Azerbaijan may join ADB's industrial emissions reduction program

The Asian Development Bank (ADB) and Azerbaijan are in discussions regarding the country's potential participation in a technical assistance program to decarbonize hard-to-decarbonize industrial and maritime sectors, Report informs.

The technical assistance program currently covers India, the Philippines, and Turkmenistan. In addition to Azerbaijan, similar discussions are also underway with Uzbekistan.

The initiative aims to support the bank's member countries in reducing emissions in the most carbon-intensive sectors of the economy and building a portfolio of "first-generation" climate projects in line with the goals of the Paris Agreement.

The total project budget is $2.25 million. Financing is planned through ADB's Technical Assistance Special Fund ($500,000), the Smart Energy Innovation Fund ($1 million), and the Spanish Cooperation Fund for Technical Assistance ($750,000).

The knowledge and support technical assistance (TA) will support DMCs in decarbonization of hard-to-abate sectors. While this transition is already underway in some countries, the pace of transformation needs to be accelerated across DMC development paths consistent with the goals of the Paris Agreement. This transition needs to be just and inclusive, ensuring affordable, reliable, and equitable access to energy services.

The TA is aimed at supporting: upstream work and pipeline origination work across multiple countries, information sharing from larger more advanced economies to less development economies, and regional cooperation especially since sectors such as cement, steel, fertilizers, petrochemicals work best under regional and global standards; cooperation agreement can lead to effective trade arrangements.

The proposed TA will assist DMCs with a comprehensive package of solutions including the preparation of sectoral and country-specific assessments; the development of new business models, pre-feasibility reports, and other technical studies; the conduct of workshops and policy dialogues; institutional capacity building exercises on decarbonization technologies; and the development of pilot and project investment pipelines to be financed by ADB and other development partners.

There are economically feasible and technologically viable solutions to achieve decarbonization. However, there are some industries which use carbon as an integral part of their process and altogether provide a substantial contribution to the world's greenhouse gas (GHG) emissions. This sector is labelled as 'hard-to-abate sector. Hard-to-abate sectors include heavy industries such as cement, steel, fertilizers and petrochemicals as well as long-distance passenger and freight transportation (e.g., airline travel and maritime shipping). They account for 30% of the total CO2 emissions.

While it is widely recognized that abating emissions from this sector is a requirement for achieving net zero, it has been challenging to identify cost-effective solutions that can be scaled up rapidly. Most technologies available today are still experimental, expensive and do not meet safety and environmental standards. However, these sectors have begun to make green pledges and develop net zero emissions roadmaps and hence urgent technical assistance is required to help ADB's DMCs to evaluate technologies, develop policy frameworks, raise financing, and support a set of 'first mover projects that can help accelerate emissions abatement in the so-called 'hard to abate sector.