The World Bank proposes the implementation of a carbon tax in Azerbaijan, Yasemin Oruj, head of the World Bank’s team in Azerbaijan said during a seminar on “Carbon Pricing and International Carbon Markets” held within the framework of cooperation with the Azerbaijani government, APA-Economics reports.
She shared recommendations regarding the transition to carbon pricing policy in the country. According to her, if the Azerbaijani government decides to implement carbon pricing instruments, this process should start with a carbon tax applied to carbon-containing fuel types.
Yasemin Oruj stated that such a tax would be appropriate to apply at the point where the fuel enters the economy, i.e., when it is imported or produced domestically. She emphasized that this method can be implemented through the existing excise system and initially cover 60% of total carbon emissions.
The World Bank official also noted that in the future, Azerbaijan can further expand the scope of this tax by transitioning to an emissions trading system. One of the main advantages of this approach is that the revenue from the tax can be directed in the form of cash transfers to low-income households affected by price increases as compensation.
Experts believe that this model is a balanced approach both in terms of reducing carbon emissions and protecting social justice.
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