PROMITHEAS – 4
Knowledge transfer and research needs for preparing mitigation/adaptation policy portfolios
(Contract No. 265182)
This document is part of the relevant report prepared for the FP7 funded project “PROMITHEAS-4: Knowledge transfer and research needs for preparing mitigation/adaptation policy portfolios”, coordinated by Prof. Dimitrios MAVRAKIS, Energy Policy and Development Centre (Greece). The whole report contains twelve (12) documents for each one of the emerging economies that participate in the project: Albania, Armenia, Azerbaijan, Bulgaria, Estonia, Kazakhstan, Moldova, Romania, Russia, Serbia, Turkey and Ukraine.
Contents
Contents
List of Tables
List of Figures
Abbreviations
Introduction
Objectives of the Azerbaijan climate change policy
Spectrum of climate change mitigation options for Azerbaijan
Spectrum of adaptation needs in Azerbaijan
References
Business – As – Usual Scenario (2000 – 2050)
BAU scenario description
References
Key assumptions
Energy Demand
Global warming potential (GHG emissions)
References
Optimistic Scenario (2000 – 2050)
Optimistic scenario description
References
Key assumptions
Energy Demand
Transformation
Global warming potential (GHG emissions)
References
Pessimistic Scenario (2000 – 2050)
Pessimistic scenario description
References
Key assumptions
Energy Demand
Transformation
Global warming potential (GHG emissions)
References
Results of Long – Range Energy Alternatives Planning System (LEAP)
Energy Demand
Transformation
Assessment of the three developed scenarios for Azerbaijan, through the multi - criteria method AMS
General comments
Required data
Assignment of grades
Results
References
Conclusions
ANNEX I
List of Tables
Table 1: United Nations projections for the Azerbaijan population (UN, 2010).
Table 2: Projections for the Azerbaijan GDP (IMF, 2011).
Table 3: Current feed – in – tariffs.
Table 4: Total emissions for the country.
Table 5: Emissions per sector for the country.
Table 6: Other environmental effects for the country under each scenario,
Table 7: Water use for cooling (Energy sector).
Table 8: Mean CEI for each sector depending on the policy instruments of the BAU scenario.
Table 9: Mean CEI for each sector depending on the selected policy instruments of the OPT scenario.
Table 10: Mean CEI for each sector depending on the selected policy instruments of the PES scenario.
Table 11: Overall cost efficiency for the three scenarios.
Table 12: Equity measurement.
Table 13: AMS results for each scenario.
List of Figures
Figure 1: Demographics: Population.
Figure 2: Economy: GDP real.
Figure 3: Average annual household income.
Figure 4: Final energy demand in households.
Figure 5: Final energy demand in agriculture.
Figure 6: Final energy demand in industrial sector.
Figure 7: Final Energy Demand in Transport sector per fuel.
Figure 8: Electricity generation.
Figure 9: Share of fuels in heat production.
Figure 10: GHG emissions per sector.
Figure 11: Precipitation in OPT scenario.
Figure 12: Temperature in OPT scenario.
Figure 13: Energy demand of the household sector in OPT scenario.
Figure 14: Energy demand of the agricultural sector in OPT scenario.
Figure 15: Energy demand of the industrial sector in OPT scenario.
Figure 16: Energy demand of the transport sector in OPT scenario.
Figure 17: Power plants capacity in OPT scenario.
Figure 18: GHG emissions for OPT scenario.
Figure 19: Precipitation in PES scenario.
Figure 20: Temperature in PES scenario.
Figure 21: Energy demand of the household sector in PES scenario.
Figure 22: Energy demand of the agricultural sector in PES scenario.
Figure 23: Energy demand of the industrial sector in PES scenario.
Figure 24: Energy demand of the transport sector in PES scenario.
Figure 25: Power plants capacity in PES scenario.
Figure 26: GHG emissions for PES scenario.
Figure 27: Energy demand for all scenarios.
Figure 28: Electricity generation for all scenarios.
Figure 29: GHG emissions for all scenarios.
Figure 30: ClimAMS-2012.
Figure 31: Environmental performance of the scenarios.
Figure 32: Political acceptability.
Figure 33: Feasibility of implementation.
Figure 34: Final grades.
