Azerbaijan–UAE: Advancing sustainability through strategic cooperation Green vision, stronger ties

In recent years, Azerbaijan has been rapidly strengthening business ties with the Gulf states to diversify its domestic exports and attract investments. In this regard, the United Arab Emirates (UAE) has been Azerbaijan’s leading partner for many years. 

Recently, business circles in the UAE have intensified joint ventures in the fields of "green" energy, tourism, and infrastructure projects. The latest step to further expand business cooperation was the working visit of Azerbaijan's President Ilham Aliyev to the UAE, which began on January 13. During the visit, the president participated in the Abu Dhabi Sustainability Week (ADSW).

The United Arab Emirates was among the first in the world (on December 26, 1991) to recognize the restoration of Azerbaijan’s independence. A year later, the two countries established diplomatic relations, and the 30th anniversary of this event was celebrated two years ago. Since then, the relationship between Baku and Abu Dhabi has been built on a solid foundation of mutual respect, shared approaches to key issues in global and regional political agendas, and, undoubtedly, relies on the sincere friendship between the leaders of both countries, their visionary policies aimed at long-term cooperation, including in the business sector. 

In recent years, business circles from both countries have actively participated in business forums, specialized exhibitions, conferences, and meetings at various levels. These diverse platforms have contributed to the expansion of trade, economic, and investment ties. To date, more than thirty intergovernmental, interdepartmental, and other bilateral agreements are in force between the two countries, promoting mutually beneficial economic and humanitarian cooperation.

The ongoing working visit of Azerbaijan’s President Ilham Aliyev to the UAE should also be considered in this context. During his visit, the President participated in the annual Abu Dhabi Sustainability Week (ADSW) held in the Emirates. The ADSW forum, which has evolved into a global initiative, aims to accelerate progress across economic, social, and environmental dimensions. It enjoys full support from the UAE government and the leading renewable energy company, Masdar. Notably, in January 2023, President Ilham Aliyev also attended the opening ceremony of ADSW, where he praised the UAE's remarkable achievements in the field of sustainable development.

The consistent cooperation between Azerbaijan and the UAE at the state level, as well as through various business formats and platforms, has contributed to the relatively rapid growth of mutual trade in recent years. For example, between January and November 2024, the bilateral trade turnover between the two countries amounted to $88.92 million. However, when considering the volumes of transit and re-export, joint commercial ventures are significantly larger in scale.

According to information provided to Caliber.Az by Azerbaijan’s Ministry of Economy, trade and economic cooperation between the two states is developing dynamically: 

 "Efforts are underway to further increase trade volumes and diversify its structure, as well as to implement potential investment projects in the fields of 'green' energy and tourism. More than 420 companies with UAE capital are registered in Azerbaijan, operating in industries such as manufacturing, agriculture and processing, transport, construction, trade, services, and other sectors." 

The two countries are also preparing to sign a Comprehensive Economic Partnership Agreement. According to the Ministry of Economy, throughout their bilateral relations, Azerbaijani businesses have invested approximately $1 billion in the UAE's economy, while the UAE has invested $3.3 billion in Azerbaijan’s economy.

The dynamics of investment have significantly expanded in recent years, especially with the implementation of numerous joint projects in the field of renewable energy. In the first quarter of 2024, Azerbaijan invested $65.8 million in the UAE's economy, reflecting a 2.9-fold increase, while UAE investments in Azerbaijan during the same period amounted to $190.7 million, growing by 3.5 times.

Energy remains the cornerstone of the partnership between Azerbaijan and the UAE, with strong ties established between SOCAR and the Abu Dhabi National Oil Company (ADNOC) in the oil and gas sector. However, the two countries have also established highly effective cooperation in the field of green energy. A key result of their partnership with the leading UAE company, Masdar, was the commissioning of the Garadag Solar Power Plant (SPP) in Azerbaijan in October 2023. With a capacity of 230 MW, the plant is expected to generate 500 million kilowatt-hours of electricity annually and reduce carbon dioxide emissions by more than 200,000 tons.

Additionally, in June 2024, Masdar laid the foundation for three renewable energy-generating facilities with a combined investment of approximately $1 billion and a total capacity of 1,000 MW. These include a 315 MW facility in the Banka settlement in Neftchala, a 445 MW facility in Bilasuvar, and a 240 MW facility in Absheron-Garadag. It is expected that these power plants will generate more than 2.3 billion kWh of electricity annually, which will save 496 million cubic meters of natural gas each year and prevent over 943,000 tons of emissions into the atmosphere.

The joint portfolio of projects between Masdar and the State Oil Company of Azerbaijan Republic (SOCAR) also includes potential initiatives in offshore wind energy with a total capacity of 2 GW, as well as the production of green hydrogen, ammonia, and synthetic methane. Another initiative by Masdar is being implemented in partnership with Azerbaijan Railways CJSC, where the partners are conducting research and planning phased decarbonisation of rolling stock and freight logistics. These efforts form part of Azerbaijan's climate resilience strategy and its commitment to achieving the United Nations Sustainable Development Goals (SDGs) in the transport sector.

The cooperation between the two countries under the UN climate agenda has also proven highly effective. During a recent meeting, UAE President Sheikh Mohamed bin Zayed Al Nahyan expressed satisfaction as he recalled his official visit to Azerbaijan in 2024 and the discussions held with the President of Azerbaijan in connection with the UN COP29 conference. The UAE’s experience in hosting the UN Climate Conference in 2023 has proven invaluable for Azerbaijan, especially as it successfully hosted COP29 in Baku in November 2024.