Implementing a Long-Term Energy Policy Planning Process for Azerbaijan: A Roadmap – Analysis

Long-term energy planning is central to a country’s strategic direction. Without it, governments could end up relying on a patchwork of policies and legislation that can be inconsistent and ill-suited to the complex challenges countries increasingly face. Good long-term energy planning encompasses domestic and foreign policy, while touching on many key areas of the economy, including industry, natural resources and trade. The process involves multiple stakeholders within government, but also engages the private sector as well as citizens, as it aims to set a strategic path towards a clear goal.

Azerbaijan, like many of its peers, is seeking to understand how best to respond to the opportunities and complexities of the global clean energy transition. The 2014-2015 oil shock prompted the government to consider and draft a series of new laws and reforms, and efforts are underway to finalize and adopt an energy strategy. The price volatility observed in global markets over the period 2020-2022 shows even more clearly that energy planning using scenario analysis and modeling will help countries to successfully respond to new and unexpected challenges in a resilient way.

This roadmap details the steps needed to build this process and explore relevant policy options that producing economies have been pursuing that may be relevant for Azerbaijan. It then discusses data collection and survey design, which are key to establishing the basis for energy modelling. The roadmap then examines energy modeling and its role in policy-making.

This roadmap aims to help Azerbaijan reconsider the policy planning process as it seeks to link key laws and reforms into a broader energy strategy. It also paves the way for Azerbaijan to make this process sustainable and iterative, by connecting its decision makers with its statisticians and investing in internal modeling capacity. Each country must choose its own energy path, based on its specific needs and resources, but having a long-term plan can significantly smooth that path.

Louisa R. Loomis