Country Climate and Development report

Public Disclosure Authorized
EUROPE AND
CENTRAL ASIA
UZBEKISTAN
World Bank Group

November 2023
i
Country Climate and Development Report: Uzbekistan
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ii
Table of Contents
Acknowledgments vi
Abbreviations vii
Executive Summary 1
Chapter 1. Climate and development 11
1.1. An ambitious reform path amid the challenge of climate change 12
1.2. How big is the challenge? 13
Chapter 2. Country climate commitments, policies, and capacities 17
2.1. Climate and adaptation commitments 18
2.2. The institutional and regulatory framework for climate change is a work in progress 18
Chapter 3. Policies and investments to advance decarbonization 22
3.1. Decarbonization of the energy system is an opportunity to strengthen energy security 23
3.2. How to strengthen energy security and transition away from a natural gas economy 24
3.3. Costs of the energy transition and investment needs 30
3.4. Enabling environment for the transition of the energy value chain 33
3.5. Decarbonizing agriculture through climate-smart livestock is also vital 35
Chapter 4. Policies and investments to promote adaptation to climate change, boost climate
resilience in water resources, agriculture and forest landscapes and reduce degradation 37
4.1 Improving water management practices to reduce water stress and scarcity 38
4.2 Realizing the ‘triple dividend’ through adaptation investments in the water and agriculture
sectors and landscape and forest management 40
4.3 Reducing climate change and land degradation risks through integrated landscape restoration 42
Chapter 5. Economic implications of an economywide policy of green transition 46
5.1 Modeling the economy-wide transition 47
5.2 Creating the environment for a green private sector 50
5.3 Financing a green transition 53
5.4 Developing fiscal policies for resilience and green transition 56
Chapter 6. Climate change and people 58
6.1. Adjusting social protection programs to adapt rapidly to people’s needs 62
6.2 Building the skills needed for a green transition 63
6.3 Changing mindsets and behavior 64
6.4 Strengthening integrated information systems 65
Chapter 7. Policy reform agenda on climate and development: Summary of recommendations 67
7.1 Urgent climate actions 68
7.2 Medium-term climate actions 70
References 74
iii
LIST OF FIGURES
Figure ES1. However climate change evolves, its impacts on GDP are similar, slowing growth 1
Figure ES2. Natural gas consumption declines by 40 percent in NZ2060 scenario compared with the
reference scenarios: Natural gas domestic production, imports, and uses 2
Figure ES3. GDP growth under the policy reform scenarios slows initially relative to the baseline
but then accelerates 3
Figure ES4. Total discounted energy system investment needs 2023–2060 (US$, billions) 4
Figure ES5. Climate adaptation investments in Uzbekistan have a high triple dividend,
2021–2040 and 2041–2050 5
Figure 1.1. Population density and climate risks in Uzbekistan, 2030 14
Figure 3.1. GHG emissions in the reference scenario and the NZ2060 scenario, 2019–2060 23
Figure 3.2. A possible decarbonization pathway to a net zero emissions energy system in
Uzbekistan, 2019–2060 24
Figure 3.3. Energy demand growth slows in the NZ2060 scenario compared with the reference scenario:
Total final energy consumption by fuel 25
Figure 3.4. Natural gas consumption declines by 40 percent in NZ2060 scenario compared with the
reference scenarios: Natural gas domestic production, imports, and uses, 2019–2060 25
Figure 3.5. End-use energy consumption drops by 16 percent in the NZ2060 scenario compared
with the reference scenario: Total final consumption by sector, 2019–2060 28
Figure 3.6. Overall fuel use declines in the transport sector, and the final consumption mix shifts green
in the net zero scenario compared with the reference scenario: Transport’s total final consumption
by fuel, 2019–2060 30
Figure 3.7. Annual investment needs (undiscounted) in the reference scenario and the NZ2060
scenario, by sector, undiscounted values, 2019–2060 32
Figure 3.8. Results of modelled scenarios to decarbonize Uzbekistan’s livestock sector, 2010–2030 36
Figure 4.1. Distribution of irrigated agricultural areas and irrigated water use, by oblast 38
Figure 4.2. Irrigation water productivity by oblast, 2020 39
Figure 4.3. Climate adaptation investments in Uzbekistan have a high triple dividend, 2021–2040
and 2041–2050 41
Figure 4.4. Land degradation hotspots: Composite map of risk from climate change, land degradation,
and population pressures, by district in Uzbekistan by 2041–2050 42
Figure 4.5. Technologies recommended for integrated landscape restoration in adaptation
opportunity hotspots 43
Figure 4.6. Adaptation opportunity hotspots in Uzbekistan: composite score (by 2041–2050) 44
Figure 5.1. GDP with and without the expected effects of climate change, 2023–2050 47
Figure 5.2. Removing energy subsidies triggers a major structural change that comes with a short-term
cost but boosts growth over the longer term, baseline and policy scenarios, 2022–2060 48
Figure 5.3. Distributional implications of subsidy reform policy package 49
Figure 5.4. Distributional implications of subsidy reform plus carbon tax reform package 49
Figure 5.5. Share of firms that engaged in any green investments in the past three years, 2019 50
Figure 5.6. Share of firms engaging in green managerial practices, 2019 50
Figure 5.7. State enterprise revenue is high as a share of GDP, latest available 51
Figure 5.8. Market competition frameworks are improving but are still weak, 2016 and 2022 51
Figure 5.9. Uzbekistan’s stock of foreign direct investment is below that of comparator countries, 2019 51
Figure 5.10. Half of greenfield foreign direct investment has been in coal, oil, and gas,
2003–2019 averages 51
iv
Figure 5.11. Export growth in less carbon-intense sectors has accelerated, 2016–2022 52
Figure 5.12. Uzbekistan’s trade facilitation is weak in several areas, 2022 52
Figure 5.13. Europe and Central Asia has the highest green export potential value, missing green
exports by region, 2010–2020 52
Figure 5.14. Machinery and electronics account for by far the largest share of missing green exports,
by product, 2010–2020 52
Figure 5.15. Public debt rises sharply if one-third of expected transition costs are met by the
public budget 53
Figure 5.16. Shadow carbon prices in the NZ2060 scenario, 2025–2060 55
Figure 5.17. Some 40–50 percent of bank lending in Uzbekistan may be exposed to significant
transition risk, and this exposure appears to be growing, 2021–2022 56
Figure 6.1. Reductions in reported employment among workers in Uzbekistan during periods
of extreme heat, by age range, 2018–2023 59
Figure 6.2. Change in population in cities, provinces, and districts of Uzbekistan by 2041–2050 60
Figure 6.3. Task similarity for selected growing occupations and legacy occupations 64
LIST OF BOXES
Box ES1. Significant investment in the energy system in the decarbonization scenario yields high benefits 4
Box 1.1. Cotton harvesting is a major source of livelihoods for women in rural areas, which may be
threatened in areas of increasing water scarcity 15
Box 2.1. Ministerial responsibilities related to the green transition and climate change 19
Box 2.2. Interagency cooperation on the climate change agenda in the Netherlands 20
Box 2.3. Climate actions within the authority of municipalities 20
Box 3.1. Reducing energy-related methane emissions in Uzbekistan’s gas sector 26
Box 4.1. Climate adaptation through restoration of degraded lands and forests 42
Box 3.2. The heat pump opportunity 34
Box 5.1. Modeling the macroeconomic implications of climate change 48
Box 5.2. Energy subsidy reforms in Uzbekistan 54
Box 6.2. Public awareness of climate change remains low in Uzbekistan 65
LIST OF TABLES
Table 3.1. Investment needs by sector, and share of private sector investments 31
Table 3.2. Decarbonization’s investment needs and economic benefits 32
Table 6.1. A people-centered framework for climate change and the green transition 61
v
Acknowledgments
This report was prepared by a World Bank team led by Irina Klytchnikova, David Stephen Knight, and Manuel
Berlengiero, and including Abdulhamid Azad, Adam Auerbach, Akos Losz, Alen Mulabdic, Amit Kanudia, Amjad
Muhammad Khan, Antonio Nunez, Armin Mayer, Audrey Sacks, Ayesha Vawda, Azhar Iqbal Hussain, Sandjar
Babaev, Bahodir Amonov, Bekhruz Yusupov, Bexi Francina Jimenez Mota, Camilla Knudsen, Chiyu Niu, Cindy
Audiguier, Davit Babasyan, Dilshod Khidirov, Domagoj Račić, Eduardo Espitia Echeverria, Elena Strukova Golub,
Ellen Hamilton, Elvira Anadolou, Eskender Trushin, Ferhat Esen, Gianfilippo Carboni, Grace Aguilar, Harald
Heubaum, Hasan Dudu, Ildus Kamilov, Irina Voitekhovitch, Ilhem Salamon, Javier Sanchez-Reaza, Kai-Alexander
Kaiser, Kazumasa Oba, Kirtan Chandra Sahoo, Kiryl Haiduk, Laura Sagnori Diniz, Leela Raina, Maksudjon
Safarov, Mansur Bustoni, Mariana Iootty De Paiva Dias, Marius Victor Karolinski, Martin Melecky, Maddalena
Honorati, Marina Novikova, Maria Ustinova, Mirzobek Ibragimov, Nita Prekazi, Paola Agostini, Pierre Jean Gerber,
Penelope Mealy, Pinar Yasar, Ragchassuren Galindev, Raimund Malischek, Robert Wrobel, Rocco de Miglio,
Rosanna Nitti, Sadjida Tashpulatova, Sahil Gill, Shakhnoza Aslanova, Shoista Zakirova, Serge Mandiefe Piabuo,
Sergio Mauricio Medinaceli Monroy, Sevilya Murdova, Stuti Khemani, Szilvia Doczi, Teklu Tesfaye, Tumurdavaa
Bayarsaihan, Verena Schaidreiter, Victor Aragones, Victoriya Babakhodjaeva, Wei-Jen Leow, Werner Hernani
Limarino, William Hutchins Seitz, and Yeraly Beksultan.
The report benefited from comments from peer reviewers: Craig Meisner, Sergiy Zorya, Hans Anand Beck, Rafael
De Sa Ferreira and Stephane Hallegatte. The report was prepared under the oversight of Antonella Bassani,
Anna Bjerde, Tatiana Proskuryakova, Wiebke Schloemer, Marco Mantovanelli, Sameh Wahba, Lalita Moorty,
Charles Cormier, Kseniya Lvovsky, Thomas Farole, Cassandra Colbert, and Merieme Travaly. Helpful discussion
with Dominique van der Mensbrugghe and Wolfgang Karl Heinz Britz are greatly appreciated. Editing by Bruce
Ross-Larson and Joe Caponio is gratefully acknowledged.
The team is grateful to the Government of Uzbekistan for support and feedback throughout study preparation,
especially Deputy Prime Minister Jamshid Kuchkarov, First Deputy Minister of Economy and Finance Ilkhom
Norkulov, General Director of the Agency for Strategic Reforms under the President of the Republic of Uzbekistan
Shukhrat Vafaev, as well as Utkir Kholbadalov (Formerly Chief of Department, MEF); Shokhzod Islamov, Chief
of Department, MEF, and Javlon Khakimov, Chief of Unit, MEF, and high level participants and representatives
of the Agency for Strategic Reforms; Ministry of Energy; Ministry of Investments, Industry, and Trade; Ministry
of Health; Ministry of Mining, Industry, and Geology; Ministry of Pre-School and Higher Education; Ministry of
Agriculture; Ministry of Education, Science, and Innovation; Ministry of Construction, Housing, and Communal
Services; Institute for Forecasting and Macroeconomic Research; development partner representatives
(especially the Asian Development Bank, the French Development Agency, European Bank for Reconstruction
and Development, United Nations Development Programme, EU Delegation and the International Energy Agency,
and OECD); and other participants in consultative workshops conducted in Tashkent to discuss the preliminary
results with government representatives and development partners.
vi
Abbreviations
APEC Asia-Pacific Economic Cooperation IFC International Finance Corporation
ASP Adaptive Social Protection International Organization for
ISO
Standardization
BCR Benefit-Cost Ratio
LIFA Low-Income Family Allowance
CAPEX Capital Expenditure
Mitigation, Adaptation, and New
Central Asia Regional Economic
CAREC MANAGE Technologies Applied General
Cooperation Program
Equilibrium
CBU Central Bank of Uzbekistan
MEF Ministry of Economy and Finance
Country Climate and Development
CCDR Ministry for Employment and Poverty
Report MEPR
Reduction
CCGT Combined-Cycle Gas Turbine
NDC Nationally Determined Contribution
CCS Carbon Capture and Storage
NEGU National Electric Grid of Uzbekistan
CGE Computable General Equilibrium
NZ2060 Net Zero 2060
CNG Compressed Natural Gas
Organization for Economic
CPAT Climate Policy Assessment Tool OECD
Cooperation and Development
DRM Disaster Risk Management R&D Research and Development
ESC Employment Support Center Science, Technology, Engineering,
STEM
EV Electric Vehicle and Math
FDI Foreign Direct Investment United Nations Framework

UNFCCC
Convention on Climate Change
GDP Gross Domestic Product
UNICEF United Nations Children’s Fund
GHG Greenhouse Gas
United States Agency for International
GMP Global Methane Pledge USAID
Development
GoU Government of Uzbekistan Agency of Hydrometeorological
Uzhydromet
IEA International Energy Agency Services
vii
Executive Summary
This Country Climate and Development Report (CCDR) comes at a juncture when Uzbekistan needs to show
results for the transformation path it has chosen. Uzbekistan, already Central Asia’s most populous country, is
expected to grow to more than 50 million people by 2050. A young and fast-growing population in need of skills
and jobs, together with high reliance on dwindling natural resources, has motivated the pursuit of a transformative
new development model. The sweeping reforms initiated by the President in 2016 and now under way, aim to
convert Uzbekistan into an upper-middle-income country with a modern, private sector-led economy. Seven years
in, policy frameworks are improving, but much remains to be done. Growth has been high, and poverty has fallen
sharply, but job creation has been weak. After a first wave of landmark reforms, Uzbekistan must now complete
a tougher phase of reforms to deliver lasting change for people, a task made more difficult by the challenge of
climate change.
Climate change impacts loom large for Uzbekistan. Uzbekistan is already experiencing the deleterious effects
of a changed climate. The ecological disaster of the drying Aral Sea—once the fourth-largest lake in the world—
epitomizes the pressing development challenges in large parts of the country. Droughts, extreme heat, rainfall
volatility, and dust storms are increasingly wreaking havoc on people and the economy. Air pollution is a growing
environmental and health challenge. The annual costs of the damage to health from ambient PM2.51 pollution in
Uzbekistan, disproportionately borne by women, children, and vulnerable groups, have reached 6.5 percent of
gross domestic product (GDP). Climate risks pose another source of vulnerability for the economy in addition to
the already high costs of degradation of natural resources. Without action, climate change will continue to have
severe impacts on Uzbekistan. Economic modeling reveals that climate change will lead to greater economic
volatility and lower average growth, with the economy 10 percent smaller by 2050 than it would have been
without climate damages (Figure ES1), resulting in significantly lower employment and higher poverty.
Without action on climate, Uzbekistan FIGURE ES1. HOWEVER CLIMATE CHANGE EVOLVES, ITS IMPACTS ON
will not achieve its development vision. GDP ARE SIMILAR, SLOWING GROWTH
Uzbekistan is one of the most energy-
and resource-intensive countries in 3,500 10%
the world. With this resource-intensive 9%
3,000
GDP per cpaita (constant prices)
economic model, the expected rapid 8%
Percentage change relative

population and economic growth will 2,500 7%
drive a significant growth in emissions,
6%
to baseline
placing excessive strains on key 2,000
resources and ecosystems. This growth 5%
1,500
trajectory is not likely to materialize 4%
without strong attention to making 1,000 3%
growth sustainable. Moreover, unless 2%
action is taken on adaptation, climate 500
1%
change will have serious negative
0 0%
impacts on the people of Uzbekistan.
2023
2025
2027
2029
2031
2033
2035
2037
2039
2041
2043
2045
2047
2049
Climate risks are deeply intertwined

with water security, food security, Average loss relative Wet-warm
and land degradation in Uzbekistan. to baseline (RHS) scenario (LHS)
With irrigated agriculture accounting Baseline (LHS) Dry-hot scenario (LHS)
for 90 percent of water use, crop and
food production systems are highly Source: World Bank analysis.
water intensive in an increasingly wa- Note: Averages presented over both dry-hot and wet-warm scenarios.
ter-stressed environment. With rising temperatures, reduced precipitation, and retreating glaciers, Uzbekistan
3,500 10%
у населения (в постоянных ценах)
ентное изменение относительно
9%
3,000
8%
1
PM2.5 = fine particulate matter of 2.5 microns or less in width.
2,500
исходного уровня
7%
2,000 1 6%
Country Climate and Development Report: Uzbekistan 5%
1,500
4%
1,000 3%
is projected to be among the most water-stressed countries in the world. These climatic stresses already
give rise to prolonged droughts, resulting in loss of livestock, reduced agricultural production, and decreased
groundwater, thus threatening water supplies, food security, energy grids, and even the livability of some re-
gions. Climate-smart agricultural practices and integrated approaches to management of water resources and
landscapes will be crucial for sustainable growth. For adaptation to the adverse impacts of climate change,
Uzbekistan would need to invest an additional US$46.7 billion over 2023–2060 (in present value terms) to
address and mitigate the adverse climate impacts on labor productivity, roads and bridges, livestock, and irri-
gation sectors alone in the wet/warm scenario and US$59.8 billion in the dry/hot scenario.
The economy’s heavy reliance on natural gas is a risk to the country’s energy security. Uzbekistan’s gas
production is depleting while the country remains gas dependent, and net imports are growing over the years.
Nevertheless, in the reference scenario, gas consumption is expected to increase with economic growth and
become dependent on imports. The acute energy crisis of the winter of 2022/23 affecting heating and power
highlights that it is in the best interest for the country to accelerate programs to reduce gas losses and use natural
gas more efficiently and diversify away from natural gas, starting with sectors with viable alternatives, such as
transport and heating. How the country will manage such a shift could have serious implications on its growth
trajectory and energy security. To kick off the transition in the natural gas as soon as possible and in preparation
for the winter of 2023/24, the government is working on a series of emergency preparedness measures to better
manage demand-side and supply-side flexibility in the gas and power sectors, which could already accelerate the
energy sector transition. This report estimates that natural gas consumption would decline by 40 percent in a net
zero 2060 (NZ2060) scenario compared with the reference scenarios (Figure ES2).
FIGURE ES2. NATURAL GAS CONSUMPTION DECLINES BY 40 PERCENT IN NZ2060 SCENARIO COMPARED WITH THE
REFERENCE SCENARIOS: NATURAL GAS DOMESTIC PRODUCTION, IMPORTS, AND USES
Reference scenario Net zero 2060 scenario