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PROMITHEAS-4:“Knowledge transfer and research needs for preparing mitigation/adaptation policy portfolios”
Abbreviations
ADB / Asian Development BankCDM / Clean Development Mechanism
DNA / Designated National Authority
EBRD / European Bank for Reconstruction and Development
EC / European Commission
EE / Energy Efficiency
EIA / Energy Information Agency
ENP / European Neighboring Partnership
EPR / Environmental Progress Report
EU / European Union
GEF / Global Environmental Fund
GDP / Gross Domestic Product
GHG / Greenhouse Gas
HESs / Hydro energy Systems
IPCC / Intergovernmental Panel on Climate Change
MoU / Memorandum of Understanding
NC / National Communication
NMVOCs / Non-Methane Volatile Organic Compounds
R&AE / Renewable & Alternative Energy
RES / Renewable Energy Sources
SAARE / State Agency for Alternative and Renewable Energy Sources
SOCAR / State Oil Company of the AzerbaijanRepublic
SOFAZ / State Oil Fund
TESs / Thermal Energy Systems
UN / United Nations
UNDP / United Nations Development Programme
UNECE / United Nations Economic Committee for Europe
UNFCCC / United Nations Framework Convention on Climate Change
Introduction
Objectives of the Azerbaijanclimate change policy
Azerbaijan ratified the United Nations Framework Convention on Climate Change (UNFCCC) in 1995 and the Kyoto Protocol in 2000. As a non-Annex I Party to the UNFCCC, Azerbaijan does not have quantitative commitments for reducing GHG emissions. The country has not undertaken so far any quantitative objectives in Renewable Energy Sources (RES) or in Energy Efficiency (EE).
The first programme relevant to climate change policy issues was the State Program “On utilization of Alternative and Renewable Energy Sources in AzerbaijanRepublic” that was published on October 21, 2004 as President’s Direction No. 462). It did not include quantitative objectives for Renewable Energy Sources (RES).
The State Program for Development of Fuel and Energy Sector in Azerbaijan (2005-2015) followed with the objective (affecting also the climate change policy): To increase the existing generating capacities of the country’s power system at 6500-7000 MW by 2015 through construction of new thermal and power plants; modernization of the existing generating units and utilization of renewable power sources (small water power plants, wind, solar power, thermal waters, etc.) (Republic of Azerbaijan, 2005).
The State Program on Poverty Reduction and Sustainable Development in the Republic of Azerbaijan for 2008-2015 (Decree No. 3043 of the President of the Republic of Azerbaijan, dated of September 15, 2008) had the following climate change policy relevant objective:
-Reduction by 20% of the conditional fuel used for 1 KW of energy so as to reduce green-house (GHG) emissions in the energy sector by 2015. The indicator against which the comparison will be done is the quantity of conditional fuel used for 1 KW of energy in 2006 which was 386 gr[1] (Republic of Azerbaijan, 2008).
In 2011 the new State Agency for Alternative and Renewable Energy in Azerbaijan announced the following targets for 2020: 20% share of renewable energy in electricity (10% in 2011: 9,8% hydropower, 0,2% other RE) and 9,7% share of renewable energy in all energy consumption (2,3% in 2011) (State Agency for Alternative and Renewable Energy, 2011). These figures became more specific in 2012 by the State Agency for Alternative and Renewable Energy ie by 2020 the solar and wind are expected to account more than two third of RES consumption (solar 38%, and wind 32%), with potentials of 5000MW for solar, 4500MW for wind, 1500MW for bioenergy, 800MW for geothermal and 350MW for small hydro plants, (The State Agency on Alternative and Renewable Energy Sources, 2012).
The second National Communication (NC) to the UNFCCC secretariat was prepared by the National Hydrometeorological Department under Ministry of Ecology and Natural Resources of the Republic of Azerbaijan with the assistance of the United Nations Development Programme (UNDP)/GEF and was under inter-ministerial consultation at the time of the review (UNECE, 2009). It was published in 2010 and it includes a Greenhouse Gas (GHG) inventory for the years from 1990 to 2005, climate change scenarios and adaptation measures. Based on this NC, the preparation of a national action plan on mitigation and another one on adaptation is being planned (UNECE, 2009).
The Azeri climate change policy will be probably developed due to cooperation with EU. Azerbaijan, as a key strategic energy partner for EU both as a producer and transit country received as assistance a 14 million EUR budget support programme to reform its energy market and legislative framework, improve energy efficiency and promote new and renewable energy sources (RES) (EC, 2012; EC, 2010). All these on the basis of the defined priorities in the European Neighboring Partnership (ENP) Action Plan and the Memorandum of Understanding (MoU) aimed at establishing a partnership on energy between Azerbaijan and the EU, signed in Brussels on 7 November 2006. The harmonization of the Azeri legislation with EU law is an important component of their cooperation, initiated by signing the MoU on Strategic Partnership between the European Union and Republic of Azerbaijan in the field of Energy in 2007 (UNECE, 2007). The EU legislation has been studied and taken into account when drafting new legislation. Many EU directives in environmental areas have already been translated into Azeri (UNECE, 2011). In 2010 Azerbaijan confirmed at high political level its commitment and policy priority to engage the country more forcefully into the development of RES (notably wind, solar and hydro), and of Energy efficiency (EC, 2010).
