Iraq, Opec's second-largest producer, plans to invest $3 billion annually to replace the burning of liquids at its power plants with natural gas, the country's deputy minister said.
"We're also drawing policies to stop burning accompanying gas [flared gas] that will stop for good by 2025," said Ali Allawi, who is also the country's finance minister.
He was speaking at the Middle East Green Initiative Forum taking place in Riyadh and being streamed virtually.
"We are working on providing a budget of $3bn every year to replace all of the liquid oil that is used in electricity generation plants in order to work with natural gas," he said.
Iraq plans to eliminate gas flaring by 2022. The World Bank estimates about 16 billion cubic metres of gas from Iraqi fields were flared in 2015, costing the economy billions in lost revenue.
Baghdad is also working on reducing its methane emissions before the Cop26 meeting on climate change in Glasgow, which starts on Sunday.
Curbing methane emissions has become a top priority for policymakers looking to mitigate climate change as it is far more potent than carbon dioxide, which is more commonly cited as the biggest contributor to global warming.
Iraq's economy is overwhelmingly dependent on oil revenue, which meets up to 90 per cent of government expenditure. The country is most at risk from the global transition to net zero by the middle of the century, which will effectively end longer-term investments in hydrocarbons.
Mr Allawi along with the executive director of the International Energy Agency previously called on the international community to support Iraq in its transition to cleaner forms of energy in an op-ed published in The Guardian.
The country has begun investing in solar energy and looks to tap up to 10 gigawatts of energy from the sun by 2025. In June, Abu Dhabi's Masdar signed an agreement with Iraq’s National Investment Commission to develop photovoltaic projects with a minimum capacity of two gigawatts.
At the forum, Mr Allawi highlighted Iraq's role in helping to bolster food security in the region through agricultural exports before its invasion by the US in 2003.
"We used to have a budget since the establishment of Iraq and until recently we can remember that it depended on our agricultural exports. We were the main contributor to the food security of our region," he said.
"Whether we like it or not, the possibility of depending only on oil will not last forever, because the international economy is changing and this will be a burden, especially a burden for our oil-exporting countries."
He called on the international community to help rentier economies such as Iraq through funding and transfer of knowledge to combat climate change.
Iraq has taken tentative steps to restructure its economy away from fossil-fuel dependency as the world prepares to reach net-zero emissions by 2050.
A white paper on economic reform submitted to Parliament by Iraqi Prime Minister Mustafa Al Kadhimi's government last year recommended phasing out subsidies to critical sectors in Iraq's economy, notably power.