4000,0 4000,0
3000,0 3000,0
2000,0 2000,0
1000,0 1000,0
0,0 0,0
PJ
PJ
-1000,0 -1000,0
-2000,0 -2000,0
-3000,0 -3000,0
-4000,0 -4000,0
2019
2025
2030
2035
2040
2045
2050
2055
2060
2019
2025
2030
2035
2040
2045
2050
2055
2060
Agriculture Commercial Residential Agriculture Commercial Residential

Import Industry Thermal Power Import Industry Thermal Power
Extraction Transport and Roads Extraction Transport and Roads H2 Thermal
Export Export Thermal CSS
Source: World Bank analysis.
By pursuing carbon neutrality, Uzbekistan can strengthen energy security.

Инерционный A green
Сценарий выхода transition
на нулевой балансled by
behavioral
4000,0 change and targeted policies and investments will
сценарий promote more efficient
4000,0 energy
выбросов к 2060use
годуand support
energy security by reducing the reliance of the economy on3000,0
3000,0 imported natural gas, lowering the need for net
energy import dependency to 8 percent by 2060 compared to a do-nothing scenario where energy import
2000,0 2000,0
dependence could reach 66 percent by 2060. Modeling results show domestic renewables can provide 70
Петаджоуль
1000,0 1000,0
percent of domestic energy supply by 2060, and over 85 percent of supply when combined with hydrogen and
domestic extraction and production.
0,0 0,0
-1000,0 -1000,0
Economic modeling illustrates that net zero transition will raise growth prospects for Uzbekistan. Net
-2000,0
zero -2000,0
transition brings economic benefits in terms of improved productivity and market opportunities. Reduced
emissions are also associated with health benefits of reduced localized air pollution, which is monetarized
-3000,0 -3000,0
-4000,0 -4000,0
2019
2025
2030
2035
2040
2045
2050
2055
2060
2019
2025
2030
2035
2040
2045
2050
2055
2060
2
Сельское хозяйство Нежилые здания Country Climate
Жилые and
здания Сельское
Development Report: хозяйство
Uzbekistan Нежилые здания Жилые здания
Импорт Промышленность ТЭС Импорт Промышленность ТЭС
Горно-добывающая Транспорт и дороги Горно-добывающая Транспорт и дороги TЭС с УХУ
Экспорт Экспорт Водород. Эл.Станции
and included in the macroeconomic FIGURE ES3. GDP GROWTH UNDER THE POLICY REFORM SCENARIOS
estimates. But during the transition SLOWS INITIALLY RELATIVE TO THE BASELINE BUT THEN ACCELERATES
period, the high investment needs and
0,2%
a relatively rapid low-carbon transition
Difference in GDP growth from baseline

leads to a temporary drop in economic
(annual average percentage change)

0,0%
efficiency of carbon-intensive factors
of production and a crowding- -0,2%
out effect on other investment,
-0,4%
particularly in the peak investment
period between 2034 and 2040. Over -0,6%
the transition period, the positive and
negative economic effects broadly -0,8%
offset each other, with the economy Energy subsidy removal only
-1,0%
about the same size it would have NZ2060 transition
been without decarbonization, but -1,2%
with annual growth higher going 2023-29 2030-39 2040-49 2050-59 2060 -
forward. The withdrawal of energy
subsidies, a critical prerequisite for Note: Impacts include the monetized benefit of reduced air pollution.
decarbonization and already existing
government policy, leads to temporarily lower growth than could otherwise have been expected in the first few
уровнем (среднегодовое процентное изменение)
Разница в росте ВВП по сравнению с исходным
0,2%
years, but it could be also associated with more air pollution benefits, especially by 2050 (Figure ES3).
0,0%
The report’s findings and recommendations can be summed up in six key messages.
-0,2%
Message 1. Setting a path to carbon neutrality by 2060 is ambitious, but achievable, and will support
Uzbekistan’s near-term energy security needs -0,4%
and long-term growth prospects.
Current policies, including the Nationally Determined

-0,6% Contribution (NDC), are expected to result in a doubling
of emissions as the economy grows, so greater ambition is needed to decarbonize the energy system, which
in turn will also promote energy security. The -0,8%
government has been implementing decarbonization measures,
especially in the power sector, but achieving carbon neutrality by 2060 requires even
Только отменаgreater deployment
энергетических субсидий of
-1,0%
renewables and low-carbon technologies, infrastructure upgrades, and improvements in energy Переходefficiency
на НБВ 2060and
well as achieving cost-recovery energy pricing. Modeling
-1,2% results indicate that, assuming the sector moves to cost-
reflective pricing in the next few years, the power sector2023-29
can largely2030-39
decarbonize by 2050; 2050-59
2040-49 commercial2060 buildings
-
can reach net zero before 2050, followed by residential buildings in 2055; and industry and transport would
decarbonize last, by 2060. The trajectory of the carbon-neutral scenario shows that it is in the best national
interest to prioritize natural gas for the power and industry sectors, moving away from its use in transport and
heating, driven by economic and efficiency considerations, with fossil fuels (mainly natural gas with carbon
capture and storage [CCS]) accounting for 19 percent of final consumption. Modeling also shows that in the
transport sector, the key drivers of decarbonization are improvements in enforced fuel efficiency standards, shift
to electricity and hydrogen (due to limited gas resources), electrification of passenger road and rail transport, use
of hydrogen for freight, greater use of public transport, and urban design for walkable cities.
While coming with an initial cost for the economy, subsidy reforms and decarbonization can bring important
benefits in the longer term. Subsidy reform will promote energy efficiency and conservation by encouraging
consumers to use energy more wisely and spur competition and innovation in the energy sector by removing
distortions in the market. This can lead to the development of new technologies and business models that could
accelerate the transition. It will also improve the overall financial sustainability of the energy sector, promoting its
creditworthiness and attractiveness for the private sector. Decarbonization will also bring substantial benefits
across the infrastructure sector, estimated at over US$178 billion over 2023 to 2060 (including about US$112
billion of avoided economic cost of pollution; accidents and damage in the residential, power, industry and
transport sectors; and US$66 billion of avoided fossil fuel imports) (box ES1).
3
BOX ES1. SIGNIFICANT INVESTMENT IN THE ENERGY SYSTEM IN THE DECARBONIZATION
SCENARIO YIELDS HIGH BENEFITS
In the decarbonization scenario, significant co-benefits arise from reduced air pollution, amounting to more
than US$100 billion by 2060. Air pollution is among the top 10 factors contributing to death and disability in
Uzbekistan and the prime environmental risk. More than half of PM2.5 air pollution is attributed to the burning of
fossil fuels. Decarbonization could result in a drop of 19 percent in air pollution mortality attributed to fossil fuels
by 2030, and 88 percent by 2060, and assuming no shift back to solid fuel use. The present economic value of
reduced air pollution mortality totals US$106 billion. 2
Significant decarbonization invest- FIGURE ES4. TOTAL DISCOUNTED ENERGY SYSTEM INVESTMENT
ments will deliver high economic NEEDS 2023–2060 (US$, BILLIONS)
benefits. Compared with the baseline
scenario that does not include climate 400.0
objectives, in the NZ2060 policy
scenario, Uzbekistan would need to 3.8% of GDP
invest an additional US$79 billion (in
present value terms) over 2023–2060.
200.0
Significant investments are needed
to replace aging energy infrastructure
and promote decarbonization (US$341
billion). A large part of such investments
will be carried out by the private sector, if 0.0
Reference scenario Net Zero 2060 scenario
the right enabling environment is in place.
Residential and commercial buildings Power sector
The investment in the energy system in Transport sector (including vehicles*) Industry
the NZ60 scenario is 3.8 percent higher
than the investment in the reference
scenario. These higher investment costs
Note: Vehicle cost includes the total value capital expenditure (CAPEX)
in the NZ60 scenario can be justified by 400.0
and not only battery costs representing only around 25 to 40 percent of
the benefits of air pollution reduction
electric vehicle (EV) costs.
in the NZ60 scenario, equivalent to 5.4 3.8% ВВП
percent of GDP (cumulative present
value). The benefits outweigh the additional costs even without considering the economic value of the additional
200.0
benefits such as the lower road congestion in the NZ60 than in the reference scenario (Figure ES4).
The government’s ongoing energy efficiency and 0.0 emergency measure programs provide an excellent
Инерционный сценарий НБВ 2060
foundation to improve energy security during the critical winter months in Central Asia, while further
Жилые и нежилые здания Энергетический сектор
scaling up of the energy efficiency program is required for deeper decarbonization. In the NZ2060 scenario,
Транспортный сектор (включая автомобили*) Промышленность
energy efficiency measures and technology advances reduce end-use energy consumption by 16 percent by
2060 (compared to the reference scenario). Among other benefits, energy efficiency gains provide an important
buffer against energy bill increases resulting from upcoming tariff reforms, notably for consumers in residential
buildings. Uzbekistan should also prioritize ambitious energy efficiency programs across the energy sector value
chain, as well as programs to reduce methane fugitive emission and gas losses, which are still very high by
international standards.
Decarbonization is also important in agriculture, waste management and other sectors, and conversion of
land to sustainable use can increase the capacity of soil and plants to store carbon. Controlling greenhouse
gas (GHG) emissions in agriculture, which accounts for 19 percent of emissions, is essential to meet mitigation
targets. Much of these emissions emanate from livestock activities. Improving feeding strategies, genetics, herd
management, and animal housing could reduce emission intensity by 25–30 percent. However, the accompanying
production gains could result in an increase in absolute emissions. Controlling herd growth would thus be
necessary to reduce emissions relative to the reference scenario.
2
The present value considers the period 2019 to 2060 and a discount rate of 7 percent. The value used for statistical life was transferred from OECD
countries to Uzbekistan.
4
Message 2. Climate adaptation measures have strong induced economic and development benefits in
Uzbekistan, making them worthwhile investments even without considering climate risks; the benefits of
adaptation investments are two to three times higher than the costs.
With the immense costs that climate change is likely to impose on the people and the economy of
Uzbekistan, investment in adaptation can deliver a triple dividend. Without adaptation, Uzbekistan could
see reductions of 3.5 percent in agricultural labor productivity, 16 percent in livestock productivity, 9 percent in
hydropower potential, and 8 percent in cotton yields. Capital infrastructure damage from once-in-50-year floods
could reach 2.6 percent of the total cost. In Uzbekistan as across the world, investment in building resilience to
climate change has lagged the needs. Uzbekistan could reap triple dividends from investments in adaptation
through avoided losses (first dividend), induced economic benefits (second dividend), and additional social and
environmental benefits (third dividend). The second and third dividends are especially important since they
accrue regardless of whether the climate risk materializes. A triple dividend analysis of investments in irrigation,
drainage, climate-smart agriculture, and land restoration finds benefits that are two to three times higher than
the costs under a range of possible future scenarios (Figure ES5). Since many of the adaptation investments
will need to be made by private actors, such as investments by farmers in on-farm irrigation systems or soil
conservation practices and machinery, realizing those benefits will require an enabling environment and policy
reforms that promote such investments.
Reforming agriculture policies is a FIGURE ES5. CLIMATE ADAPTATION INVESTMENTS IN UZBEKISTAN

