Azerbaijan Transport and Climate Profile 2026

Outline

AZERBAIJAN

TRANSPORT AND CLIMATE PROFILE

Supported by:

Background

Azerbaijan, classified as an upper-middle-income country in Central and West Asia, has a population of 10.3 million and a GDP (PPP) of $256.0 billion as of 2024. The transport sector significantly impacts the environment, producing 9.9 million tonnes of greenhouse gas emissions in 2024, which makes up about 17% of the total emissions across the economy. Before the Paris Agreement and Sustainable Development Goals, transport CO2 emissions increased by an average of 7.5% annually; however, since 2015, this rate has slowed to 4.1% per year. The majority of these emissions come from road transport, accounting for 92% of all transport-related emissions and 16% of the national greenhouse gas inventory. Meanwhile, domestic aviation, domestic navigation, and rail contribute 6%, 2%, and 0%, respectively.

The transport sector's energy demand remains robust, with consumption reaching 140,254 terajoules in 2023. Although growth in energy consumption slowed from 8% (2000–2010) to 5% (since 2010), the sector remains almost entirely dependent on fossil fuels. Oil products accounted for 99% of transport energy consumption in 2023, a slight increase from 98% in 2010. Correspondingly, biofuels and electricity represent negligible shares of <1% and 1%, respectively. While Azerbaijan has improved its emission intensity relative to GDP—falling from 84.5 gCO2e/USD in 2000 to 38.6 in 2024—it remains higher than the Asia-Pacific average (29.0) and the upper-middle-income peer average (29.5). The rail sector offers an optimistic perspective when it comes to clean energy use; electricity consumption in rail increased from 84% in 2010 to 95% in 2023. This is despite the high grid emission factor of 633 gCO2/kWh, which exceeds both the Central and West Asia (495) and Asia-Pacific (559) averages benchmarks.

Azerbaijan's transport sector is heavily subsidized through fossil fuel support in its fiscal policy. From 2016 to 2023, these subsidies increased significantly to $8.1 billion, up from $2.5 billion during 2010–2015. They constitute about 4% of the government's total revenue and generate substantial external costs, mainly road congestion (72%), road accidents (27%), and infrastructure damage (1%). Despite this, there is a noticeable shift in vehicle markets: EV imports totaled $734 million from 2017 to 2024, accounting for 24% of all road vehicle imports by 2024, with light-duty vehicles (LDVs) representing 88% of this share. Nonetheless, Azerbaijan's UNEP E-mobility Readiness Index is moderate at 59 out of 100, with particularly low scores in financial instruments (11) and technology/market readiness (12).

Azerbaijan faces significant climate-related risks to its transport infrastructure. Under a 4.5-degree temperature increase scenario, over 16% of road and rail assets could be exposed to extreme precipitation. The country ranks 76th globally in National Road Vulnerability, with potential average annual losses to transport infrastructure estimated at $7.1 million—89% of which is concentrated in the road sector. Urban mobility also presents a challenge; as of 2024, the country possesses only 37 kilometers of rapid transit (entirely metro), and the availability of rapid transit per million urban residents has stagnated since 2015. Accessibility remains low, with 80% of residents in over half of Azerbaijan's cities lacking convenient access to public transport.

Official Development Assistance (ODA) for transport has shifted significantly, increasing from $81.9 million (2002–2010) to $436.6 million (2011–2023), with a notable pivot from road-centric funding (74%) to rail (69%). Structurally, Azerbaijan's climate policy is guided by its Nationally Determined Contribution (NDC) 3.0, which targets a 35% reduction in economy-wide GHG emissions by 2030 and 40% by 2035 compared to 1990 levels. However, the NDC lacks a specific net-zero target or transport-specific emissions goals. Of the 23 relevant policy documents identified, only 23% incorporate climate adaptation or resilience components, despite 87% having relevance to mitigation. Priority measures focus on transport laws, EV adoption, rail electrification, and road safety, yet the NDC and Long-Term Strategies (LTS) currently cover only 24% of these top priority policy areas.

Avoid Measures - Azerbaijan is prioritizing the decoupling of economic growth from increased transport demand through integrated spatial and logistics planning. A central pillar is the development of a transit-targeted Integrated transport and logistics strategy, which seeks to optimize international transport corridors. Key policy developments include: Urban Mobility Planning: The State Program of the Azerbaijan Republic on Road Safety for 2019-2023 mandates the preparation of "Urban Movement (mobility) Plans" for every city to ensure safe and efficient movement for all road users. Digital Integration: The government is expanding the Intelligent Transportation Management System (ITMS) to reduce congestion and optimize traffic flow, particularly in Baku and Absheron. Logistics Optimization: Strategic roadmaps, such as the Strategic Roadmap for Development of Logistics and Trade, emphasize selecting proper areas for logistics centers and truck transport infrastructure to reduce unnecessary vehicle kilometers. Policies are increasingly targeting active mobility, including constructing bicycle strips and parking as outlined in the Second Biennial Update Report - AZE

Shift Measures - The "Shift" strategy focuses on moving freight and passengers to energy-efficient modes, notably rail and electrified public transit. Azerbaijan's Nationally Determined Contribution 3.0 emphasizes a systemic shift to railway transport for both freight and passenger movement. The government proposes rapidly expanding the Baku Metro network and increasing the number of stations to encourage a shift from private vehicles. Concurrently, the Socio-economic development strategy (2022-2026) prioritizes the creation of special traffic lanes for public transport.

Improve Measures - The "Improve" pillar focuses on vehicle technology and fuel efficiency. Azerbaijan is aggressively promoting E-mobility and stricter emission standards to mitigate the impact of the remaining motorized fleet. A major technical priority is the electrification of railway lines and the transition to an alternating current (AC) traction system. This is supported by the State program for the development of the rail transport system, which aims to update the locomotive fleet with energy-efficient units.

The Socio-economic development strategy for 2022-2026 includes developing a National E-mobility plan. Significant fiscal incentives are in place, including VAT exemptions on the import and sale of electric vehicles and chargers, and a 0% import duty on new electric passenger cars.

Public Transit Modernization: By January 1, 2025, all passenger buses in the Baku administrative area must be equipped with compressed natural gas (CNG) or electric motors, as required by the Updated Nationally Determined Contribution.

Fleet Renewal and Standards: To modernize the aging fleet, the government has restricted the import of passenger cars older than 10 years as of 2023. Furthermore, the State Program on Road Safety aims to adapt fuel quality to meet Euro-4, Euro-5, and Euro-6 standards.