Within the wake of its brutal struggle in Ukraine, as of Sept. 5, Russia’s pure gasoline exports had fallen to 21 billion cubic meters, two-thirds decrease than final 12 months and 6 instances decrease than in 2021.
The EU has responded by upping its renewable power technique whereas looking for different sources to assist meet its pure gasoline calls for within the meantime. Azerbaijan (part of the previous Soviet Union) is a kind of international locations, signing a new deal for doubling gasoline exports to Europe by 2027.
Nevertheless, growing power imports from petro-states akin to Azerbaijan won’t hasten Europe’s renewable power transition; it should solely complicate it.
Azerbaijan will not be the primary petro-state the place undemocratic and aggressive governments are propped on account of their oil and gasoline exports; Saudi Arabia and Iran are the best-known examples. However Azerbaijan’s state of affairs, mendacity on the heart of the Eurasian heartland, and its proximity to the struggle in Ukraine are distinctive. Worldwide help for international locations akin to Azerbaijan engaged in “petro-aggression” has implications for the broader world shift to renewable power, and it’s value asking what multinational firms can, and may, do in response.
Of pipelines and battle
If the world has rejected normalizing Russia’s aggression, why the double normal with Azerbaijan? As an American of Armenian descent, I’ve adopted the lengthy historical past of violence within the South Caucasus between Azerbaijan and Armenia, most just lately ensuing within the “Second Karabakh Battle” and hundreds of casualties on each side. As of September, Azerbaijan has forcibly eliminated and ethnically cleansed 100,000 Armenians from the area referred to as Nagorno-Karabakh.
Shortly after President Ilhan Aliyev claimed victory in Karabakh, Turkey, which additionally has a historical past of genocide and violence in opposition to Armenia, Azerbaijan signed a brand new gasoline pipeline deal connecting the Turkish metropolis of Igdir with Nakchivan, a area managed by Azerbaijan, simply west of Karabakh and Armenia. The brand new pipeline will be part of different pipelines connecting the Caspian Sea oil and gasoline fields with the Mediterranean.
Anna Ohanyan, a professor of political science and worldwide relations at Stonehill School, wrote just lately in Overseas Coverage that Azerbaijan seemingly seeks to obtain an extraterritorial hall that will enable it to regularly take management of Armenian land and circumvent geopolitical sanctions for ignoring internationally acknowledged borders.
False energy and petro-aggression
Azerbaijan’s rise as an power exporter is already giving it “false geopolitical energy.” The nation’s fossil sources are rapidly diminishing as its personal home calls for enhance, limiting its export provides even because it tries to execute offers with Europe and leverage them to stop European nations from thwarting its ambitions in Armenia.
“It is rather unlikely that Azerbaijan will have the ability to meet its rising export calls for to the EU,” wrote analysts at The Economist Intelligence Unit. Azerbaijan’s oil and gasoline reserves may very well be depleted by 2030, in keeping with a report in Third World Quarterly. “Azerbaijan’s leverage is truthfully a puzzle to me and is vastly overestimated,” Ohanyan informed me. “Azerbaijan signed an settlement with Russia earlier than Russia invaded Ukraine for power cooperation; Azerbaijan is unable to fulfill its personal calls for and guarantees to Europe and in consequence is principally shopping for gasoline from Russia after which promoting it to Europe.”
Azeri-style belligerence is typically referred to as petro-aggression: when a rustic’s fossil gasoline riches and supposed financial clout embolden it to be extra aggressive, focusing on neighboring states to develop its geopolitical energy. “On this state of affairs, … [Azerbaijan] will not be solely an authoritarian state, which is already a threat issue, however it’s a petro-state,” mentioned Ohanyan. “Petro-states behave fully otherwise and they’re extra prone to begin wars.”
Totally 50 p.c of Azerbaijan’s state price range and 90 p.c of its export income comes from oil and gasoline output, showcasing simply how intertwined fossil fuels are with the nation’s future.
The shift to renewables must speed up
Because the world shifts to extra renewable power, international locations akin to Azerbaijan or Russia, which closely depend on fossil gasoline exports for his or her geopolitical energy, will face new limits as demand for gasoline and oil decreases. Renewable power is a pressure perform for democracy and democratic practices because it decentralizes energy and privatizes financial authority, however solely when met with authorities help. “[President Aliyev] going to withstand the inexperienced transition as a result of if carried out, it will diversify Azerbaijan’s economic system and convey new gamers into it together with decentralizing energy, that are all issues President Aliyev has been working in opposition to,” mentioned Ohanyan.
Even authoritarians akin to Aliyev can’t cease this transition: Azerbaijan just lately signed agreements with the Abu Dhabi Future Power Firm for photo voltaic and wind initiatives totaling 1 GW, and the nation has a acknowledged purpose to achieve carbon neutrality by 2050.
Name to motion
The battle within the South Caucasus issues to giant multinational firms and their shift to a greener future, and they need to become involved, mentioned Ohanyan: “I believe firms want to take a position and begin taking note of how conflicts are resolved. Conflicts must be resolved by negotiation and firms want to talk a lot louder in opposition to the usage of pressure.”
Multinationals, she added, “are a beneficiary of a peaceable transition to a inexperienced economic system.” Moderately than counting on fossil gasoline provides from petro-states, multinational firms can speed up their investments within the power transition and scale back the necessity for such fossil-fuel imports. Packages such because the REPowerEU, launched in response to Russia’s invasion of Ukraine, are an instance of promising motion; however for now, the concentrate on Russia has solely shifted fossil-fueled energy grabs elsewhere.
