Nexus Between Energy, Economic Growth and Emissions in an Oil-Producing Country and the Potential of Energy Decoupling: Insights from Azerbaijan

Sustainable economic development involves reducing heavy reliance on fossil energy resources and their associated environmental impacts. The complexity of this task increases significantly in oil-producing countries, given the hydrocarbons’ role in economic growth, GDP, and exports. In such cases, decoupling economic growth, energy consumption and emissions should be achieved gradually to ensure a smooth transition, which will require the development of a reliable approach. This study aims to develop a strategy to identify potential pathways for economic growth and energy decoupling in the oil industry. Given the characteristics of the transition process, the feasibility of long-term solutions remains uncertain, and special measures are needed to enhance the reliability of decisions. An approach that combines assessing the economic–environment–emissions nexus, developing fuzzy transition scenarios, and applying multi-criteria and probabilistic decision-making methods has been designed to identify reliable pathways for the energy transition and sustainable development in oil-dependent countries. This allows us to create reliable and compromise scenarios that consider social, technological, environmental, economic and political factors. This study employed Azerbaijan as a case study. Analysis of key indicators revealed strong correlations between country GDP, energy production, and emissions. The MCDM calculations of the obtained feasible scenarios show the optimality of the scenario assuming a decrease in oil production while maintaining natural gas as usual, significantly increasing solar, and moderately increasing wind and hydro energy production. Decisions reflect global economic and energy-sector trends, expert opinions, and the current realities of Azerbaijan’s economy.