After the energy crisis in Europe in 2022, the transition to clean and sustainable energy has become more urgent than ever. After the onset of the present stage in the Russia-Ukraine war on 24 February 2022, the number of economic sanctions against Russia imposed by the West has increased dramatically. As a result, Russia— the largest energy partner of the European Union until 2022—reduced the volume of energy exports to the EU. In response to the crisis in the European energy market, which predates the war and has been accelerated by it, the EU Commission presented its REPowerEU Plan.

The role of natural gas in energy transition has long been debated. Although a fossil fuel, it emits significantly less carbon dioxide and air pollutants than coal and oil. In this regard, many consider it as an intermediate source of energy helping to shift from the world of hydrocarbons to renewables.

Azerbaijan has considerable potential in green energy, with proved offshore wind potential of 157 gigawatts, onshore wind and solar potential of 27 gigawatts, and up to 10 gigawatts of wind and solar potential in the liberated territories. The Nakhchivan Autonomous Republic also has considerable potential, with negotiations underway to build a 500-megawatt solar power station. Azerbaijan is currently executing two investment projects in solar and wind power generation with Masdar and ACWA power, totaling 470 megawatts, and another project with BP for 240 megawatts in the Jabrayil district.

Iran and Armenia have enhanced their energy cooperation. On the sidelines of the official visit of Armenian Prime Minister Nikol Pashinyan to Iran on 1 November 2022, the two countries agreed to upgrade their existing gas-for-electricity barter deal, whereby Iran exports natural gas to Armenia in return for electricity supplied by Armenia.

Over the past several months, Azerbaijan has taken a number of steps to further anchor its position as one of the most reliable non-Western suppliers of hydrocarbons to the European Union and the Western Balkans, in accordance with a deepening strategic energy partnership between Baku and Brussels. Perhaps the most illustrative recent example of how this is playing out is the set of outcomes achieved during Azerbaijani President Ilham Aliyev’s two-day official visit to Sofia, Bulgaria, that took place from 30 September to 1 October 2022.

Recent geopolitical developments and a rapidly changing situation in its neighborhood has led Azerbaijan to adjust its foreign policy strategy with Central Asian states in general and with Kazakhstan in particular. President Kassym-Jomart Tokayev’s groundbreaking visit to Baku on 24 August 2022 represents the capstone of this policy shift and a breakthrough in the bilateral relationship.

While the negotiations between Azerbaijan and the European Union on concluding a new comprehensive partnership agreement are underway, the two sides have recently reached another important milestone in the field of energy cooperation.

Azerbaijan and Iran are actively building up economic cooperation, both bilaterally and within the framework of international projects. Having common religious, historical, cultural ties, to say nothing of a common border spanning 765 kilometers, the two neighboring states have a chance to transmute an economic relationship— especially in the sphere of natural gas—into a more stable and predictable political one.