How climate action can accelerate growth in Uzbekistan

Meeting Uzbekistan’s ambitious climate targets and commitments to green its economy will require large-scale private investment in cleaner technologies, but could deliver high returns.

Climate adaptation and decarbonisation of Uzbekistan’s energy-intensive economy could help the country achieve its development goals and improve living standards of its people, according to a new report from the World Bank Group.

The ecological disaster of the drying Aral Sea, once the fourth largest lake in the world, epitomises the pressing development challenges in large parts of Uzbekistan, says the Uzbekistan Country Climate and Development Report (CCDR).

Water scarcity, droughts, extreme heat, rainfall volatility, dust storms, and other climate change consequences pose additional sources of vulnerability to society and the economy, exacerbating the already high cost of degradation of natural resources.

Climate will affect the people of Uzbekistan in multiple ways and by 2030, at least eight million people will be residing in very high climate risk areas across the country. Without action on climate adaptation, the domestic economy is predicted to be 10 per cent smaller by 2050 than it could have been without climate effects, resulting in significantly lower employment and household incomes.

Decarbonising the economy by 2060 will require a focus on the energy sector, which is responsible for about 75 per cent of Uzbekistan’s GHG emissions. Reducing dependence on depleting natural gas reserves through energy efficiency and renewable energy scale-up will contribute to the country’s energy security. Reliance on fossil fuels also exacerbates air pollution, which is amongst the top 10 risk factors contributing to death and disability in the country.

“Without action on climate, Uzbekistan will not be able to achieve its bold development goals and will, instead, face significant negative impacts on its economy and the well-being of its people,” says Tatiana Proskuryakova, World Bank Regional Director for Central Asia. “The CCDR proposes a set of urgent actions to advance climate adaptation and decarbonisation, accelerating the transition to a green economy and underpinning the country’s long-term growth prospects.”

Effective action to adapt to climate change can unlock a triple dividend for Uzbekistan by reducing adverse impacts, such as from climate change-induced land degradation; generating economic benefits, such as greater food security and healthier landscapes; and environmental benefits by sequestering carbon and reducing greenhouse gas (GHG) emissions, the CCDR notes.

Key recommendations of the report include economy-wide reforms, with the government accelerating the current reform programme to improve business dynamism and the investment environment, as well as strengthen the private sector to lead the way in a green transition.

It is recommended to establish monitoring, reporting, and verification systems to facilitate the scale-up of climate projects. Strengthening financial and investment regulations will also be critical for promoting green investment and climate risk management. The government could also strengthen market incentives to reduce emissions, such as a carbon tax.

In the energy sector, transitioning to a greener growth model and improving energy security in Uzbekistan requires promoting energy-efficient technologies, eliminating gas, electricity, and heating subsidies, and prioritising domestic gas use for power generation and industry. Developing a competitive renewable energy sector and investing in energy infrastructure development are also critical.

Enhancing water resource management meanwhile, to cope with climate change in Uzbekistan, involves promoting water-saving technologies and climate-aligned agricultural policies, transferring irrigation management to the private sector, introducing flexible water allocation mechanisms, and modernising irrigation infrastructure and accounting systems.

Additionally, to attract investments in climate-smart agriculture, it is important to strengthen the land tenure security of local farmers, improve soil conservation practices, scale up climate-smart agriculture, and develop a clear roadmap underpinned by an investment plan.

Air quality, urban development, and public transport also need to be improved, the report suggests. Uzbekistan will benefit from developing a national programme for air quality improvement, green city master plans, urban mobility, and efficient public transport delivery that will curb GHG emissions, reduce congestion, and support climate adaptation measures.

Uzbekistan will also need to continue to strengthen its social protection system to safeguard the most vulnerable groups from climate-related risks and expand on the quality of foundational and technical skills through education and training opportunities to prepare people for jobs generated by a green economy. 

Significant investment

Significant investments will be needed for the decarbonisation and adaptation agenda. It is estimated that Uzbekistan would require around 60 billion US dollars to mitigate adverse climate impacts on labour productivity, roads and bridges, livestock, and irrigation sectors alone. Additionally, around 340 billion US dollars would be needed by 2060 for replacing aging energy infrastructure and decarbonisation measures. A large part of these investments can be carried out by the private sector.

“Meeting Uzbekistan’s ambitious climate targets and commitments to green its economy will require large-scale private investment in cleaner technologies to reduce the carbon footprint and increase climate resilience,” says Wiebke Schloemer, IFC Regional Director for Turkey and Central Asia. “Advancing the government’s economic reform agenda is key to making this happen, and enabling both domestic and foreign firms to benefit from the opportunities the green transition offers.”

Public and private investments in climate adaptation and decarbonisation in Uzbekistan are expected to have high returns. For instance, the use of integrated landscape management and climate-smart technologies in agriculture could raise crop production by 4.6 billion US dollars over a 10-year period and save over 1.8 billion cubic meters of water annually.

Decarbonisation will also bring substantial benefits across the infrastructure sector, estimated at more than 178 billion US dollars over the period of 2023 to 2060, including 112 billion US dollars of avoided costs of pollution, accidents, damage in the residential, power, industry, and transport sectors, as well as 66 billion US dollars of fossil fuel import savings. Furthermore, decarbonisation measures may cut air pollution mortality by almost 90 per cent and create a substantial number of jobs in the power and other sectors.

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