Drawing upon a state-society approach, as well as insights from the international political economy literature, this paper is a case study of investment in large-scale renewable energy projects in Azerbaijan. It demonstrates how the country’s well-developed conventional energy industry and status as a Clean Development Mechanism (CDM)-eligible country under the United Nations Framework Convention on Climate Change (UNFCCC) has garnered investment in large-scale renewable and energy efficiency projects, but has perpetuated a top-down, technocratic approach to climate policy which excludes local involvement in climate change adaptation measures. As the impacts of climate change become more prevalent throughout the Middle East and Caucasus, countries endowed with large reserves of fossil fuels are increasingly becoming the site of foreign direct investment in large-scale renewable energy and energy efficiency projects. Such investment is spurred by several factors: the fact that foreign firms are already invested in conventional energy projects within these countries, and the expansion into renewables is a way to diversify their portfolio; the opportunities for certain countries to receive carbon credits for renewable and energy-efficiency projects under the UNFCCC and CDM; and the financial support of international development institutions in the development of energy projects. Host countries to such projects also have an incentive to welcome foreign investment in large renewable projects, both for the rent opportunities as well as the chance to increase electricity generation capacity. Yet does the investment in large renewable energy projects crowd out the pursuit of less-lucrative, but arguably more immediately necessary, adaptation to climate change? Particularly as water resources become increasingly scarce within the Middle East and Caucasus, my research shows that well-intentioned investments in climate protection measures can actually exacerbate societal tensions over resource use, in extreme cases leading to conflict. Responding to the more immediate and local effects of climate change through adapting to changed circumstances can help minimize conflict generated by changing access to resources. My study uses the example of the Kura-Araks river basin in Azerbaijan, which is both susceptible to drought and flooding, and has been an ongoing source of international tensions among the countries of the South Caucasus regarding rights to water use. While concerns for garnering FDI in renewables have crowded out opportunities for adaptation investment in Azerbaijan and have entrenched a top-down approach to climate change policy, I demonstrate that societal demands for protection against drought and flooding in the Kura-Araks region will prove costly if ignored.