THE RELATIONSHIP BETWEEN OIL PRODUCTION AND RENEWABLE ENERGY CONSUMPTION IN AZERBAIJAN (2005-2024)

Abstract

This study investigates the relationship between oil production, renewable energy consumption, and economic growth in Azerbaijan from 2005 to 2024, offering empirical insights into the country's dual energy structure and diversification challenges. As a hydrocarbon-dependent yet renewable-resource-rich nation, Azerbaijan represents a distinctive case for assessing whether oil wealth supports or hinders the transition toward sustainable energy. The research aims to evaluate how oil production and renewable energy variables interact with each other and with economic growth, thereby determining whether the country's development trajectory reflects complementarity or substitution between fossil and renewable resources. Using annual time-series data from the State Statistical Committee of Azerbaijan and the World Bank, the study applies descriptive statistics, Pearson correlation, hypothesis testing, and linear regression analysis to examine the strength and direction of these relationships. The results reveal a statistically significant positive correlation between oil production and the share of renewables in total energy consumption, suggesting that oil revenues may be reinvested into renewable projects, indicating a complementary rather than competing dynamic between the two sectors. In contrast, the weak correlations between GDP and energy variables imply that economic growth has become partially decoupled from short-term energy fluctuations. These findings highlight the potential for resource-rich economies to leverage hydrocarbon income to accelerate renewable energy deployment. The paper concludes that integrated policy planning, institutional strengthening, and targeted reinvestment of oil revenues are essential to achieving a balanced and sustainable energy transition in Azerbaijan.