precondition for the adoption of climate- HAVE A HIGH TRIPLE DIVIDEND, 2021–2040 AND 2041–2050
smart agriculture practices at scale. Since Benefit to cost ratio of investments in water resources,
2018, Uzbekistan has made major progress agriculture, and land restroration
in reforming wheat and cotton production, 4
which account for 70 percent of irrigated
planted area, 70 percent of irrigation 3
water, and 80 percent of public spending
2
on agriculture. Investing in climate-smart
agricultural and pastoral practices is costly 1
(establishing orchards, purchasing high-
quality seeds and more efficient irrigation 0
equipment, procuring a larger volume and 2021-2040 2041-2050
better quality of feedstock, learning new First dividend Second dividend Third dividend
skills to utilize new technologies), so broader
adoption of such practices requires raising Source: World Bank analysis.
farmers’ incomes. Strengthening land
tenure security and eliminating the crop placement system, which prevents farmers from planting crops based
on market signals, are major items on the policy reform agenda. Continued reforms are essential for enabling a
green transition in the agriculture sector. Соотношение выгод и затрат от инвестиций в водные ресурсы,
сельское хозяйство и мелиорацию земель
Integrated landscape and watershed management 4 present opportunities to restore degraded land and
agricultural productivity. Integrated landscape management approaches and climate-smart technologies in
3
areas with the highest adaptation potential are expected to boost crop values by about US$4.6 billion and
production on natural pastures by US$100 million 2 over 10 years. Some 1.8 billion cubic meters of water can be
saved annually. Integrated landscape management and adaptation actions will reverse trends in land degradation,
preserve carbon stock above and below the ground, 1 control erosion better, enhance water regulation, and reduce
landslide risk.
0
Ensuring water security will be critical for adaptation to2021-2040 climate risks. Better2041-2050
management of water
resources will be a frontline for tackling climate challenges. Ensuring sustainable development will require more
Первый дивидент Второй дивидент Третий дивидент
efficient use of increasingly scarce water resources as well as improved coordination among competing uses,
especially since irrigation-dependent agriculture generates a quarter of GDP and employment in the country. But
projections show greatly declining water availability by 2050, with water availability in the main rivers down by up
to 15 percent by 2050. Meanwhile water demand from competing uses, both within and outside of Uzbekistan,
will increase with economic development, adding further stress to water resources. Without appropriate action,
5
these trends would lead to water shortages of 15 billion cubic meters by 2050. While the downside risks are
high, large gains are also possible given the right interventions. Modernizing infrastructure and adopting a
service-oriented approach to water management will be key. Investment costs for modernizing the irrigation
and drainage system are estimated at US$6 billion from 2023 through 2030. Investments are also needed to
increase on-farm water-use efficiency, crucial for climate adaptation.
However, climate action will also lead to unintended consequences for workers and families. A policy-
induced shock will provide incentives for firms to introduce water-optimizing technologies, shift skills demand,
and lead to job losses and wage inequality.5 For instance, water-optimizing technologies needed in agriculture
could lead to unintentional labor shedding and sectoral labor reallocation. Workers will need to reskill/upskill
subject to how well their foundational skills allow them to learn new skills. Having the right human development
policies in place will increase people’s acceptance of the new green economy and ensure a sustainable green
transition over the long run. Inevitably, in the short to medium run, job losses will put a strain on families’
livelihoods. Adaptive social protection (ASP) systems will be crucial to abate some of the costs of the transition.
Message 3. Accelerating the development of Uzbekistan’s private sector is critical to absorb the costs and
take advantage of the opportunities of the green transition.
The emerging private sector and foreign direct investment (FDI) inflows will be pivotal in driving overall
development and the green transition. Uzbekistan has embarked on a bold path to reimagine its economy as
one led by innovation, competition, and above all, a dynamic private sector. Reforms to support private sector
development are critical to succeeding on a green transition path. Uzbekistan’s business sector already shows
signs of latent demand to go green, while FDI remains muted. The continuation of the government’s economic
reform agenda is key to bring increased FDI and improve the business environment for both domestic and
foreign firms to invest, compete, and export in low-carbon markets.
Continued economic reforms offer the prospect of new, green markets for the country, while robust and
inclusive growth can create fiscal space to build greater resilience to climate change. The public sector,
businesses, and individuals can more easily absorb the costs of building resilience to climate change and
transitioning to a low-carbon economy if incomes rise rapidly. Green markets can unleash faster growth if
Uzbekistan can calibrate its policy frameworks to competitively engage. Analysis indicates that there is more
than US$2 billion annually in potential exports for Uzbekistan to serve current green value chains, not counting
future growth. Accelerating trade integration would increase competition, efficiency, and productivity and enable
Uzbekistan firms to access external markets in a green transition. The frontier technologies of fast-growing green
markets can support rapid growth in domestic productivity and exports.
Rolling back the pervasive role of the state via state-owned enterprises’ privatization and ensuring robust,
conducive competition and investment regulatory environments are key to increasing the FDI that is much
needed for the green transition. Bringing more FDI into low-carbon sectors is a key priority as it brings both
financial and technological know-how. To date, Uzbekistan has underperformed in attracting FDI, especially in
green sectors. Uzbekistan’s stock of FDI is far below regional averages and that of its neighbors. Stimulating
investment in low-carbon activities requires transparent and stable regulations, a coherent government
coordination framework, and stronger investor service delivery. The ongoing privatization of state enterprises
and the establishment of public-private partnerships can also attract more FDI.
Message 4. Market incentives and financial market development will help bring in the private sector at
scale and relieve burdens on public finances.
The government’s fiscal position will quickly become unsustainable if the public sector must shoulder large
green transition costs without creating fiscal space elsewhere. At 34 percent of GDP in 2022, Uzbekistan’s
public spending is already higher than that of most of its income-level peers, and the budget has limited capacity to
take on major additional financing demands. Mobilizing funds for needed investments will require a mix of public and
private financing. The temptation can be to rely more on public finances, which can be mobilized quickly and do not
require the tough policy reforms that attract private investment, but such an approach would move the budget onto
an unsustainable path. Under a scenario where half of the investment costs of the green transition is financed by the
budget, the public debt-to-GDP ratio could exceed the benchmark for sustainable levels before 2050.
6
Adjusting prices, particularly by removing energy subsidies and introducing carbon pricing, is a keystone
policy for triggering the green transition that will boost growth over the longer term despite short-term
costs. Removing energy subsidies in the gas, electricity, and heating markets is an essential component of
a green transition. Introducing carbon pricing through a carbon tax will also spur the investments needed to
reach net zero emissions. These policies not only provide the market incentives to trigger behavioral change
but also generate fiscal space which can be directed to reinforce these incentives and support the transition.
Macroeconomic modelling suggests that these two policies combined can create as much as 5 percent of GDP
worth of additional fiscal space over the transition period. These resources can be used to leverage private finance
by providing smart subsidies for green investment, to support accelerated transition in difficult sector such as
residential energy efficiency, and to finance essential low-carbon public goods, both physical infrastructure and
the strengthening of education and labor market frameworks to build human capital for the green transition.
Given the scale of resources required, the private sector will need to be the primary financing source for the
green transition. With many competing public spending needs, the government budget cannot accommodate
all the investment needs of the transition. Ushering in greater private financing, both domestically and through
FDI, and developing green finance, will be critical. Key policy areas to support green finance include constructing
clear regulation and supervisory frameworks for green finance, rolling out new instruments that provide market-
based incentives for green investments, and developing insurance and other instruments to better manage
disaster- and climate-related risks.
Message 5. Mitigation and adaptation policies need to be complemented with carefully designed and well
implemented social protection policy packages to protect vulnerable groups from harm and to win broad
support for policy goals.
The benefits of a green transition should be shared widely by supporting the inclusion of vulnerable groups
in the green economy, protecting those affected by climate actions, and ensuring that benefits go to most
of the population. The distributional impacts of climate change and climate policies will be uneven on the poor;
workers with lower education and skills; and other vulnerable groups including women, people in rural areas, and
people with disabilities. Active labor market programs could be redesigned to facilitate labor shifts by providing
intermediation services to both jobseekers and employers in greener sectors and by tailoring training to provide
technological and vocational skills required in green jobs. Removing energy subsidies, while required to make
the energy sector economically viable, will lead to energy price increases, which will disproportionally affect
the poorest households as they spend large proportions of their incomes on essentials like food, energy, and
transport. Social protection policies can play a key role in mitigating the income losses due to the removal of
energy subsidies on the poorest by providing targeted income support to poor households identified in the Social
Protection Single Registry and to other vulnerable categories like single elderly households and people with
disabilities. These social protection compensation measures can be financed with fiscal savings from ending
energy subsidies and revenue stemming from implementing carbon taxes.
In addition to abating the costs of the transition, social protection systems can be made more adaptive and
responsive, to foster people’s resilience. Existing programs such as the Low-Income Family Allowance (LIFA)
can be scaled up and better targeted to reach more of the poorest households. Anticipatory cash transfers could
be introduced to enable the rollout of more climate-responsive support systems in cases of climate crises. To
be effective, these programs require integrating information and response systems, merging beneficiary data
(from disaster risk management systems) for effective targeting, establishing rapid payment mechanisms for
transfers, and setting up early warning systems.
Message 6. Skill development and climate action at the local level will be essential to enable a just transition
for the people of Uzbekistan.
The green transition is not expected to lead to a significant reduction in jobs overall, but the types of jobs
will change. Macroeconomic modeling indicates that there will be a similar number of jobs under a net zero
transition as in the reference scenario. But a major challenge is to ensure that workers have the right skills for the
new jobs. Some of the biggest growth areas may already have a nascent labor pool, while filling other new jobs
will require training people in dedicated skills. In the power sector, the net zero transition will be associated with
7
more net jobs, with employment 30 percent higher by 2035. This includes new jobs in construction, installation,
and operation and maintenance of new, greener technologies and considers the reduction in jobs in declining
technologies. In addition to sectors such as renewable energy, which see massive job growth, higher value-
added service sectors such as insurance and information and communication technologies and other service
sectors such as hospitality are expected to create more jobs in the net zero scenario than in the baseline.
Manufacturing also performs well, adding more jobs than in the baseline.
People need to be equipped with foundational and technical skills through formal education and training
opportunities to fuel a green transition. In Uzbekistan, foundational skill gaps need to be filled by raising low
average achievement levels according to standardized international testing of academic proficiency (50 percent
in reading, 52 percent in math, and 59 percent in science among 4th grade students), and the share of students
studying science, technology, engineering, and math needs to increase from a low base of 30 percent. Likewise,
many more students in Uzbekistan need to enroll in higher education, especially in math and science. Youths and
adults require reliable information to assist them in making smart career decisions, and they need more career
guidance during the green transition.
Behavioral change is critical for a green transition and can be encouraged through a mix of interventions,
including public awareness campaigns, education, and the introduction of new technologies and incentives.
Receiving new information can be a catalyst for behavioral change and the adoption of new technologies
(related to agricultural and livestock practices, energy mix and efficiency of use, and uptake of microfinance,
for example). Education and social protection policies should incorporate incentives for behavioral changes
that reduce carbon emissions. Concepts related to disaster risk management and climate change should be
part of the curriculum beginning with preschool, and environmental awareness should be taught as a core skill,
preferably in the context of solving real-world problems and encouraging creative thinking. Social protection
programs can also support mitigation, including through incentives built into conditional cash incentives and
advisory and training services.
Some people and communities will be affected more severely by climate change, and public awareness of
the causes and consequences of climate change is especially low in rural communities. 3 Some impacts, such
as drought-induced losses in productivity, reduced agricultural yields, diminished mobility due to degraded roads,
land degradation, flooding, and mudslides, will disproportionally affect low-income people and communities
already facing other economic and social challenges. While local communities are on the frontlines of climate
impacts, their voice often goes unheard in the policy discussions and decision-making that affect their ability to
cope with shocks and stressors today and adapt to changing conditions over the long term.
Programs that focus on local climate action and that create partnerships between governments,
communities, and civil society can identify socially inclusive solutions tailored to local needs and priorities.
Entry points for supporting locally led climate action vary with a country’s national and local institutional
readiness, previous engagements with local communities, and strength of local participatory processes for
development. Local climate action programs reinforce systems and capacities for climate action by engaging
with different levels of government; empowering communities to share local knowledge, assess their climate
risks, and prioritize actions for resilience under a range of climate scenarios; and increasing the transparency
and accountability to local stakeholders of processes for financing, designing, and delivering programs.
Mahallas have the potential to support and advance local climate action. Uzbekistan has over 9,000
mahallas, the lowest tier of territorial organization. Within the framework of the National Development
Strategy 2022–2026, the government is expanding the role of mahallas in local service delivery, poverty reduction
programs, and citizen engagement in program decision-making and oversight. Recent reforms have broadened
the human resource base in mahallas, increased resource allocations for mahalla-level basic infrastructure
investments, and introduced measures to enable mahallas to raise revenues and execute local development
projects. Because mahalla leaders serve as the interface between higher tiers of government and individual
citizens and civil society, training and capacity building on climate change can make these leaders more effective
3
In a survey of over 4,000 households in five regions of Uzbekistan, less than half of respondents had heard of climate change (Uzbekistan Rural
Infrastructure Development Project 2021 Survey).
8
in raising awareness of climate change impacts and adaptation strategies, informing local government planning
and investments, and targeting resources to the poor and vulnerable in their communities.
This report presents the recommendations for the next stage of reforms through the climate change
lens. The government is pursuing a comprehensive reform program including challenging structural reforms in
the business enabling environment, the energy, water, and agriculture sectors, as well as many other sectors
across the economy, and is implementing measures to strengthen the institutional framework for managing key
climate change issues. The CCDR proposes a set of urgent actions to advance decarbonization and adaptation
to climate change in Uzbekistan in the short term. The following actions include key policy and investment
priorities to address the most critical challenges for unlocking a green transition in Uzbekistan. Over the medium
term, deeper policy reforms and investment will need support across sectors that are most critical to advancing
decarbonization and climate adaptation objectives.
Priority area Recommended action in the short term
Climate action and climate commitments across sectors for a green transition
Climate action Adopt more ambitious NDC targets and carbon-neutrality targets.
Green economy Develop a national green taxonomy and monitoring, reporting, and verification
system.
Private sector Continue and accelerate existing reform programs to improve business
development dynamism, enhance the investment environment, and strengthen the private
sector’s role in leading the green transition.
Subnational Increase the responsibilities of municipal government by empowering

governance of subnational governments, including mahallas and regional Uzhydromet offices,
climate action to support appropriate local climate policy design and implementation.
Energy policy reforms and investment to promote energy efficiency and clean energy
Energy pricing Complete energy sector subsidy reforms, accompanied by social protection
measures for the vulnerable population.
Energy efficiency Accelerate the implementation of existing energy efficiency programs in

buildings.
Continue the scale-up of competitive and private sector-driven renewable

Clean energy and energy generation. Adhere to the commitment of no new coal development
natural gas while limiting natural gas to domestic use, prioritizing power and industry
sectors.
Natural gas Reduce losses and emissions through systematic measurement by the regulator
and attract investors in proven technologies of venting and flaring reduction.
Water resources management, climate-smart agriculture and ecosystem services
Water resources Increase the efficiency of water use in irrigation by promoting the adoption of
and irrigation water- and energy-efficient technologies, in combination with complementary
management measures and climate-aligned agriculture policies.
Climate-smart Strengthen incentives for investments in climate-smart agriculture by

agriculture and land strengthening land tenure security and promoting land conservation
policy investments and other investments in climate-smart agriculture through
financial incentives.
Landscape Prioritize investments in adaptation, forest, and landscape restoration based

restoration on the potential for adoption of climate-smart technologies, the speed of
investment recovery, and socioeconomic factors.
9
Priority area Recommended action in the short term
Green urban Adopt compact development and systematic green development, while applying
development biodiversity planning, green master plans, urban mobility plans, and efficient
delivery of public transport.
Foundational skills and social protection for climate resilience
Foundational skills Develop foundational skills and upskill workers to better integrate them into a
green economy through upgrading formal education curricula.
Social protection Make the social protection system more adaptive to enable crisis preparedness,
faster crisis response, and greater resilience among people.
10
Chapter 1
Climate and
development
The abandoned ships in the deserted Aral Sea near the city of Muynak in Karakalpakstan, Uzbekistan.
Photo by the World Bank 11
1.1. An ambitious reform path amid the challenge of climate change
Uzbekistan has embarked on an ambitious reform path that aims to catapult it to upper-middle-income
status early in the next decade. President Shavkat Mirziyoyev, who assumed office in 2016, embarked on an
ambitious reform agenda to rapidly develop the economy and raise living standards by doubling incomes by
2030. Over the last seven years, the President has overseen major reforms aimed at moving away from a state-
controlled economy to private sector-led markets and modern and inclusive social and environmental policies
that may reshape the economy to achieve these goals.
This Country Climate and Development Report (CCDR) comes at a juncture when Uzbekistan needs to show
results for the transformation path it has chosen. Uzbekistan, with 36 million people, is already Central
Asia’s most populous country and is expected to grow to more than 50 million people by 2050. A young and
fast-growing population in need of jobs and a heavy but diminishing reliance on natural resource extraction
have been motivating factors for the transformative new development model envisaged under the new reform
agenda. Seven years into the transformation, policy frameworks are improving, but much remains to be done.
Growth has been high, and poverty has fallen sharply, but job creation has been weak, putting the sustainability
of gains at risk. As in many transition economies, after a first wave of landmark reforms, Uzbekistan now must
complete a tougher phase of reforms to fully enable tangible change for people, a task made more difficult by
the challenges of climate change.
Climate change impacts loom large for Uzbekistan, and the trajectory of its accelerated development path
depends on how well it navigates this challenge. Uzbekistan is a small contributor—just 0.3 percent—to global
CO 2 emissions yet one of the most energy-intensive countries in the world. Without action to decarbonize
growth, achieving rapid economic growth will increasingly undermine global climate change mitigation efforts.
Uzbekistan is already facing the destructive effects of a changed climate. The ecological disaster of the drying
Aral Sea—once the fourth-largest lake in the world—creates pressing development challenges in large parts of
the country. Droughts, extreme heat, rainfall volatility, and dust storms are having increasingly severe impacts
on people and the economy. Air pollution is a growing environmental and health challenge. The annual costs of
the damage to health from ambient PM 2.54 pollution, disproportionately borne by women, children, and vulnerable
groups, have reached 6.5 percent of Uzbekistan’s gross domestic product (GDP).5
Climate change and the green transition are intertwined processes representing Uzbekistan’s biggest
challenges. The formidable challenge of climate change requires not only the right policies but the right policy
complementarities. At least some of the policies that aim to address climate change can also lead economies to
a green transition. As firms and households comply with new regulations and change their economic behavior,6
the resulting green economy may reinforce climate action goals, such as emission reduction.
Continued economic reforms and rapid growth offer the prospect of creating new, green markets and scaling
up investment, which can be marshalled to build greater resilience to climate change. The costs incurred
by the public sector, people, and firms in building resilience to climate change and transitioning to a low-carbon
economy will be more easily absorbed in a fast-growing economy. Green markets are also the key to unlock faster
growth if Uzbekistan can calibrate its policy frameworks to competitively engage. The frontier technologies of fast-
growing green markets can support rapid growth in domestic productivity and exports. Analysis indicates that
there is more than US$2 billion annually in potential exports for Uzbekistan to serve current green value chains,
not counting future growth.7
Moving to a lower-carbon economy requires investment in a new set of endowments—capital, skills, and
institutions. Studies have emphasized that the surest way to sustained growth is through investments in the
4
Fine particulate matter of 2.5 microns or less in width.
5
World Bank 2022a.
6
Regulations can take the form of caps on emissions, elimination of certain pollutants from production processes, and others, and incentives can take
the form of financing for firms’ technological change or households energy consumption patterns, such as adoption of solar panels.
7
Mulabdic 2023.
12
quality of policies, institutions, and human capital, along with physical assets.8 These lessons are especially apt
for Uzbekistan and its potential green transition. Improving the country’s capabilities to engage in competitive,
higher value-added activities at home and abroad will be what sees Uzbekistan move beyond its natural resource
and geographic limits.
Investment in climate change adaptation will have multiple benefits and high payoffs. Climate policy
and investment can bring associated benefits. For instance, reducing transport sector emissions has both
decarbonization benefits and health benefits from air quality improvement, while investing in livestock breeds
that emit less methane results in animal herds that are more resilient to drought and more productive. The
investments in adaptation that Uzbekistan takes could yield triple dividends through avoided losses (first dividend),
induced economic and development benefits (second dividend), and additional social and environmental benefits
(third dividend). Importantly, the second and third dividends are realized regardless of whether the climate risk
materializes. Thus, action on climate adaptation is in Uzbekistan’s own best interest.9
A green transition, both globally and domestically, brings risks as it does opportunities. Winners and losers
in the green transition will be determined to a great extent by their ability to adapt and adopt early. As Uzbekistan
keeps expanding its economic reach, its greatest opportunities will naturally lie in green markets, some of the
fastest growing in the world. As other countries follow a decarbonizing path, they are likely to limit imports of high-
carbon goods, which will lead to a decline in competitiveness for countries like Uzbekistan whose economies are
highly emissions intensive. Uzbekistan is also facing peak production of domestic gas, posing a significant risk for
its economy and energy independence. A green transition could represent an important opportunity for mitigating
such risk. On the domestic level, risks extend to workers and households that may be caught out during a green
transition. As the economy transforms, labor market demand will evolve, as some jobs sunset and others require
new skillsets. Decarbonization and carbon-pricing policies will alter relative prices as emission-intensive goods
become more expensive. In the short term, households may face adverse price shocks. Policy frameworks need
to be in place through the transition to help people and firms and support the vulnerable.
While Uzbekistan has demonstrated a commitment to climate change action, identifying more ambitious
targets would be an important signal of intent and would be in line with the Paris Agreement. Uzbekistan’s
revised Nationally Determined Contributions (NDCs), submitted in October 2021, target reducing CO2 emissions
per unit of GDP by 35 percent below 2010 levels by 2030. But there are no targets for methane and nitrous oxide,
which account for nearly half of greenhouse gas (GHG) emissions, and CO2 emissions are likely to continue to rise
as economic growth outpaces the targeted reduction in emission intensity. These factors, combined with the fact
that Uzbekistan does not yet have a formal economy-wide net zero target, means the country is not yet sending a
clear signal about where it is headed in a green transition.
1.2. How big is the challenge?

