Clare Nuttall in Baku -

After more than 150 years of producing and processing of oil, Azerbaijan is one of the world's most polluted countries. Now some large Azeri companies are starting to address this poisonous legacy and invest in modern environmentally friendly technologies.

Within the state-owned sector, efforts are being spurred on by the government, which has designated 2010 as the "Year of Ecology in Azerbaijan." Government initiatives include planting trees to restore forests and improved provision of clean water. Despite Azerbaijan's large oil and gas reserves, attention is also being given to alternative energy. State oil and gas company Socar has announced plans to invest several hundred million dollars to clean up its operations.

As more such initiatives are started either under government pressure or by private companies keen to make efficiency gains, Azerbaijan is expected to see the entry of a new wave of international specialists. The executive director of the American Chamber of Commerce (Amcham) in Azerbaijan, Nargiz Nasrullayeva-Muduroglu, notes the need for foreign companies in waste management, water purification and other areas to provide the expertise that doesn't yet exist in Azerbaijan.

Capital of pollution

The Abershon peninsular, where Azerbaijan's oil and gas industry is concentrated around the cities of Baku and Sumgait, is notorious as an environmental disaster area. Baku regularly tops the list of most polluted capital cities. Sumgait, once the centre of the Soviet petrochemicals industry, is now semi-derelict and was among the 10 most polluted places on earth, according to a 2006 study by the US-based Blacksmith Institute.

The high level of pollution is due to Azerbaijan's long history as an oil producer, with commercial production dating back to the mid-19th century. Soviet planning, which typically put industry before people, resulted in residential districts of Baku being built among the oilfields and industrial operations located inside the city limits. "With such a long history of oil and gas development in the country... we have very polluted areas even within Baku city boundaries," says Vitality Baylarbayov, deputy vice president of Socar.

While admitting that "almost nothing" was done in the past, he says the firm is now doing a great deal more. "Environmental protection has been made one of our priorities. We have already switched to Euro 2 and are targeting Euro 3 standards for our oil products. Now we are removing our refining complexes to outside Baku, reducing carbon dioxide emissions, and have launched an extensive programme for rehabilitation of contaminated sites."

One such area was Bibi Heybat, the location of one of Azerbaijan's oldest oilfields where production started around 1845. "We are carrying out rehabilitation of this and all other onshore and offshore oilfields. At Bibi Heybat we are replacing the oil and planting tens of thousands of trees to turn the area into a beautiful park. Socar's oil museum will also be located there," says Baylarbayov.

State power company Azerenerji has received funding from the European Bank for Reconstruction and Development (EBRD) to rehabilitate the Azdres Thermal Power Plant, which will allow it to start generating carbon credits under the Clean Development Mechanism (CDM), as established under the Kyoto Protocol. "The project is expected to reduce CO2 emissions by 3m tonnes annually. This is a landmark deal which involved the development of a new CDM methodology for power plant rehabilitation projects," says the EBRD's country head for Azerbaijan, Francis Delaey.

Meanwhile, greater attention to the environment is also being paid by the private sector. Nasib Piriyev, CEO of AzMeCo, which is building a $1.1bn modern petrochemicals complex near Baku, stresses that the refiner is, "an environmentally friendly company that carries out no-residue production."

Another major local company investing in environmentally friendly technology is Garadagh Cement, which is replacing its wet technology clinker production line with a new dry kiln. This will reduce energy consumption, cut CO2 emissions by almost 10% and ensure compliance with the highest environmental standards, according to Garadagh director general Horia Adrian.

The island

Meanwhile, the most exotic and ambitious project is not located on Azeri land, but off the Caspian Sea coast. The planned Zira Zero Island development has been designed as a self-contained eco-city, which will rely on wind, solar and wave energy, and be entirely independent of external resources.

Denmark's Bjarke Ingels Group, which has designed the carbon-neutral development, says it is intended to become a model for future urban development. "What we propose for Zira Zero Island is an architectural landscape based on the natural landscape of Azerbaijan," says founding partner Bjarke Ingels. "This new architecture not only recreates the iconic silhouettes of Azerbaijan's seven peaks, but more importantly creates an autonomous ecosystem where the flow of air, water, heat and energy are channeled in almost natural ways."

Construction is currently on hold due to the crisis, but according to a spokesperson for Bjarke Ingels, it is likely to start in the near future.