Azerbaijan is encouraged to fully implement the Cancun and Durban agreement and in particular devise a low carbon development strategy including update information on target or actions that it will implement (EC, 2012).
Spectrum of climate change mitigation options for Azerbaijan
The energy and industrial sectors are the main sources of CO2 emissions (Ministry of Ecology and Natural Resources of the Republic of Azerbaijan, 2010). CO2 emissions in the Energy sectorcome from the burning of fuel for the production of energy, oil and gas extraction, transport, and human settlements (Ministry of Ecology and Natural Resources of the Republic of Azerbaijan, 2010).
Energy production is based on natural gas, fuel oil and water resources. The energy sources are dominated by fossil fuels with small reliance on hydroelectric power (18%) and minimal use of other RES types (less than 1%) (Spurgeon J. et al., 2011). According to estimations the national natural gas reserves will last through the 2070s, and oil reserves well beyond 2100 with the assumption that the country does not export any of these resources (Spurgeon J. et al., 2011).More specifically,BP and the U.S. Energy Information Agency (EIA) estimated in 2009 the proven oil reserves to be about 7 billion barrels and the reserves/production ratio at 29,3 years (UNECE, 2011). On the other hand estimates of the State Oil Company of the Azerbaijan Republic (SOCAR) increases the proven oil reserves at 17,5 billion barrels (UNECE, 2011). This discrepancy is caused by different classification systems and methods used in the estimations. The oil reserves of Azerbaijan account for somewhere between 0,6% and 1,5% of the world’s total oil reserves. Gas reserves estimates vary from 0,85 trillion m3to 1,35 trillion m3. In 2008, domestic gas production was 16,2 billion m3, of which about one-third (5,55 billion m3) was exported (UNECE, 2011). Since oil and gas are the major Azeri exports, the reserves could possibly be used up in the next few decades (Spurgeon J. et al., 2011).
The power system is the oldest and most developed in southern Caucasus region (EBRD, 2009). It has an installed generating capacity of about 7100 MW, out of which thermal power stations (using residual fuel oil, and by natural gas)contribute 6100 MW (almost 80%) and hydropower stations make up most of the balance (EBRD, 2009; republic of Azerbaijan, 2008)). A significant portion of the installed generating capacity is not actually available because of the old infrastructure, the deficiency of spare parts, and the lack of scheduled maintenance (EBRD, 2009). More than 35% of Azerenerji power stations have been operating for more than 30 years, while about half of the turbo-generators and boilers are in use for more than 40 years (EBRD, 2009; Republic of Azerbaijan, 2008). This situation results in high fuel consumption, low thermal efficiency and high emissions.
A significant part of the generation is lost during transmission because of the inefficient distribution network (Republic of Azerbaijan, 2008). The thermal power plants are largely fuelled by oil and emit mainly NOx and SO2. This set as an option for the energy sector to switch eventually all thermal power plants to natural gas fuel (Republic of Azerbaijan, 2008).
In 2010, the sector with the highest share of the final energy consumption was the household sector with 50,9%, followed by the transport sector with 25,3% and the industrial sector with 11% (Energy Charter Secretariat, 2011).
The country has the opportunity to decrease reliance and possible future shortfalls in fossil fuel supplies by expanding the renewables sector, and meeting the targets established by the EU by 2020 (Spurgeon J. et al., 2011). The country will also improve energy security over the longer term, have potential employment benefits, and will create potential for increased energy access in remote areas. An analysis by Spurgeon et al. in 2011 estimated that Azerbaijan could save up to 35 million Euros annually from avoided GHG emissions costs by reducing fossil fuel dependency.
Exploitation of RES
There is considerable potential for the development of RES, particularly wind, solar and biomass, but there are considerable obstacles (low feed-in tariffs and management inertia due to institutional capture by the oil and gas industry) (Spurgeon J. et al., 2011). The share of small hydropower can increase due to considerable number of appropriate sites around the country, but few feasibility studies have been completed (Spurgeon J. et al., 2011). There was interest in renewables other than hydropower, and a few studies were performed, but actual projects focused on infrastructure (EBRD, 2009).