With rising temperatures, Uzbekistan’s vulnerability to both climate-related shocks and chronic impacts,
such as changes in river flow and precipitation patterns and ecosystems health, will increase. Uzbekistan’s
landscape is dominated by large desert plains, including desert areas in the far west that formed as the Aral
Sea dried up. With its arid climate, the country already experiences considerable variation in temperature and
precipitation10 and is expected to be severely stressed by further temperature rises. Average temperatures,
having risen 2.9°C from 1950 to 2020, are expected to rise by another 1.21°C–1.94°C over the century. In a
pessimistic climate scenario, the most extreme temperature rises are expected in the northwestern Aral Sea
region and in southeastern provinces—which is especially concerning as this is likely to trigger mudslides,
glacier melt, and worsening drinking water scarcity. Changes in rainfall are more uncertain, but the higher
expected frequency of heavy rainfall events would increase flood risks.
8
Including Diversified Development (2014) and the Growth Commission Report (2008).
9
World Resources Institute 2022.
10
For instance, southeastern areas of Uzbekistan, including its largest cities of Tashkent and Samarkand, received nearly 10 times more rainfall
(800–900 mm per year) than western areas (100 mm per year).
13
The high vulnerability to natural disasters calls for financial and fiscal systems that strengthen the resilience
of people, firms, and assets. Economic losses from natural disasters in Uzbekistan are estimated at US$92
million (0.20 percent of GDP) a year.11 Almost 15 percent of the country, with more than half of the population,
is subject to high seismic risk. Landslides also present a high risk, with most of them triggered by snow melt,
precipitation, and underground water. Preliminary estimates put the economic cost of flooding at US$236 million
annually. With limited fiscal resources and capacities of businesses and households to recover, it is increasingly
important to focus on financial protection to address potential disaster impacts.
With a large share of the rural poor engaged in agricultural work, poverty is highly associated with access
to water, fertile land, and natural resources in Uzbekistan. Three of every five poor people in Uzbekistan
lived in a rural area in 2022, and agriculture accounted for one in four jobs. In the same year, the regions of
Karakalpakstan Republic, Khorezm, and Syrdarya topped the lists of areas with the highest poverty rates and
elevated agricultural shares of employment. A large share of the population in both rural and urban areas will
live in areas of very high climate risk—more than one-fifth of the projected population of Uzbekistan in 2030
(8 million). The highest population concentrations at risk reside in the Ferghana Valley, Khorezm, Bukhara, and
Surkhandarya regions (Figure 1.1).
FIGURE 1.1. POPULATION DENSITY AND CLIMATE RISKS IN UZBEKISTAN, 2030
Population density (people per sq. km)a Climate Change Risk scores (percentile)b
Cities Population Dens., Cities Climate Change Risk Score

Provinces year 2030, Hab / sqkm Provinces Low - 20 th percentile
Districts <=10 Districts 40 th percentile
10 - 50 60 th percentile
50 - 150 80 th percentile
150 - 500 Maximum
>500
I. R. of Iran I. R. of Iran
Source: World Bank. 2023. Landscape Restoration Opportunities for Climate Change Adaptation in Uzbekistan. Forthcoming.
a. Population projections based on climate risk mapping and mapping of potential beneficiaries of sustainable agricultural practices and
Плотность населения (чел. на кв. км.)а Показатели риска изменения климата (процентиль)b
as an indicator of pressure on natural resources in the calculation of the Population Risk Score for 2030 in chapter 4 of the source report.
b. The aggregate Climate Change Risk score is a multicriteria district risk score, unit-less. Higher values correspond to higher risk from
Города
potential climate change impacts. The score is the average (чел. наof four indicators: anomalies in the standardized precipitationГорода
evapotranspiration
Плотность населения Показатели риска
кв. км.)а изменения климата
Области
<=10 Области
index, maximum rainfall depth in one day, average Районы annual10rainfall- 50 depth, and anomalies in the growing season length. Районы Низкий - 20 процентиль
40 процентиль й
й
50 - 150
Казахстан Казахстан 60 й процентиль
150 - 500
80 й процентиль
>500
Максимальный
People living in the downstream reaches of the Amu Darya basin and facing high water stress and land
degradation are likely to experience higher pressure to migrate in the future as increasing droughts and
Нукус Нукус
water stress add to the other drivers of migration. Smaller pockets of irrigated croplands in southern Uzbekistan
Ургенч
Узбекистан
Кыргызская Ургенч
Узбекистан Кыргызская
Республика
along the Amu Darya are also projected to be outmigration climate hotspots for the same reasons. Estimates
Ташкент
Наманган
Андижан
Ташкент
Наманган
Андижан
of the magnitude of migration vary, but it is clear that a systematic approach is needed to support alternative
Навои Джиззак
Гулистан
Фергана
Гулистан
Фергана
livelihoods or facilitate outmigration to other regions.12

Бухара
Самарканд Бухара
Самарканд
Туркменистан Туркменистан
Карши Карши
Women in Uzbekistan are especially vulnerable to economic exclusion and disproportionately rely on Таджикистан Таджикистан
agriculture for income. Although men account for a larger absolute number of agricultural workers (box 1.1),
Термез Термез
Иран Иран
agricultural work represents a larger share of employment among women, particularly in the cotton sector.
Афганистан
Пакистан
Пакистан
11
World Bank 2020.
12
World Bank 2021a.
14
BOX 1.1. COTTON HARVESTING IS A MAJOR SOURCE OF LIVELIHOODS FOR WOMEN IN RURAL AREAS,
WHICH MAY BE THREATENED IN AREAS OF INCREASING WATER SCARCITY
Cotton, a dominant crop in the Karakalpakstan, Khorezm, and Bukhara regions, is highly sensitive to water
availability. In these and other rural areas of Uzbekistan, many women rely primarily on informal and seasonal
work in agriculture for their livelihoods. According to the International Labour Organization’s Third Party Monitoring
Report (2020), the cotton harvest season, for example, has offered one of the few opportunities for some women
to earn cash income, despite poor working conditions and issues of full and fair payment: women represent 60
percent of pickers, 76 percent of them living in rural areas.a Female seasonal workers often encounter poor working
conditions, such as long hours, inadequate safety measures, and insufficient access to basic amenities.b Increased
water scarcity will eliminate scarce employment opportunities for women in areas where cotton production is no
longer economically viable. Investment in supporting crop diversification in water scarcity hotspots, with attention
to gender issues, is important for helping transition to other farming methods and other sectors.
a
ILO 2020. b
World Bank 2017.
At the national level, the country’s food system, especially irrigated agriculture, will come under severe
climate pressure. Uzbekistan’s irrigation and drainage networks—affecting 95 percent of crop production—are
the backbone of the country’s agricultural and food systems. Irrigated agriculture accounts for more than 25
percent of GDP and employment and 90 percent of water use. Food production is thus especially vulnerable
to water shortages, which are projected to increase in frequency and severity with climate change and rising
economic and demographic pressures.
Stress on both surface water and groundwater resources will increase, and water will become an
increasingly scarce commodity due to climate change, population pressures, and expected economic
growth. Climate projections suggest that the flow of the Amu Darya will decrease by 5 percent and the Syr
Darya by 15 percent by 2050, with an increase in frequency of low-water flow and drought years and with
expected runoff losses of as much as 25–40 percent. Meanwhile, heat stress will increase the demand for
water. Also, uncertainties related to the transboundary nature of water resources, including construction of the
Koshteba Canal13 in Afghanistan that will divert water from the Amu Darya, will exacerbate the water situation.
In some catchments, water availability is projected to decrease by 30–40 percent by 2050, while irrigation
water demand will rise by 25 percent. The total annual water shortage will increase to 7 billion cubic meters
in 2030 and to 15 billion cubic meters in 2050. Crop and livestock production will decline, threatening food
security countrywide, with potentially dire social impacts, including increased migration. The rural poor will
be disproportionately affected. Avoiding these outcomes requires investments in climate-change adaptation
measures and in building resilience to water scarcity. More than anything else, this means investing in irrigation
modernization and water resources management.
Water shortages tax groundwater resources and lead to land degradation, creating a vicious cycle of lowered
land productivity and further stress on water resources. Over 500,000 ha of land is already water-logged and
degraded by salinization due to poor irrigation practices and inadequate drainage systems. In the absence of
proper drainage, excessive irrigation leads to soil salinity and greatly reduces the productivity of land. To reduce
salinity, farmers have to wash the soil by applying more water than is needed to grow crops. The result is a vicious
cycle of land degradation and even more inefficient use of water resources. Modernizing irrigation and drainage
infrastructure and improving water management practices could prevent further degradation.
Transboundary allocation issues and weak regional cooperation are also key constraints to improving
water resources management. Water availability affects economic performance, social cohesion, and even
political stability in the broader region, as water is a shared resource that is in high demand for food and energy
13
According to some estimates, construction of the Koshteba canal in the upper catchment of the Amu Darya in Afghanistan will reduce flows of the
river to Uzbekistan and Turkmenistan by 5 billion cubic meters. About 18 percent of the 285-kilometer canal was built recently. The canal will have a
capacity of 650 cubic meters a second and will irrigate about 0.5 million hectares.
15
production, environmental safety, and livelihood security. Climate change is expected to amplify the seasonal
and geographic variability in water resources, whose distribution is already highly uneven. Hydropower resources
are concentrated in the Kyrgyz Republic and Tajikistan, while thermal energy resources are concentrated in
Uzbekistan, Turkmenistan, and Kazakhstan. Energy–water links will play a critical role in Central Asia’s economic
development, poverty alleviation and shared prosperity, food security, and cooperative relations. However,
transboundary water allocation and weak regional cooperation have been difficult barriers to overcome. At
the core is a mismatch in the timing of water demands for energy and food production. Whereas the Kyrgyz
Republic and Tajikistan need dams to release stored water during the winter to generate electricity, Kazakhstan,
Turkmenistan, and Uzbekistan need the reservoirs to store this water until it is needed for agriculture in the
summer growing season. Yet history and experience elsewhere have demonstrated that mutual benefits are to
be gained from sharing and coordinating use of energy and water resources across borders.
Increased water scarcity risks creates disputes over access to water and productive land in affected areas
and undermines social cohesion. A 2021 survey of rural communities participating in the Rural Infrastructure
Development Project of the Government of Uzbekistan (GoU) found that, although community disputes are rare,
those that arise most frequently relate to access to water (both irrigation and drinking water).14 Thus mahalla
leaders and representatives of state agencies responsible for irrigation services and drinking water delivery are
likely to come under increasing pressure to provide services in line with community expectations and mediate
increased competition for access to water that may occur among members of the same community, across
communities, and between communities across borders.15 Local disputes over access to water and land in
vulnerable border areas such as the Ferghana Valley periodically escalate into large-scale or violent conflicts.
Some of the other most damaging effects of climate change are expected to be on agricultural and livestock
productivity and on the health of people and animals. By 2050, rising temperatures may result in productivity
losses across the economy of 2.0–3.5 percent. Productivity shocks are expected to be highest for agriculture,
followed by industry and services. Significant climate-related losses to livestock productivity are anticipated,
adding to food security challenges. By the 2040s, livestock production could decline by 8–13 percent. In the case
of the health impacts of climate change, they are also anticipated to be very high. A rising incidence of water-
borne and heat-related illnesses could result in a 0.6–1.2 percent increase in mortality by 2050.
Rapid urbanization and population growth exacerbate the risks and challenges associated with urban
resilience and disaster management. Urban resilience is a critical issue in Uzbekistan as the country is exposed
to multiple environmental and human-caused hazards, such as earthquakes, landslides, floods, droughts, and
industrial accidents. Recognizing the importance of enhancing urban resilience, the government has strengthened
disaster preparedness and response, improved infrastructure, and promoted sustainable urban development.
Measures have included developing national policies and strategies on disaster risk reduction, establishing a
national emergency management agency, and promoting community-based disaster risk reduction and climate
change adaptation initiatives. However, much work remains to be done to enhance urban resilience, particularly
by effectively implementing and enforcing policies and strategies, strengthening institutional capacity and
coordination, and promoting public awareness and participation.
14
In a survey of over 4,000 households in five regions of Uzbekistan, 9 percent of respondents indicated that serious disagreements occur in their
village sometimes, often, or very often. Of this subset of respondents, nearly 50 percent reported that disputes occur over access to water.
15
World Bank 2021b.
16
Chapter 2
Country climate
commitments, policies,
and capacities
The Charvak Reservoir, Tashkent region, Uzbekistan.

