INtroductioN INTrodUCTion Azerbaijan ratified the Energy Charter Treaty (ECT) and the Protocol on Energy Efficiency and Related Environmental Aspects (PEEREA) on 2 December 1997. By ratifying PEEREA, countries commit themselves to formulating and implementing policies for improving energy efficiency (EE) and reducing the negative environmental impacts of the energy cycle (Art.5). The guiding principle of PEEREA is that contracting parties shall co-operate and, as appropriate, assist each other in developing and implementing EE policies, laws and regulations (Art.3). The country review process is a core activity in monitoring and facilitating the implementation of PEEREA. The in-depth EE reviews, implemented under PEEREA, have proven to be an important tool in assessing the progress of member countries in fulfilling their commitments under the protocol. They also provide peer guidance to governments in developing and implementing EE policies. At the Energy Charter Conference in 2009 in Rome, member states discussed the fact that, to effectively monitor the progress made by the contracting parties in implementing the PEEREA obligations, in-depth reviews should be carried out every five years and regular reviews should be completed in between. The conference also adopted an indicative schedule of reviews for 2010–2012, focusing on countries that are not covered by other international organisations. Fully respecting the criteria discussed by the conference an in-depth review of the EE policy of Azerbaijan was carried out in 2012. The review team comprised the following officials: Mr Christopher Walden from the Swedish Energy Agency, Sweden, Mr Artan Leskoviku from the National Agency of Natural Resources, Albania, and Ms Edyta Nowak from the EC Delegation in Azerbaijan, together with Ms Gabriela Prata Dias and Ms Bilyana Chobanova from the Energy Charter Secretariat. The team was also supported by Ms Rukiye Yayla and Mr Wietze Lise from AF-Mercados EMI. The team visited Baku between 18 and 22 June 2012 and discussed a range of issues with government agencies and other stakeholders (listed in Annex IV). The key sources of information for this report include the previous in-depth review of the investment climate and market structure in the energy sector of Azerbaijan of 2011, national policies and relevant laws as posted on ministry websites, other relevant publications by the Government of Azerbaijan and the reports of international financial institutions such as the European Bank for Reconstruction and Development (EBRD), International Monetary Fund (IMF), World Bank (WB), International Finance Corporation (IFC), International Energy Agency (IEA), Transparency International and the institutions of the EU. 3 TABLE OF CONTENTS TABLE OF CONTENTS INTrodUCTion ...............................................................................................................................................................................................................................................3 EXecUTIVE SUMMarY .......................................................................................................................................................................................................................8 BacKgrouND ......................................................................................................................................................................................................................................................... 9 ENergy AND ENergy EfficieNcy Policy ............................................................................................................................................................. 9 RENewaBle ENergy Policy...................................................................................................................................................................................................... 10 Overall AssessmeNT of Progress ........................................................................................................................................................................ 11 RecommeNdatioNS ............................................................................................................................................................................................................................... 12 BacKGroUnd ...............................................................................................................................................................................................................................................16 Brief Overview of the CouNtry ................................................................................................................................................................................. 17 ENergy Supply AND DemaND ............................................................................................................................................................................................. 23 ENergy CONsumptioN TreNds BY Sectors ............................................................................................................................................. 35 EnerGY POLicY .........................................................................................................................................................................................................................................42 BacKgrouND ..................................................................................................................................................................................................................................................... 43 ENergy Policy Goals ....................................................................................................................................................................................................................... 43 Legal Basis ............................................................................................................................................................................................................................................................ 44 ENergy MarKet LIBeralisatioN ..................................................................................................................................................................................... 45 INstitutioNal FrameworK .................................................................................................................................................................................................... 46 ENergy PriciNG.............................................................................................................................................................................................................................................. 48 EnerGY EFFiciencY POLicY ...........................................................................................................................................................................................52 Strategic AND Legal Basis .................................................................................................................................................................................................... 53 ENergy INteNsity .....................................................................................................................................................................................................................................
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