Azerbaijan's New Climate Fund, Easy on Fossil Fuel Producers, Denounced as 'Smoke Screen'

Climate campaigners on Thursday dismissed Azerbaijan's plan for a $500 million climate investment fund, arguing that it was a small, poorly designed initiative meant to distract from the nation's oil production.

The criticism came following news that Azerbaijan, which is seeking to bolster its green credentials as it prepares to host the United Nations Climate Change Conference (COP29) in November, plans to raise at least $500 million of financing for clean energy investments in the Global South. The money would come from fossil fuel producers, including the state-owned Azerbaijani company SOCAR.

Azerbaijani officials considered introducing a levy on fossil fuel producers to raise money for the fund but, after facing opposition from oil-producing Gulf countries, opted for a voluntary, public-private investment model, an anonymous source told Reuters.

350.org called Azerbaijan's plan a "commercial" venture and said "we must distinguish profit-driven investments from genuine efforts," in a statement.

"The role of a COP presidency is to drive forward highly concessional climate finance, not profit from it," said Andreas Sieber, associate director of policy and campaigns. "We demand accountability through tax levies, not token charity, in this climate emergency. Those responsible for the climate crisis must pay for what they have created."

Azerbaijan's new fund marks the second year in a row that an oil-producing nation has sought to deflect criticism by announcing a climate finance venture ahead of the U.N. summit.

The United Arab Emirates (UAE), which hosted COP28 last year, announced a far larger climate investment fund, with a $30 billion initial investment and a goal of raising $250 billion. Forbes reported after COP28 that "the reality is the fund is an investment tool with a primary purpose of profits for the investors."

Like the UAE last year, Azerbaijan faces questions as its commitment to climate action.

"Several diplomats and negotiators have privately expressed concerns that Azerbaijan, which relies heavily on oil and gas revenues, is fundamentally reluctant to address the question of how to shift away from fossil fuels," The Financial Times reported.

In January, Azerbaijan appointed a 20-year oil and gas veteran to lead COP29 talks, drawing criticism from environmental groups. A Global Witness report revealed that the country plans not to phase out fossil fuel use, per an international agreement made at COP28, but to raise gas production by one-third in the next decade.