Photo by Eranicle / stock.adobe.com 17
2.1. Climate and adaptation commitments
Uzbekistan has made international commitments on climate change and has begun to tighten them. In
2018, Uzbekistan ratified the Paris Agreement and submitted an NDC to reduce GHGs per unit of GDP by 10
percent by 2030 from the 2010 baseline. At the United Nations Climate Change Conference (COP26) in 2021,
Uzbekistan increased its commitment to 35 percent. With rapid GDP growth projected, Uzbekistan has scope
to commit to even more ambitious GHG reductions. Its Long-Term Decarbonization Strategy, currently under
preparation, may provide the basis for an updated NDC. In 2022, Uzbekistan took the Global Methane Pledge and
committed to reduce methane emissions by 30 percent by 2030. Uzbekistan does not yet have sector- or GHG-
specific emissions reduction targets, although it made significant commitments and showed progress in some
sectors, such as the ambitious renewable energy program in the power sector.
Uzbekistan’s NDC includes adaptation commitments. Some of the main NDC targets are to enhance the
resilience of strategic infrastructure and ecosystems, protect biodiversity, and reduce the harmful impact of the
degradation of the Aral Sea basin. Uzbekistan also plans to increase the efficiency of water use, promote crop
diversification, introduce organic farming practices, encourage reforestation, and develop early warning systems
for hydro-meteorological hazards.
Uzbekistan’s plan to transition to a green economy includes important steps to reduce its carbon
footprint. In December 2022, the government adopted a Program and a Plan of Action for Transitioning to a
Green Economy and Ensuring Green Growth until 2030 (Presidential Decree No. PP-436 of December 2, 2022),
which includes measures addressing environmental and economic challenges to achieve green, resilient,
and inclusive development. The plan sets key strategic directions and measurable targets, including for crop
diversification, water-use efficiency, sustainable land and pasture management, leveraging of public-private
financing for sustainable irrigation and a green economy, energy security, low-carbon development, disaster
and urban risk management, support for green jobs, and encouragement of innovation for decarbonization and
climate resilience.
2.2. The institutional and regulatory framework for climate change

is a work in progress
Without a unified law on the response to climate change, the governance framework on climate change
impacts consists of a patchwork of presidential decrees, government resolutions, and sectoral strategies.
Around 30 laws and 100 decrees related to climate change have been passed through presidential approval or
government ministries and Oliy Majlis (Senate and Legislative Chamber). A national climate change strategy is
being drafted, as is a National Adaptation Plan to complement the NDC.
Targets and measures to meet climate-related requirements are being incorporated into medium-term
sector strategies for water, energy, agriculture, and the environment but are still needed for other sectors.
Requirements take the form of GHG limits (power generation, industrial and residential energy use, transport,
and land use); energy efficiency goals for industry; and increased water-use efficiency gains, renewable energy
capacity, forest cover, and waste service coverage. Enforcement mechanisms still need to be defined.
Multiple ministries are engaged in activities related to the green transition and climate change (box 2.1).16
The Strategy for Transition to a Green Economy assigns responsibility for strategic guidance and decision-making
on the green transition to an interagency council consisting of heads of ministries and agencies and led by the
Minister of Economy and Finance.
16
The climate change institutional arrangements described in this section reflect the status before the ministerial consolidation.
18
The newly created Ministry of Ecology, Environmental Protection, and Climate Change has key climate
change-related functions. Under the management of the Cabinet of Ministers, Uzhydromet has been responsible
for developing the national climate change strategy and is the designated national coordinator for the United
Nations Framework Convention on Climate Change (UNFCCC) and the Paris Agreement. In accordance with
Presidential decrees issued in May 2023, the Ministry of Natural Resources was transformed into the Ministry
of Ecology, Environmental Protection and Climate Change with expanded functions. The Ministry now includes
Uzhydromet, the Forestry Agency and the Tourism Agency. The Central Asian University for Environmental
Studies and Climate Change was created under the Ministry of Ecology, as well as the National Center for Green
Transformation and Adaptation to Climate Change, responsible for fulfilling the obligations adopted under the
Paris Agreement.
The Ministry of Economy and Finance (MEF) holds important implementation, coordination, and regulatory
roles related to climate. The ministry is responsible for coordinating activities to promote a green economy and
implement green growth principles, including reducing GHG emissions, coordinating implementation of activities
under Article 6 of the Paris Agreement, and regulating and coordinating Uzbekistan’s national and international
implementation and management of GHG trade. Over August 2021–February 2022, Ministry of Economy in
partnership with Central Asia Regional Economic Cooperation Program (CAREC) and the World Bank convened
a set of 11 policy dialogues on green growth and climate change which helped engage over 700 stakeholders
and policy makers, built the momentum toward implementation of green transition, and discussed relevant
policy recommendations for each sector.17 The ministry also develops financial mechanisms to support the green
transition and monitors the use of funds in climate projects and programs.
BOX 2.1. MINISTERIAL RESPONSIBILITIES RELATED TO THE GREEN TRANSITION AND CLIMATE CHANGE
• Uzhydromet coordinates ministerial input and drafts the national climate change strategy and Nationally
Determined Contributions (NDCs), UNFCCC biennial reporting, and climate change data management.
• The Ministry of Investment, Industry, and Trade is responsible for interacting with the Green Climate Fund The
and attracting investments for implementing the NDC.
• The MEF is responsible for implementing the Strategy for Transition to a Green Economy and UNFCCC Clean
Development Mechanism projects.
• The Ministry of Ecology, Environmental Protection and Climate Change is responsible for state policy in the
field of nature conservation, use and restoration of natural resources, waste management, and climate
change; maintaining state environmental control for nature protection, including atmospheric air, land,
subsoil, water, forests, protected natural areas, protection of flora and fauna, waste management; forests;
monitoring climate change and environmental pollution; reducing harmful emissions, reducing the negative
impact of human activities on nature.
• The Ministry of Energy, together with the MEF, coordinates the development and implementation of the
National Low-Carbon Development Strategy (Long-Term Strategy). The Intersectoral Energy Saving Fund has
been established under the Ministry of Energy.
• The Ministry of Agriculture promotes climate-resistant and water-saving technologies and measures to
reduce GHG emissions in agriculture.
• The Ministry of Transport leads the gradual transition of public transport to electric traction and measures to
expand the production and use of more energy-efficient vehicles.
• The Ministry of Construction, Housing, and Communal Services devises innovative energy-efficient and
energy-saving solutions in building construction.
• The Statistics Agency Under the President of the Republic of Uzbekistan provides state agencies with
statistical information necessary to prepare and implement the NDC and coordinates implementation of the
National Sustainable Development Goals.
17
https://www.worldbank.org/en/events/2021/09/21/uzbekistan-policy-dialogues-green-growth-and-climate-change
Uzbekistan has adopted Presidential Decree No. PP-436 02.12.2022 “On measures aimed at increasing the effectiveness of reforms with the goal
of transition of the Republic of Uzbekistan to a “green” economy until 2030.” Raina et al (2022).
19
Both national and subnational policies are crucial for sustained and just climate change adaptation,
mitigation, and green transition. While top-down approaches are necessary for the green transition, its
successful implementation requires policies at other levels of government to be aligned with and ready to support
complementary climate action and the human development policies (see example of the Netherlands in box 2.2).
BOX 2.2. INTERAGENCY COOPERATION ON THE CLIMATE CHANGE AGENDA IN THE NETHERLANDS
Under the Climate Act that sets emission targets in the Netherlands, the government is required to facilitate
implementation of a climate plan, which defines the measures needed to achieve the targets in the Climate Act.
The executive and the House of Representatives decide on the policies to be implemented. In addition, a national
Climate Agreement with participating industries specifies what they will do to help achieve the climate goals. The
Minister of Economic Affairs and Climate Policy coordinates and monitors implementation of the Climate Agreement.
Sectoral implementation committees, with representatives of private sector and nongovernmental organizations,
have been set up under the direction of sectoral ministers to develop activities under five thematic platforms for
each industry to connect labor market demand and human capital development.
Source: National Climate Agreement, the Netherlands (2019).
Subnational governance mechanisms can be progressively strengthened and supported. Subnational

governments (khokimiyats and the regional departments of Uzhydromet) prepare and implement territorial
hydrometeorological programs, including measures to adapt to climate change, and develop social infrastructure.
However, they are not directly involved in formulating national climate objectives. Implementing climate policy
requires cross-sectoral approaches across different (urban, rural, and peri-urban) territorial areas. Meeting
climate action priorities will mean that plans and resourcing are spatially aligned, with provisions to allow territorial
administration mechanisms to effectively contribute.
The governance system in Uzbekistan is highly centralized. Municipal governments have limited capacities and
budgets for local economic development programs. The allocation of land and access to existing infrastructure
networks are their main tools. Despite some recent reforms, local governments still lack the authority to plan
for revenue generation and spending obligations in the medium and long run, to manage them independently,
or to make large capital investments. A starting point for more territorially responsive climate action would be to
better define the roles, responsibilities, and accountabilities of subnational administrations across the tiers of
territorial administration and align them with the requisite fiscal and administrative capabilities. Municipalities are
playing an increasingly important role in promoting local climate actions in urban areas through urban planning,
regulation, and incentives within their remit (box 2.3).
BOX 2.3. CLIMATE ACTIONS WITHIN THE AUTHORITY OF MUNICIPALITIES
Urban centers account for 37 percent of national carbon emissions (see box figure). Urban emissions will
rise along with urbanization rates unless mitigation actions are taken. Emissions in cities could be reduced by
almost 90 percent by 2050 with technically feasible, widely available measures.a While urban decarbonization will
depend on national policies (such as electrification, industrial policies, and power sector regulations), cities can
also take their own mitigation measures by supporting urban planning that favors compact, transit-oriented urban
growth; investing in multimodal infrastructure, including public transit, walking, bicycling, and electric vehicles
(EVs); enacting regulations and providing incentives for greater energy efficiency of buildings and industries; and
improving solid waste management.
Urban climate mitigation actions have substantial local benefits. Emission reduction in cities also makes
them more livable. Switching to clean energy and EVs reduces local air pollution. Reducing dependence on private
vehicles also cuts travel costs for individuals and traffic congestion and its associated cost to the economy
20
Box 2.3.
while promoting the positive health impacts BOX FIGURE 2.3. TOTAL CO2 EMISSIONS BY SETTLEMENT
of walking and bicycling. Compact urban TYPE IN UZBEKISTAN, 1970–2015
form also reduces the cost of municipal
infrastructure and service delivery, preserves Total CO2 emissions by settlement type in Uzbekistan,
natural ecosystems and biodiversity, and 140.000.000 1970-2015
strengthens food security. Improving building 120.000.000

energy efficiency reduces household energy 100.000.000
costs. Finally, improving waste management 80.000.000
would support climate change goals. Municipal 60.000.000
solid waste management is responsible for a 40.000.000
large and rapidly growing share of methane, a 20.000.000
powerful driver of climate change. Upgrading 0
1970 1990 2005 2015
the waste management system will be
Urban centers Dense and semi-dense urban clusters
essential to curb GHG emissions and make
Suburban or peri-urban areas Rural areas
the sector more resilient to climate impacts.
Note: a. Coalition for Urban Transitions 2019. Source: Crippa et al. 2021.
Общие выбросы CO2 в разбивке по типам населенных
пунктов в Узбекистане, 1970-2015 гг.
140.000.000
120.000.000
Mahallas, the lowest tier of territorial organization
100.000.000in Uzbekistan, have the potential to strongly
influence local climate action. There are over 9,000 mahallas in Uzbekistan, and the government plans to
80.000.000
strengthen their role in local service delivery, poverty reduction, and citizen engagement. Recent reforms have
60.000.000
strengthened the human resource base in mahallas,40.000.000
increased resources for mahalla-level basic infrastructure,
and introduced measures to enable mahallas to raise20.000.000
revenues and execute local development projects. Although
0
the Law on Self-Government Bodies of Citizens, which defines the 1970
mandate of1990 mahallas, indicates2015
2005 that mahallas
can create commissions on ecology and environmental protection, but
Городские центрыthere is limited
Сельские районыevidence that such
commissions function in practice. As a result, public awareness in rural
Пригородные или communities about
примыкающие к городам the causes and
районы
Плотные и полуплотные городские кластеры
consequences of climate change is low. Government capacity building for mahalla specialists on climate change
could help them become more effective in raising awareness in the community.18 Government capacity building
for mahalla specialists on climate change could help them become more effective in raising awareness in the
community.
18
In a survey of over 4,000 households in five regions of Uzbekistan, less than half of surveyed citizens had heard of climate change (Uzbekistan Rural
Infrastructure Development Project 2021 Survey).
21
Chapter 3
Policies and
investments to advance
decarbonization
А solar power plant.

Photo by Agnormark / stock.adobe.com 22
3.1. Decarbonization of the energy system is an opportunity to
strengthen energy security
The energy sector, 19 which accounted for 74 percent of GHG emissions in Uzbekistan in 2019, and agriculture,
which accounted for 19 percent, are the most important sectors in decarbonizing the economy. Thus, they
are the main focus of this chapter. Of the energy sector emissions, around 80 percent are from the burning of
fossil fuels (combustion) and 20 percent from fugitive emissions.20 The bulk of non-energy sector emissions
emanate from agriculture (19 percent), waste management (4 percent), and industrial processes (3 percent),
which in total account for the remaining 26 percent of GHG emission (2019). The energy sector, or energy system,
encompasses the entire value chain from the extraction of energy resources through transformation (power,
hydrogen, and so on) to main end users, including buildings, industry, agriculture, and transport.
This chapter examines a least-cost pathway for decarbonizing Uzbekistan’s energy sector by 2060 (net zero
emissions by 2060, NZ2060) compared with a reference scenario based on existing policies and trends
(Figure 3.1). Based on modeling undertaken for this CCDR,21 both scenarios assume cost-reflective pricing,
which implies removing energy subsidies, and both pathways are aligned with Uzbekistan’s 2030 NDC targets.
FIGURE 3.1. GHG EMISSIONS IN THE REFERENCE SCENARIO AND THE NZ2060 SCENARIO, 2019–2060

300 300
250 250
200 200
mt CO2/yr
mt CO2/yr
150 150
100 100
50
50
0
0
-50
2019
2025
2030
2035
2040
2045
2050
2055
2060
2019
2025
2030
2035
2040
2045
2050
2055
2060
Agriculture Mining Industry NE Agriculture Mining Industry NE
Industry Transport Power sector Industry Transport Power sector
Residential Energy Residential Energy Direct Air Cap
Commercial Commercial Hydrogen
Under the reference Инерционный

scenario, current policies result in much higher Сценарий выхода наon
dependency нулевой балансenergy
imported
сценарий выбросов к 2060 году
resources
300 and a doubling of emissions by 2060, indicating 300that more action is needed to promote the
country energy security while mitigating rising emissions. With GDP (and energy demand) expected to rise
250 250
quickly, Uzbekistan meets its 2030 NDC target as emissions rise more slowly and emission intensity declines.
млн тн. CO2 /год
млн тн. CO2 /год
200 200
Nevertheless, the country will become highly dependent on imported energy resources, due to limited natural
150
gas availability, 150
with energy imports accounting for 66 percent of supply by 2060, renewables for just 21 percent,
and 100 100
domestic fossil fuel extraction and production for 13 percent. This will also produce a large increase in total
emissions 50
50 in the reference scenario, putting decarbonization out of reach. In this scenario, growth in energy
demand is met largely through fossil fuels, while improved emission0 efficiency is due to the cost-driven uptake of
0
-50
2019
2025
2030
2035
2040
2045
2050
2055
2060
2019
2025
2030
2035
2040
2045
2050
2055
2060
19
The energy sector, or energy system, encompasses the entire value chain from the extraction of energy resources through their transformation
(power, hydrogen) and use by end users, including buildings, industry, agriculture, and transport.
Сельское хозяйство Использование Сельское хозяйство Добыча
20
Almost all fugitive emissions in Uzbekistanкак
are сырье
relatedвto natural gas leaks, mainly from corroded pipelines and outdated equipment, especially valves
Промышленность
(IEA 2022a; see box 3.1). промышленности Промышленность Транспорт
Жилые здания Производство Жилые здания Энергетика
21
Various sensitivity analyses were carried out using KINESYS+, a TIMES based energy system modelling framework, and further details can be found
НежилыеEnergy
in the accompanying здания электроэнергии Нежилые здания
System Decarbonization technical paper (available upon request). Водород
Добыча Энергетика Прямое улавливание Производство
Транспорт углерода из воздуха электроэнергии
Использование как сырье в промышленности
23
renewable energy, a shift from natural gas in the power sector and heating, improvements in energy efficiency,
and a small cost-driven uptake of electric vehicles (EVs).
The NZ2060 scenario reflects a feasible least-cost path for the energy sector to achieve peak emissions
before 2030 and decarbonization by 2060 while strengthening the country’s energy independence. In
the NZ2060 scenario, energy security improves, with net energy imports limited to 8 percent by 2060 as
most energy is produced domestically. Domestic renewables provide 70 percent of domestic energy supply by
2060 and over 85 percent of supply when combined with hydrogen and domestic extraction and production.
Decarbonization follows the steps described in Figure 3.2, including greater deployment of renewables, higher
energy efficiency, and use of low-carbon technologies, among others. The power sector drives most of the
emission reductions in the first two decades and then reaches almost full decarbonization by 2050, except
for small residual emissions from natural gas with carbon capture and storage (CCS). Commercial buildings
reach net zero before 2050, followed by residential buildings in 2055. Industry and transport decarbonize last,
by 2060. Fossil fuels account for 19 percent of final consumption, which is mainly natural gas with CCS. The
NZ2060 scenario would also allow for more ambitious NDC targets for 2030. Energy trade is still significant and
an integral part of the country energy security.
FIGURE 3.2. A POSSIBLE DECARBONIZATION PATHWAY TO A NET ZERO EMISSIONS ENERGY SYSTEM IN UZBEKISTAN,
2019–2060
Fuel economy No new gas fueled 3.5 million Green H2 for 12,000 Market of 9m
standards vehicles post 2035 EVs by 2040 heavy trucks EVs self-sustaining
Renovations: 0.8% EV pickup post 50%+ solar + wind Scale up of heat Residential: Net
or 50,000 per year 2035 generation in 2035 pumps - over 4m Zero by 2055
120
Gas growth in TFC No new gas in new Scale up of 100% of gas plants Hydrogen in
through 2030 built post 2035 storage and CCS with CCS by 2050 industry by 2050
100
No new coal Gas CCS Green H2 prod. 80%+ solar + wind
plants post 2023 from 2040 from 2040 generation in 2050
80 More ambitious 3+ GW storage