Renewable fuels (liquid and gaseous), solid and municipal waste are not used yet (Srebotnjak T., Hardi P. 2011). The share of RES in total primary supply of energy in 2011 was 1,9% with the following distribution: 98,1% hydro and 1,5% renewable combustible and waste (Sopian K, et all, 2011).
Hydro
Much of the potential for hydro-electricity production is untapped (ADB, 2009; Ministry of Industry and Energy of Azerbaijan Republic, 2004). The country’s rivers could feasibly be exploited to produce 40 billion kWh, with a technically favorable potential of 16 billion kWh, 5 billion kWh of which is shared by small hydropower plants (Ministry of Industry and Energy of Azerbaijan Republic, 2004).
The share of the hydro power generation capacity in the overall power system was in 2009, 17,8% (ADB, 2009). The hydro power stations in 2003 produced 2,4 billion kWh of total electricity (ADB, 2009). This amount represented for that year the 11,4% of overall electricity generation (ADB, 2009).
The construction of hydro power plants will facilitate the regulation of flood waters, production of environmentally sound electricity generation and the creation of new irrigation systems (ADB, 2009). Small Hydro Power Plants (PPP) on rivers (estimation for 61 small HPPs) can generate up to 3,2 billion kWh annually (ADB, 2009). These HPPs can be installed on irrigation canals, rivers with unregulated flow and water reservoirs that are under-construction. Their use in electricity supply of activities and settlements that are remote from transmission lines and substations of countrywide grid system can resolve electricity problems, as well social problems (ADB, 2009).
Biomass
The available sources for biomass include (ADB, 2009): combustive industrial wastes; wastes of forestry and wood-working; agricultural and organic wastes; domestic and communal wastes; wastes processed from areas polluted with oil and petroleum products.
More than 2 million tons of solid domestic and production wastes are annually collected in waste treatment sites in the country (ADB, 2009).Their utilization (processing) would partially resolve the problems in heating public buildings in Baku and other large industrial cities (ADB, 2009). An estimated 83% of the total municipal waste stream in the country is collected, of which 50% is landfilled, 30% recycled and 20% is dumped (Spurgeon et al., 2011).
Agricultural residues can be used for biomass combustion or gasification (EBRD, 2009). Wastes from animal manures can be used for biogas production (EBRD, 2009).There may also be potential for methane production from landfills.In 2009 Azerbaijan was the largest amongst Republics of the former USSR and fourth in the world in production of raw cotton (EBRD, 2009).The waste of cultivating cotton and cereal crops is used as a fuel in private household equipment by the population of Azerbaijan uses. No large scale projects were identified, although it is feasible to further utilize these residues in a larger application (EBRD, 2009).The Ministry of Environment and Natural Resources of Azerbaijan has expressed interest in developing biogas energy use, and has sponsored pilot projects in Lerik, Guba, and Ismayilly, Siyaku, Nakhchivan and Piran using solar energy (EBRD, 2009).
Wind
Many regions in Azerbaijan have the potential for wind power facilities (ADB, 2009). There is estimation of 800 MW annual wind power capacities (equivalent to2,4 billion kWh of electricity) due to its geographical location, nature and economic infrastructure (ADB, 2009). This amount corresponds to the saving up of 1 million tons of conventional fuel and more importantly, the prevention of emitting large quantity GHG emissions (ADB, 2009).
Solar
Climate conditions in Azerbaijan allow the production of electric and heat energy using solar power (ADB, 2009). The annual number of sunshine hours in Azerbaijan is 2400-3200 hours (ADB, 2009). The estimated solar power is 1500-2000 kWh/m2 allowing to be considered as one of the efficiency factors for attracting investments in solar power (ADB, 2009).
Geothermal
The country is rich with thermal waters which are located at the Great and Small Caucasus, the AbsheronPeninsula, Talish mountain zone, Kur lowland and Caspian-Guba area (ADB, 2009). Exploitation of thermal waters in these areas would partially cover domestic and other heat energy needs (ADB, 2009). It can be also used as thermal energy to heat extensive greenhouses (ADB, 2009).
Energy efficiency
The State Program for the Development of Fuel Energy Complex for the period 2005–2015 was adopted in 2005 (Republic of Azerbaijan, 2005). One component aims at reducing the environmental impact of energy generation by upgrading and increasing the energy efficiency of thermal plans. However, there are no other relevant to energy efficiency mitigation actions estimations.