2030 NDC target post 2035
MtCO2
60 New efficient 13 GW solar +

gas units wind in 2030
40 Decommissioning of
ineff. gas plants
30% solar + wind
generation in 2030
20
0
Only limited role of DAC and BECCS*
at end of time horizon
-20
2020 2025 2030 2035 2040 2045 2050 2055 2060
Power / Cross-Cutting Buildings Industry Transport Agriculture
3.2. How to strengthen energy security and transition away from a

Стандарты экономии
С 2035 года не будет
новых автомобилей
3,5 млн ЭТС «Зеленый» H2 для 12 000 9 млн ЭТС –
natural gas economy

топлива к 2040 году тяжелых грузовиков самодостаточный рынок
на СПГ
Капитальный Солнечные и ветровые ЭС: Массовое внедрение Жилые здания: нулевой

Рост числа ЭТС
ремонт: 0,8% или >50% выработки энергии в тепловых насосов - более баланс выбросов к
120 50 000 в год
после 2035 года
2035 году 4 млн 2055 году
Transition to a decarbonized
Рост общего economy Послеsupports Uzbekistan’s
2035 года не будет path to 100%
Расширение масштабов
energy security through
газовых установок с Водород в energy
100 потребления газа до новых проектов газификации промышленности
efficiency gains and 2030 годаdomestic renewablesновостроек that are cost-effective
хранения энергии и УХУ
andсистемой
thatУХУsecure
к 2050 году
economic к 2050 г.growth.
Projections
80 show high
Никаких новыхannual
угольных
электростанций после
rates of growth for
Газовые Uzbekistan’s
установки с economy (more than
Производство 4 percent)
экологически and
Солнечные иpopulation
ветровые ЭС:
>80% выработки энергии в
УХУ с 2040 года чистого H с 2040 года
Млн т CO2
(1.5 percent), generating 2023 года

strong demand for energy and electricity. In the reference scenario, energy demand
2050 году
Мощность установок по
grows more than
60 200 percent and electricity
Более амбициозные
цели ОНУВ на 2030 год
demand
аккумулированию more than 400 percent by 2060. In the NZ2060 scenario,
энергии
>3 ГВт после 2035 года
energy efficiency gains and a switch to more efficient technologies moderate energy demand growth to 160
40 Новые эффективные Мощность солнечных и
percent. The sizeгазовые of the power sector more
установки than
ветровых ЭС вdoubles
>13 ГВт
2030 году by 2060 compared to the reference scenario as the
net zero
20 system relies on
Вывод из эксплуатации electrification and green hydrogen.
Солнечные и ветровые ЭС: In general, technologies available to reach net
неэффективных газовых более 30% выработки
zero are more limited in Uzbekistan than inэнергии
установок some к 2030other
году countries due to limits on natural gas and bioenergy
0
availability for blue hydrogen production, transport, and residential heating. FigureВ конце 3.3 периода
presents the total final
DAC – прямое улавливание углекислого газа из воздуха DAC и BECCS*
consumption
-20
by fuel in the
BECCS – биоэнергетика с УХУ
reference scenario and NZ2060 scenario. играют лишь ограниченную роль
2020 2025 2030 2035 2040 2045 2050 2055 2060
Энергетика / межотраслевые меры Здания Промышленность Транспорт Сельское хозяйство
24
FIGURE 3.3. ENERGY DEMAND GROWTH SLOWS IN THE NZ2060 SCENARIO COMPARED WITH THE REFERENCE SCENARIO:
TOTAL FINAL ENERGY CONSUMPTION BY FUEL
4500.0 4500.0
4000.0 4000.0
3500.0 3500.0
3000.0 3000.0
2500.0 2500.0
PJ
PJ
2000.0 2000.0
1500.0 1500.0
1000.0 1000.0
500.0 500.0
0.0 0.0
2019 2025 2030 2035 2040 2045 2050 2055 2060 2019 2025 2030 2035 2040 2045 2050 2055 2060
Biofuels Biomass Coal Gas Biofuels Biomass Coal Gas
Grid Elec Heat Oil Grid Elec Heat Hydrogen Oil
With natural gas running out, the energy system in Uzbekistan is at a crossroad. Uzbekistan’s gas-dependent
Инерционный Сценарий выхода на нулевой баланс
economy is gradually running out of domestic gas, with the gap between domestic
сценарий production
выбросов 2060 and peak gas
4500.0 4500.0
demand increasing every year. Annual gas production is expected to peak in 2023, at around 57 billion cubic
4000.0 4000.0
meters. Based on current reserves, gas production is expected to then decline sharply to 10 billion cubic
3500.0 3500.0
meters by 2050. Historically, Uzbekistan has been a net exporter of natural gas, but it has begun to import
Пета Джоуль
Пета Джоуль
3000.0 3000.0
increasingly more natural gas during the winter. As part of its strategy for the sector, the government is now
2500.0 to ban natural gas exports by 2025.
planning 2500.0
2000.0 2000.0
Rationing
1500.0 natural gas use can reduce its consumption by 40 percent by 2060 relative to 2019. Limited
1500.0
gas1000.0
availability in Uzbekistan requires a significant shift away 1000.0 gas across all sectors—for example, moving
from
to more
500.0
efficient vehicles, switching to EVs, and decarbonizing 500.0
heating (supported by heat pumps and district
heating). In the NZ2060 scenario, no new gas connections are permitted for heating in new residential buildings
0.0 0.0
after 2035. In transport,
2019 no new
2025 2030 2035 2040compressed natural
2045 2050 2055 2060 gas (CNG)-fueled2019vehicles
2025 2030 are allowed
2035 after2050
2040 2045 2035.
2055Natural
2060
gas is prioritized for
Биотопливо
the power and
Биомасса
industry sectors,
Уголь
while its use is reduced
Биотопливо
for heating and
Биомасса
transport.
Уголь
Natural
gas is not available
Нефть for blueТепло
hydrogen production. Figure 3.4 presents
Электричество the natural Тепло
Водород gas balance for domestic
Электричество
из сети из сети
production, Природный
imports,газ and uses in the two scenarios. Природный газ Нефть
FIGURE 3.4. NATURAL GAS CONSUMPTION DECLINES BY 40 PERCENT IN NZ2060 SCENARIO COMPARED WITH THE
REFERENCE SCENARIOS: NATURAL GAS DOMESTIC PRODUCTION, IMPORTS, AND USES, 2019–2060
4000.0 Reference scenario 4000.0 Net zero 2060 scenario
3000.0 3000.0
2000.0 2000.0
1000.0 1000.0
0.0 0.0
-1000.0 -1000.0
-2000.0 -2000.0
-3000.0 -3000.0
-4000.0 -4000.0
2019 2025 2030 2035 2040 2045 2050 2055 2060 2019 2025 2030 2035 2040 2045 2050 2055 2060
Agriculture Commercial Energy Sector Agriculture Commercial Energy Sector
Import Industry Residential Import Industry Residential
Export Thermal Power Tranport & Roads Export Thermal Power Tranport & Roads
Extraction Extraction Thermal CSS H2 Thermal
4000.0 Инерционный сценарий 4000.0 Сценарий выхода на нулевой

баланс выбросов 2060
3000.0 3000.0
25
2000.0 2000.0
1000.0 1000.0
0.0 0.0
Renewable energy and especially solar and wind power investments are expected to advance in both
scenarios. The power sector accounted for 42 percent of energy sector emissions in 2019 and is expected to see
the largest sectorial growth. With electrification, the power sector’s share in total energy consumption increases
from 16 percent in 2019 to 55 percent in 2060, in the NZ2060 scenario. Among renewables, solar and wind have
the largest potential (39 GW in 2035 in NZ2060), starting to account for a majority of power generation after
2035 in the NZ2060, while accounting for 30 percent by 2035 in reference scenario. Hydropower reaches 3.4 GW
by 2035 in the NZ2060 scenario. Other renewables could also play a role in the power sector as well as in heat
production: geothermal and biomass have a theoretical potential of 1 GW and 15–17 GW, respectively, according
to IEA (2022a). By 2050, power exports peak at 9 percent of generation and imports at 4 percent in the reference
scenario, while exports peak at 9 percent in the NZ2060 scenario, helping to balance solar and wind generation
and enabling the use of hydropower and thermal generation from neighboring countries.
Moving from a gas-dominated power system to a solar- and wind-dominated power system comes with
significant integration challenges. Power system flexibility in Uzbekistan is relatively high already due to
flexible gas and hydropower plants. Additionally, new sources of flexibility will need to come in after year 2030,
including storage, cross-border trade, and the flexible dispatch of green hydrogen production. Battery storage
needs reach 3 GW by 2035 in the NZ2060 scenario.
Under both scenarios, the government needs to promote more efficient use of natural gas in the power
sector. More efficient gas use requires upgrading the design of gas infrastructure and equipment—from the well
to the power switch—to minimize losses and inefficiencies throughout the supply chain. The decommissioning of
simple cycle power plants and their replacement with combined-cycle gas turbine (CCGT) alone would increase
the efficiency of gas use by 50 to 60 percent. In the NZ2060 scenario, most new gas-fired power generation is
equipped with CCS from 2035 onwards. Gas with CCS continues to play a balancing role in the power system
throughout the 2060 timeframe, alongside hydropower generation and storage. The key uncertainties of the CCS
technology include capture rates (from 80–95 percent), the carbon transit routes (from the main domestic sources
to the storage locations), and high uncertainty of associated costs and efficiencies.22 Under both scenarios,
Uzbekistan should prioritize reducing fugitive emissions (including methane venting and flaring) and technical
losses of electricity (Box 3.1).
BOX 3.1. REDUCING ENERGY-RELATED METHANE EMISSIONS IN UZBEKISTAN’S GAS SECTOR
Rapid and sustained reductions in methane emissions are key to limiting near-term global warming and
improving air quality. Based on the International Energy Agency (IEA) 2023 global methane tracker, methane is
responsible for around 30 percent of the rise in global temperatures since the industrial revolution. The global
warming power of methane is 84 to 87 times larger than that of carbon dioxide. The energy sector accounts
for nearly 40 percent of methane emissions from human activity and has higher abatement potential than
agriculture.
Both energy-related methane emissions and natural gas losses have been declining in Uzbekistan, but they
are still very high compared to other countries. In May 2022, Uzbekistan became one of the 150 signatory
countries of the Global Methane Pledge (GMP) and agreed to take voluntary actions to contribute to a collective
effort to reduce global methane emissions by 30 percent by 2030 (compared to 2020). However, challenges
with implementation are substantial and were made even more difficult by a high degree of uncertainty, as
outlined below. Detailed measurement campaigns and studies are needed to identify strategies, road maps, and
investment needs to reduce energy-related methane emissions and gas losses in Uzbekistan.
22
To achieve decarbonization, further innovation in CCS technology is required to boost carbon capture efficiency from 90 percent to 95 percent and
reach cost levels of $25/ton of CO2 captured. CO2 transportation and injection costs currently vary from $10 to $100/ton internationally, subject to
transport distance and the geophysical characteristics of aquifers.
26
Box 3.1.
Energy-related methane emissions account for about 25 percent of total GHG emissions in Uzbekistan.
Within energy-related methane emissions, fugitive23 methane emissions account for 36 percent, while venting 24
contributes 54 percent and incomplete flaring 25 contributes 5 percent, according to IEA estimates. Incomplete
flaring additionally contributes to CO2 emissions via the combustion of 0.4 to 0.5 billion cubic meters of gas,
adding approximately 1 million tons of CO2 emissions annually in Uzbekistan.26
Investments of US$220 million could abate 150 million tons of CO 2 equivalent according to the geospatial
analysis of methane emissions in Central Asia by the International Finance Corporation (IFC). For the
implementation, Uzbekistan should also develop the capacity to monitor methane emissions and constructively
engage with polluters. At the current price for carbon in Europe, such an abatement would be worth EUR 150
billion.27
Natural gas losses arise from the difference between the volume of gas entering the transmission and
distribution system and the volume sold to end users. Fugitive methane emissions along the gas transmission
and distribution system (due to leaks, for example) count toward technical losses, whereas venting, flaring, and
fugitive emissions during upstream and non-gas-related operations are not included in losses because these
volumes never enter the gas grid. In addition, commercial losses include measurement inconsistencies due to
pressure and temperature differences at the place of entry and consumption, metering issues, and gas theft,
among other issues. IEA statistics put natural gas losses at only 2.4 percent of total consumption, but the IEA’s
in-depth review of Uzbekistan’s energy sector notes that “official information on Uzbekistan’s gas distribution
system losses is restricted and is not publicly available,” so the reported statistics are not reliable.
Low-carbon (blue) hydrogen production is constrained by limited natural gas, but the NZ2060 scenario sees
the development of green hydrogen after 2040. Hydrogen in this scenario represents 2 percent of energy use
in 2050, rising to 8 percent by 2060. Hydrogen use does not become cost-effective before 2060 in the power
sector, but it becomes cost-effective sooner in freight transport for heavy trucks; district heating; industrial fuel
for cement, steel, and chemicals production; feedstock for ammonia production; and direct air capture operations.
Hydrogen becomes cost-effective in district heating because alternative clean technologies like gas with CCS and
biogas/biomass with CCS cannot reduce emissions to zero. Uzbekistan may be able to trade green hydrogen with
neighboring countries and China through gas pipeline infrastructure updated to hydrogen, but access to other
hydrogen markets is limited by high transport costs. The expected cost-effectiveness of electrolyzers, which are
used to produce green hydrogen from electricity, supports the business case for green hydrogen production in
Uzbekistan from both the supply- and demand-side perspective; hydrogen production in Uzbekistan could rely on
domestic solar and wind power and benefit from the domestic demand for hydrogen.
In the NZ2060 scenario, energy efficiency measures and technology advances reduce end-use energy
consumption by 16 percent by 2060. Among other benefits, energy efficiency gains provide an important buffer
against energy bill increases resulting from upcoming tariff reforms, notably for consumers in residential buildings.
Figure 3.5 shows total final consumption by sector in the reference and NZ2060 scenarios.
23
Fugitive emissions refer to the unintended releases of methane into the atmosphere during the production, transmission and distribution of natural
gas and other hydrocarbons (e.g., from faulty seals or leaking valves).
24
Venting means the intentional release of methane into the atmosphere, predominantly during the upstream production process (e.g., for safety
reasons) and – to a lesser extent – from the midstream infrastructure (e.g., to facilitate pipeline inspections).
25
Incomplete flaring contributes to energy-related methane emissions when a portion of the methane intended to be burned is not combusted, and it
thus enters the atmosphere in the form of methane rather than as CO2 and water.
26
Calculated based on World Bank Gas Flaring Data for Uzbekistan, using default assumptions for methane content (80%), flaring efficiency (98%), and
global warming potential (100-year timeframe).
27
According to the forthcoming IFC Methane study in Kazakhstan and Uzbekistan (2023)
27
FIGURE 3.5. END-USE ENERGY CONSUMPTION DROPS BY 16 PERCENT IN THE NZ2060 SCENARIO COMPARED WITH THE
REFERENCE SCENARIO: TOTAL FINAL CONSUMPTION BY SECTOR, 2019–2060

4500.0 4500.0
4000.0 4000.0
3500.0 3500.0
3000.0 3000.0
PJ
PJ
2500.0 2500.0
2000.0 2000.0
1500.0 1500.0
1000.0 1000.0
500.0 500.0
0.0 0.0
2019
2025
2030
2035
2040
2045
2050
2055
2060
2019
2025
2030
2035
2040
2045
2050
2055
2060
Agriculture Energy Industry Agriculture Energy Industry
Power-Auto Transport NE Residential Power-Auto Transport NE Residential
Commercial Industry NE Transport Commercial Industry NE Transport
Industry decarbonizes late, shifting to low-carbon technologies, including

Инерционный electrification,
Сценарий natural
выхода на нулевой балансgas with
CCS, and green hydrogen. In the NZ2060 scenario, emissions in industry climb
сценарий gradually
выбросов to 34 percent of
к 2060 году
end-use
4500.0sector emissions by 2035 and remain above 30 percent 4500.0until 2050, after which the adoption of green
hydrogen
4000.0 and gas with CCS technologies results in a sharp decline
4000.0 to zero by 2060. Industry continues to emit
a small amount of carbon by 2060, mitigated by direct air capture.
3500.0 3500.0 In contrast, in the reference scenario, fossil
fuels continue to dominate in industry. To realize the full impact

3000.0 3000.0of the low-carbon technologies, the NZ2060
2500.0 sees widespread adoption of energy management2500.0
scenario systems (such as ISO 50001), supported by tax
2000.0
breaks and other incentives that boost industrial efficiency, 2000.0
in combination with deployment of more efficient
1500.0pumps, drives, and other key technologies. From 2030
motors, 1500.0
to 2040, an increase in the use of automation
and artificial intelligence applications in the NZ2060 scenario1000.0
1000.0 reduces industrial energy and emissions intensity.
500.0 500.0
Emission limits and minimum energy performance standards for key industrial technologies are additional tools
0.0 0.0
to limit energy demand growth while cutting emissions in the NZ2060 scenario.
2019
2025
2030
2035
2040
2045
2050
2055
2060
2019
2025
2030
2035
2040
2045
2050
2055
2060
Population and GDP growth have caused a steep rise in private vehicle ownerships and truck movements in
Uzbekistan’s transport
Сельское хозяйствоsector, while the
Энергетика railways and public transport
Промышленность have
Сельское not keptЭнергетика
хозяйство up with theПромышленность
connectivity
needs. Passenger-km
Блок ЭС has grown by 75 percent
Как сырье in only 12 years (2010–2022),
Жилые здания Блок ЭС 28
freightКакactivity
сырье hasЖилые
grown by 25
здания
Нежилые здания в транспорте Транспорт Нежилые здания в транспорте Транспорт
percent in Использование
the same period, 28
and the total vehicle fleet has grown by 44
как сырье в промышленности
percent in the last 5 years. As the current
Использование как сырье в промышленности
motorization rate (around 100 vehicles per 1,000 inhabitants) is still well below international comparators, the
vehicle fleet in the country is expected to increase further. As this would ultimately increase the energy needs for
the transport sector, attention should be given to reducing reliance on CNG to fuel the national fleet, considering
the limited availability of natural gas in the country, and a gap between domestic production and peak demand
widening each year.
Increasing motorization associated with an old fleet and lack of attractive public transport are leading to
increase in congestion and air pollution, particularly in Tashkent. Tashkent City accounts for one-fifth of the
total passenger car flow in Uzbekistan, two-thirds of passenger car flow in the Tashkent region, and almost 17
percent of vehicles registered nationally. Rapid growth in the registration of vehicles has driven congestion and
local particulate emission increases. Yandex data highlight the seasonal nature of congestion in Tashkent, with
traffic jams being at their worst in winter months. These are expected to worsen without preemptive action from
28
Statistics Agency Under the President of the Republic of Uzbekistan. 2023. Passenger transportation and passenger turnover by transport type.
https://stat.uz/en/official-statistics/services
28
Tashkent City Hall. Congestion significantly raises transport’s contribution to local particulate emissions through
the idling of engines, fuel-inefficient driving patterns, and the need to drive extended distances to secure parking
space.
Rail has a major role in freight transport in Uzbekistan but has been steadily losing freight modal share to
an increasingly competitive trucking sector, especially on domestic traffic. While rail still holds the majority
of the freight transport market with 55 percent of freight activity in 2022 (ton-km) against 45 percent for roads,29
this has been showing a steady reduction compared to the 71 percent share sustained in 2010.30 The limitations
on last-mile connectivity make rail domestic traffic more exposed to the growing competition from roads, while for
international transport, the rail sector has managed to increase the transported volumes, leveraging its higher
competitiveness over longer distances. The rail sector shall not only consolidate and increase its relevance for
international freight transport (including transit, where rail holds a large majority share31) but also improve the
operational efficiency of the sector to limit the loss in the modal share for domestic transport.
Uzbekistan, a doubly landlocked country, faces high transport costs that restrict its productivity, but it can
integrate more deeply into regional and global value chains by improving logistics services. In the recently
released 2023 international Logistics Performance Index, Uzbekistan’s overall ranking was 88 out of 160
countries. 32 Further improvements to railway efficiency, enhanced cross-border operations, and strategically
located logistics centers can lower transport costs and increase competitiveness in foreign markets,33 especially
in sectors where Uzbekistan’s comparative advantage is not being fully exploited due to transport costs barriers. In
addition to lowering logistics costs and increasing efficiency, this can help consolidating the rail competitiveness
over long hauling distances (for certain commodities) against a more carbon-intensive trucking sector.
As natural gas availability shrinks toward 2060, the transport sector shifts to a reliance on oil and electricity
in the reference scenario and to electricity and hydrogen in the NZ2060 scenario. The transport sector
accounted for 25 percent of end-use sector emissions in 2019 and is expected to account for 32 percent by
2060 in the reference scenario. Along with industry, the transport sector is the last to decarbonize in the NZ2060
scenario. Electrification of transport in the NZ2060 scenario is accompanied by energy efficiency gains of close
to 50 percent arising from dramatically increased vehicle power conversion efficiency compared with internal
combustion engines. The key drivers of transport sector decarbonization in the NZ2060 scenario include rising
fuel efficiency standards and their enforcement, electrification of passenger road and rail transport, a shift to
hydrogen for freight, a shift from individual to public transport, and urban design for walkable cities. In 2019,
the transport consumption mix consisted mainly of natural gas (54 percent) and oil (44 percent). In the NZ2060
scenario, gas use drops to 42 percent by 2035, 20 percent by 2050, and 2 percent by 2060 (Figure 3.6). Grid
electricity rises from 2 percent to 25 percent of consumption by 2040 and 82 percent by 2060. Hydrogen
accounts for 5 percent of transport consumption in 2045, climbing to 16 percent by 2060. Biofuels play an
insignificant role in both scenarios because of lack of land and water for biofuel production in Uzbekistan.
In freight road transport, light duty trucks decarbonize by going largely electric in the NZ2060 scenario,
while heavy duty trucks decarbonize through electrification and hydrogen. In the NZ2060 scenario, light
duty trucks go electric, reaching 250,000 electric light duty trucks by 2040 and over 1.2 million by 2060.
Hydrogen fuel plays a role in freight transport for heavy duty trucks in the NZ2060 scenario, fueling a fleet of
12,000 vehicles in 2045 and growing to 61,000 by 2060, in the final push toward decarbonizing road transport.
Hydrogen accounts for 5 percent of transport consumption in 2045, climbing to 16 percent by 2060. Biofuels
play an insignificant role in both scenarios because of inadequate land and water for biofuel production in
Uzbekistan.
29
Considering only the rail-road split, i.e., excluding pipeline transport.
30
Statistics Agency Under the President of the Republic of Uzbekistan. 2023. Freight transportation and freight turnover by transport type.
https://stat.uz/en/official-statistics/services.
31
Statistics Agency Under the President of the Republic of Uzbekistan. 2023. Socio-economic situation of the Republic of Uzbekistan.
https://stat.uz/en/quarterly-reports/39036-2023-eng-2.
32
World Bank. 2023. Connecting to Compete 2023: Trade Logistics in an Uncertain Global Economy. The Logistics Performance Index and Its Indicators.
33
World Bank. 2020. Uzbekistan: Building Blocks for Integrated Transport and Logistics Development.
29
FIGURE 3.6. OVERALL FUEL USE DECLINES IN THE TRANSPORT SECTOR, AND THE FINAL CONSUMPTION MIX SHIFTS
GREEN IN THE NET ZERO SCENARIO COMPARED WITH THE REFERENCE SCENARIO: TRANSPORT’S TOTAL FINAL
CONSUMPTION BY FUEL, 2019–2060
900,0 900,0
800,0 800,0
700,0 700,0
600,0 600,0
500,0 500,0
400,0 400,0
300,0 300,0
200,0 200,0
100,0 100,0
0,0 0,0
2019 2025 2030 2035 2040 2045 2050 2055 2060 2019 2025 2030 2035 2040 2045 2050 2055 2060
Biofuel Coal Gas Biofuel Coal Gas

Grid Electricity Oil Production Grid Electricity Oil Production Hydrogen
Source: World Bank analysis, preliminary results.
EVs begin to feature Инерционный

in the NZ2060 scenario from 2030 to 2040, with 3.5
Сценарий million
выхода EVsбаланс
на нулевой projected on
900,0 сценарий 900,0 выбросов к 2060 году
Uzbekistan’s roads by 2040. By 2060, EVs reach a little over 9 million in the NZ2060 scenario, making up almost
800,0 800,0
the entire vehicle fleet. Well-designed public transport systems included in the NZ2060 scenario help Uzbekistan
reach higher levels of motorization. Combined with other700,0
700,0 policies to decarbonize the transport sector, this can
600,0
forestall the purchase of more than 3 million new passenger 600,0
vehicles by 2060 in the NZ2060 scenario compared
500,0 500,0
with the reference scenario and reduce electricity demand for transport. In the NZ2060 scenario, the number
of electric buses reaches 60,000 in 2040 and 210,000 400,0
400,0 in 2060, while all rail lines are electrified. In addition,
300,0
urban planning and awareness campaigns in the NZ2060 300,0
scenario support modal shifts to public transport,
walking,
200,0 and cycling, while remote and hybrid work patterns200,0 further reduce transport demand and emissions
pressures.
100,0 Achieving transport sector decarbonization and electrification in line with the NZ2060 scenario will
100,0
require
0,0 a strong focus on EVs and related charging infrastructure
0,0 in the near and medium terms and advanced
2019 2025 2030 2035 2040 2045 2050 2055 2060
(automation) e-mobility solutions and green hydrogen for freight2019
in the2025 2030 2035 2040 2045 2050 2055 2060
longer term.
Биотопливо Уголь Природный газ Биотопливо Уголь Природный газ
The mining sectorизis
Электричество expanding
сети quickly but sustaining its competitiveness
Нефтепродукты will Нефтепродукты
Электричество из сети require reducing emissions
Водород
and pursuing new climate-smart mining opportunities related to green manufacturing and low-carbon
growth. Uzbekistan ranks among the top 30 countries in the world in terms of energy and mineral reserves, including
natural gas (proven reserves for 18 years), oil (reserves for 35 years), gold, copper, uranium, and coal (reserves for
over 200 years). Gold represents about 25 percent of the country’s exports. Furthermore, Uzbekistan has regionally
significant CO2 storage potential. A key question for the next decade is how these natural resources can best be
utilized and maximized for economic growth.
3.3. Costs of the energy transition and investment needs

Significant investments are needed to replace aging energy infrastructure (US$262 billion in the reference
scenario), and even more for mitigation, decarbonization (US$341 billion) (table 3.1). Total investment
needs without decarbonization are estimated to amount to 2.9 percent of GDP per year or 3.8 percent of
GDP per year to reach decarbonization by 2060. These investments encompass all technologies involved in
the energy system value chain including the power and hydrogen sectors, as well end-use sectors: buildings,
industry, and transport (machinery, appliances, conventional and EVs, boilers and heat pumps, building energy
efficiency upgrades, and so on). Such investments will spur economic opportunities in the country and will
require a conducive environment, as well as a mix of public and private funds, with foreign direct investment
(FDI) playing an important role. For the most energy and end-use sectors, the share of private sector investments
is expected be higher than 60 percent, with a high degree of uncertainty as public sector spending can vary
depending on targeted government support programs.
30
TABLE 3.1. INVESTMENT NEEDS BY SECTOR, AND SHARE OF PRIVATE SECTOR INVESTMENTS
Total
Total Total discounted
discounted
discounted Estimated investment
investment
Scenario Sector investment share of private needs
needs
needs sector (%) 2023–2060 (%
2031–2060
2023–2030 of GDP per year)
(US$, billions)
Residential and commercial

8.8 46.8 80–95 3.0
buildings
Reference Power sector 7.3 34.2 60–75 1.6

scenario
Industry 2.7 6.8 90–100 0.5
Transport sector (including
46.4 109.5 90–95 8.4
vehicles)
Residential and commercial
8.9 49.2 80–95 3.1
buildings
NZ2060 Power sector and hydrogen 7.5 98.4 60–75 4.0

scenario
Industry 2.5 6.3 90–100 0.5
Transport sector (including
46.2 122.1 90–95 9.0
vehicles)
Note: Estimated share of private sector is based on international and country specific sub-sector trends (historic and projected).
Power, storage, and transmission investments are significantly higher in the NZ2060 scenario, reflecting
the needs of a much larger and more complex power sector. In both scenarios, most investment goes into
transport (including cost associated with vehicle purchases), followed by commercial and residential buildings
(including the cost of building energy efficiency upgrades), the power sector, storage, and cross-border
infrastructure (Figure 3.7). In the NZ2060 scenario, transport and power sector investments rise, and storage
investments skyrocket to US$16 billion (undiscounted) in 2060. Annualized total investments in the NZ2060
scenario reach US$20 billion (undiscounted) in 2030 and US$106 billion (undiscounted) in 2060. 34 These
investments encompass all technologies involved in the energy system value chain (machinery, appliances,
EVs, heat pumps, building envelops related to energy efficiency investments, and so on). Mobilizing that level of
investment will require a mix of public and private funds, and FDI will be important. The private sector will have
a large role in funding investments in the transport sector, in buildings, in industry, and in the power sector. For
instance, firms and households will purchase EVs, electrolyzers, heat pumps, and building envelopes, and the
government can facilitate and accelerate the transition by introducing incentives (including grants) for scaling
up the adoption of new building envelops, EVs, and heat pumps. Government funding, state enterprises, and
international financial institute financing are expected to play a larger role in transport infrastructure and in
transmission and distribution.
34
Annualization means that investments are spread out over the lifetime of the asset.
31
FIGURE 3.7. ANNUAL INVESTMENT NEEDS (UNDISCOUNTED) IN THE REFERENCE SCENARIO AND THE NZ2060
SCENARIO, BY SECTOR, UNDISCOUNTED VALUES, 2019–2060
120,0 120,0
100,0 100,0
billion US$ 2015/yr
billion US$ 2015/yr

80,0 80,0
60,0 60,0
40,0 40,0
20,0 20,0
0,0 0,0
2019 2025 2030 2035 2040 2045 2050 2055 2060 2019 2025 2030 2035 2040 2045 2050 2055 2060
Commercial buildings Energy Transmission Commercial buildings Energy Direct Air Cap
Industry Power Utilities for new renewable Industry Hydrogen Trade
Residential buildings Storage energy Residential buildings Storage Transmission
Trade Transport Transport Power Utilities for new renewable
energy

Note: Transmission investments include only the transmission necessary to connect new renewable energy. The analysis excludes the
update and extension of electricity and gas transmission and distribution networks thatСценарий
Инерционный are expected in на
выхода both scenarios.
нулевой баланс
сценарий выбросов к 2060 году
120,0 120,0
Decarbonization
100,0
will bring substantial benefits across the
100,0
infrastructure sector compared to the reference
Млрд дол США 2015/год
Млрд дол США 2015/год
scenario. The CCDR has estimated such benefits at over US$178 billion over 2023 to 2060 (including about
80,0 80,0
US$112 billion of avoided economic cost of pollution; accidents and damage in the residential, power, industry
and transport sectors; and US$66 billion of avoided fossil fuel imports). Table 3.2 summarizes the results of the
60,0 60,0
analysis.
40,0 40,0
20,03.2. DECARBONIZATION’S INVESTMENT NEEDS AND ECONOMIC

TABLE 20,0 BENEFITS
0,0 0,0
2019 2025 2030 2035 2040 2045 2050 2055 2060 2019 2025 2030 Present Value
2035 2040 Present
2045 2050 2055 Value
2060
Sector 2023–2030 2031–2060
Коммерческие здания Энергетика Передача в сеть Коммерческие здания Энергетика УХУ
Промышленность Хранение новых ВИЭ Промышленность
(US$, billions)
Водород
(US$, billions)
Торговля
Жилые здания Транспорт Распределение Жилые здания Хранение Передача в
электроэнергии сеть новых ВИЭ
Торговля Residential and commercialТранспорт
buildings −0.1
Распределение −2.8
электроэнергии
Decarbonization's additional
investment needs in comparison Power, heat, and hydrogen sectors −0.3 −63.4
with the Reference scenario
(Reference case investments minus Industry 0.2 0.3
NZ2060 investments)
Transport sector (including vehicles) 0.2 −13.1
Residential 4.1
Decarbonization's benefits - Power 22.0

avoided economic cost of pollution,
accidents, and damage per sector Industry 11.6
in comparison with the Reference
scenario Transport including air pollution,
reduced traffic accidents, and 74.4
reduced road damage
Decarbonization’s benefit - avoided fossil fuel imports 66.6
32
3.4. Enabling environment for the transition of the energy value chain
As Uzbekistan decarbonizes its economy and energy sector, enabling measures will be critical to successful
transition. While some key enabling measures across fuels and sectors have already been mentioned, this
section examines select measures in more detail for end-use sectors (buildings, industry, and transport) and the
power sector and identifies necessary governance reforms.
Policy leadership, in the form of strategic direction and concrete milestones, is the foundation for a suite
of enabling measures for a transition to net zero emissions. The GoU has already made substantial progress
(see chapter 2), but it could go further in adopting a net zero target for the power sector by 2050. Current targets
could also be consolidated into an overarching net zero action plan.
Energy sector reforms to improve governance and spur competition are a critical enabling component for
achieving net zero. The government has already initiated reforms to move toward a market-based model for
energy sector management and operation. It has established a new agency for public-private partnerships and has
unbundled vertically integrated utilities. Still needed are regulations for a wholesale energy market, establishment
of an independent energy regulator, and commercialization of the National Electric Grid of Uzbekistan (NEGU).
Reducing the country’s dependency on natural gas will require implementation of a series of short to medium
term actions, which will help mitigate winter shortages. The emergency response protocol currently under
development by the government prepares the country for the possible upcoming winter crises and also supports
the long-term decarbonization effort by preparing the gas and electricity system stakeholders (including relevant
agencies, ministries, and system operators) for the higher variability of supply, in terms of both gas availability and
variability of solar and wind generation while also tapping into new demand side flexibility opportunities.
Additional measures, such as ensuring that transmission system operators and distribution system
operators are incentivized/remunerated to support distributed renewable energy sources can help level the
playing field in the sector while moving toward a fully functioning energy market that is ready for net zero.
In addition to tariff and subsidy reforms, the government can use temporary tax breaks to incentivize industries
to deploy energy-saving technologies. Getting Uzbekistan’s industries ready for net zero will also require review
of building codes, and targeted incentives to increase the uptake of CCS and green hydrogen, particularly during
2050–2060.
Accelerating the scaling up of renewable energy will play an essential role in the power sector, but more
broadly technologies and fuels will need concentrated attention across the energy system to enable
decarbonization. Declining domestic gas production can result in more electrification and together with a ban on
new coal power development can drive the system toward lower emission in the short term. In the medium- and
long-term, increased domestic gas storage would drive further efficiency in the use of gas resources. Setting a
specific target for battery energy storage system by 2030/2035 would be appropriate, particularly if accompanied
by a requirement for all gas power stations to adopt CCS. There are also possibilities to use geothermal resources
for district heating and cooling, especially in the Fergana Valley (Namangan region: potential of 42,600 tons35 of
coal equivalent [tce]) and the Bukhara region (81,200 tce).
Targeted incentives will also be crucial in the transport sector, particularly for shifting from internal
combustion engines to EVs. In the short term to 2030, consumers will need incentives to adopt EVs and
retrofit older vehicles, as appropriate. Making the EV market self-sustaining by 2060 will also require substantial
incentives during 2030–2050. Incentives for using green hydrogen in freight will be an important part of this
policy mix. In agriculture, technology-specific incentives can offset some of the projected emission increases
by enabling farmers to procure on-site renewable energy sources, pumps, irrigation technologies, and other
equipment at reduced costs.
35
According to IFC analysis by BeicipFranlab, Scaling Geothermal – Phase 1, Analytical Report, April 2023
33
Standards, notably for fuel economy, are fundamental in the transport sector. In addition to standards, targets
for electrification of road and rail transport are important for sending the right market signal to manufacturers,
investors, and consumers on the transition to EVs.
In the buildings sector, minimum energy performance standards for all types of energy-using equipment can
deliver significant efficiency gains while supporting energy security objectives. Standards are particularly
effective if accompanied by annual building renovation/retrofit targets, robust codes for new buildings, and
targeted phase-outs of fossil fuel technologies. Minimum performance standards can also improve energy and
carbon efficiency in industry.
The buildings sector is a particular focus of financing and investments, with urgent action required to avoid
locking in high-carbon and energy intensities in the built environment. Implementing policies and regulations
for low-carbon housing and enforcing minimum energy performance standards in building codes would enable
scaling up construction of low-carbon housing and settlements. In addition to dedicated funding to support
building retrofits, investments in Uzbekistan’s district heating systems could make it easier to shift from the
heavy reliance on gas, especially in residential buildings. Bulk procurement of efficient technologies could be
rolled out in the near term to improve efficiency and reduce emissions in buildings and industry. At a later stage,
green hydrogen and CCS could receive dedicated investments to support late-stage decarbonization in industry,
as outlined in the modeling for this report.
A range of technologies would need to be deployed across building types to drive down emissions and
avoid locking in inefficient systems. In residential buildings up to 2030, key technologies to focus on are
district heating, insulation, LEDs, heat pumps (see box 3.2), smart meters, and on-site solar. In commercial and
public buildings, controls, automation, and analytics are readily available and affordable. Medium- and longer-
term focus areas include EV charging and renewable energy technologies, particularly in new construction.
Residential buildings could also be enabled with such technologies. Energy consumers can become ‘prosumers’
by becoming energy producers with generators of on-site renewables and aggregators of providing demand
response and storage services.
BOX 3.2. THE HEAT PUMP OPPORTUNITY
Heat pumps are a critical and mature BOX FIGURE 3.2. ESTIMATED NUMBER OF HEAT PUMPS IN THE
decarbonization technology whose RESIDENTIAL SECTOR, 2019–2060
uptake is expected to pick up in
Uzbekistan and globally. In all scenarios in 12
Uzbekistan, heat pumps reach over 6 million
units serving 6 million dwellings by 2060. 10
The uptake of heat pumps is much steeper
8
in a green growth pathway, reaching around
Million
2 million in 2030 and over 3 million in 2035. 6

With the shift to heat pumps in the NZ2060
scenario, 82 percent of residential heat 4
output is provided by heat pumps in 2060
2
as opposed to 59 percent in the reference
scenario. These scenarios assume a ban 0
on new gas/coal boiler buildings from 2019 2030 2035 2060
2035 onward. This policy is already being
Reference NZ60 NZ50 NZ60 Delayed
deployed in several EU countries, including
France and Germany, and in the United
Kingdom, effective from 2023 to 2025. Source: KINESYS-based World Bank Energy System Model.
12
10
8
Миллион
4 34
2
0
2019 2030 2035 2060
Pumping water for irrigation consumes 15–20 percent of the electricity used in Uzbekistan, which is
equivalent to more than 3 million tons of CO2 emissions every year or about 2–3 percent of the country’s
total emissions. Water-use inefficiencies directly contribute to the high carbon footprint of irrigation services,
as more energy is spent to channel water through the system to compensate for high water losses. Conveyance
losses are large because of aging irrigation infrastructure, with some systems reporting water-loss rates of as
much as 60 percent.
The Ministry of Water Resources plans to reduce energy consumption at 1,687 state-owned pumped-
irrigation systems from 8.2 billion kilowatt hours (kWh) to 6 billion kWh in 2030. This will require major
investments in upgrading equipment and modernizing36 irrigation systems to improve water-use efficiency and
energy efficiency. This will entail establishing a real-time automated monitoring and control system for electricity
consumption at pumping stations and developing alternative energy sources. In addition to the 5,000 pumps
operated by the 1,687 state-owned pumping stations, there are 9.4 million pumping units on farms or managed
by special service organizations (former water user associations). These stand to benefit from conversions to
solar pumping and the shift to gravity-fed irrigation where feasible.
3.5. Decarbonizing agriculture through climate-smart livestock

is also vital
Controlling GHG emissions in agriculture, particularly in the livestock sector, is essential to meet
mitigation targets. The livestock sector is a fast-growing emitter in Uzbekistan. From 1990 to 2017, livestock
emissions grew by over 160 percent and accounted for two-thirds of total agricultural emissions (57.8 percent
from enteric methane plus 9.2 percent from manure management). Detailed assessments caried out for this
report using local data and applying the Intergovernmental Panel on Climate Change Tier2 method estimated
the livestock sector’s GHG emissions at 45.7 million tons CO 2 equivalent. 37 Ruminant species are the major
source of emissions, with cattle accounting for 81.4 percent of emissions and sheep for 16.7 percent. Most
of the livestock (85–95 percent of animals) is owned by dehkan farms, which are therefore the source of most
emissions in the livestock sector.
Scenario modeling to estimate livestock GHG emissions by 2030 considered GHG mitigation practices,
including genetic improvement, health improvement, control of herd growth, and replacement of some
ruminant production by poultry. Under the business-as-usual scenario, livestock production growth is achieved
mostly through increased herd expansion, which drives GHG emissions in 2030 up 54 percent over the 2022
reference year. In a productivity scenario, one-third of dehkan farms grow and achieve large productivity gains
supported by genetic improvement, herd management, and animal health programs. Relative to the business-
as-usual scenario, the productivity scenario produces more animal protein (25.7 percent more) and reduces
emission intensity slightly (6.6 percent lower) but raises absolute emissions (17.4 percent). To achieve similar
protein production as in the business-as-usual scenario (4.1 percent gain) and reduce absolute emissions (6.2
percent lower), the productivity and herd control scenario combines productivity gains with control of herd growth
(20 percent fewer ruminants than in business as usual). Additional mitigation effects could be achieved in the
productivity, herd control, and protein shift scenario by increasing poultry production (by 30 percent) and replacing
part of current ruminant consumption (moving from about 8 percent to 25 percent of the meat protein consumed).
Figure 3.8 summarizes the results for each scenario.
36
The Food and Agriculture Organization of the United Nations defines irrigation modernization as “technical and managerial upgrading (as opposed
to mere rehabilitation such as canal lining and switching to alternative irrigation technology) of irrigation schemes with the objective to improve
resources utilization (labor, water, economics, environmental) and water service for farmers” (FAO 2018, p. 59).
37
This Figure includes both direct (enteric fermentation and manure management) and indirect emissions (mostly related to feed production and energy
consumption) from ruminants and chicken.
35
FIGURE 3.8. RESULTS OF MODELLED SCENARIOS TO DECARBONIZE UZBEKISTAN’S LIVESTOCK SECTOR, 2010–2030
Meat protein mix in 2022 reference

Protein production GHG emissions
80 Sheep&Goat
27,3% Total Per capita Total Emission
Intensity
70 Beef
Chicken 64,6% Gg g/capita/ Mt kg CO2-
GHG emissions
2012 results for enteric methane 8,1% day CO2-eq eq/kg prot.
(Mt CO2 eq)
60 only (in Gg CH4) Reference 575.2 44.4 45.7 79.4

3rd national communications: 573 In % difference compared to Reference
this assessment: 603 Sheep&Goat 58.9 37.1 53.9 -3.1
50 17%
BAU
Productivity 99.8 72.4 80.7 -9.6
Productivity & herd control 65.4 42.8 44.3 -12.8
40 Meat protein mix in 2030, Beef
stable emissions objective: 45,4% Productivity, herd control 68.6 45.6 40.2 -16.8
Chicken & protein shift
30 37,6% Stable emissions objective 31.9 13.9 -0.9 -24.9
2010 2015 2020 2025 2030

Note: The ‘Stable emissions objective’ scenario does not consider year-to-year changes; the curve is based on an interpolation of 2022,
2026, and 2030 data points.
Структура источников мясного белка в 2022 году Пр-во белка Выбросы ПГ
80 Интенсив.
Итого На душу Итого
Stabilizing livestock GHG emissions could be possible while maintaining per capita protein production
Овцы и козы but
выбросов населения
Выбросы парниковых газов
27,3%
would70 require significant reductions in ruminant Говядина
population and changes in meat consumption Gg
patterns.
г на душу Млн тонн Тонн
An
(млн тонн CO2 в экв.)
64,6% населения CO -экв CO -экв./кг

Курятина 2 2
в день белка
additional scenario
результаты за 2012was explored
год только
60 для интестинального метана (в Gg CH4)
with
8,1% the objective of stabilizing livestock sector’s emissions in 2030 compared
Сценарии 575.2 44.4 45.7 79.4
to the 2022 reference
3-е национальное year 573
сообщение: while slightly increasing the domestic production of animal Вproteins
% разница по(44.4
сравнениюg per capita
с Инерционным
50 данная оценка: 603 Овцы и козы Без изменений 58.9 37.1 53.9 -3.1
per day in 2022 according to this assessment) to maintain the current 17%
meat protein99.8consumption
Продуктивность 72.4 80.7 level -9.6(46.0
Продуктивность и 65.4 42.8 44.3 -12.8
g per40capita per day in 2022 according to Food
Структура источников and Agriculture
мясного Говядина
Organization
ограничение поголовьяCorporate
Продуктивность,
Statistical Database
белка к 2030 году, цель 68.6 45.6 40.2 -16.8
[FAOSTAT]),
30
without relying on imports. In this
стабилизации ‘Emission
выбросов: Курятина stabilization’
45,4%
scenario, the same types of interventions
ограничение поголовья
и смена белка
37,6% Цель стабилизации выбросов 31.9 13.9 -0.9 -24.9
as in the ‘Productivity, herd control, and protein shift’ scenarios were considered but with a higher adoption rate,
2010 2015 2020 2025 2030
impact, and pace. Productivity gains and levelling of the ruminant herd growth were assumed to be progressively
implemented by 2026. Between 2026 and 2030, the ruminant herd is further controlled to reduce not only its
growth rate but its actual size. Because of the important productivity gains and growth of poultry production,
the production of meat protein reaches 50.5 g per capita per day in 2026, a value higher than the 2022 protein
consumption but lower than a 2030 (56.2 g per capita per day) estimate obtained from linear project of the
2010–2022 trend. This exploratory scenario indicates that stabilizing emissions by 2030 while growing the
domestic production to sustain the current level of per capita meat protein consumption could be technically
feasible but would require a significant transformation of the sector, downsizing the ruminant population by 23
percent between 2022 and 2030 and increasing the share of poultry meat consumption from about 8 percent of
meat intake in 2022 to one-third by 2030.
Productivity gains are within reach if the government accelerates efforts to increase livestock productivity
through animal health, management, and breeding programs. Translating efficiency gains into significant
climate benefits requires additional measures to control growth of the livestock sector. This could include
introducing improvements in genetics and herd management and focusing on herd replacement rather than
expansion. For example, livestock production could be reoriented toward species with lower emissions, such as
poultry, and public support for higher pedigree animal imports could be conditioned on the culling of low pedigree
animals. In the “emission stabilization” scenario, the economic and equity effects of reducing the ruminant herd
by about a quarter should be closely assessed and monitored. Getting people to eat chicken instead of beef, for
example, would require behavioral change. Communication campaigns could be rolled out to promote chicken
dishes, highlighting chicken’s nutritional value and emphasizing food safety measures (such as improvements
in the cold chain and avoidance of antibiotics and hormones in poultry food). In addition to a reduction of GHG
emission, such dietary change is likely to result in healthier diets given the relatively lower content in saturated
fatty acid of chicken meat.
The mitigation approaches modeled in this initial work are conservative. An important mitigation pathway that
was not considered in this assessment is the improvement of animal feed, due to the water scarcity constraint
on fodder production. Other options to improve feed quality may exist, however, and should be investigated.
Similarly, grassland restoration for soil carbon sequestration, although also limited by declining rainfall and
rising temperatures, could create mitigation-adaptation synergies that were not considered because of a lack of
information.
36
Chapter 4
Policies and investments to
promote adaptation to climate
change, boost climate resilience
in water resources, agriculture
and forest landscapes and
reduce degradation
Women working in a greenhouse in Uzbekistan.

This chapter analyzes the impact of climate change on water, agriculture and pastures, and forests;
estimates the investments needed for adaptation; and prioritizes opportunities for adaptation to reverse
land degradation. The investment cost to restore degraded land in opportunity hotspots is lower than the cost of
inaction (economic losses from land degradation). Further analysis reveals that the benefits of climate adaptation
measures are far greater than often assumed, expressed through a “triple dividend” of high induced economic
development benefits, additional environmental benefits, and the benefits of protection against losses from
natural hazards. The impact of climate change on the natural capital of Uzbekistan affects the potential for
economic growth and the livelihoods of a large share of the vulnerable population.
4.1 Improving water management practices to reduce water

stress and scarcity
Already limited water resources are projected to decline in Uzbekistan. By 2050, water resources are
projected to decline in Syr Darya (by 5 percent) and Amu Darya (by 15 percent) as the glaciers feeding the two
rivers recede, even in the 2°C warming scenario. Forecasts project that a 2°C increase would shrink glacier
cover by half and a 4°C increase would shrink it by more than three-quarters. For some catchments, estimates
project an even steeper decline of 30–40 percent in water availability by 2050.
At the same time, water demand for competing uses within and outside Uzbekistan will increase with
economic development, adding to water resource stress. Water demand for irrigation could increase by 5
percent by 2030 and by 7–10 percent by 2050 under median projections, and by as much as 25 percent by the
2040s during summer months under a high-emissions scenario.38 Water shortages will rise to 7 billion cubic
meters a year by 2030 and 15 billion cubic meters by 2050. In the near term, climate change is also projected to
shift the intra-year timing of peak flows from summer to spring and increase inter-year volatility in water availability.
Uzbekistan’s irrigation and drainage system is the backbone of the country’s agriculture and food
production. Nearly all (95 percent) crop production is dependent on the country’s extensive irrigation and
drainage network, which is the largest in Central Asia. Irrigated agriculture contributes more than 25 percent to
GDP and employment and accounts for 90 percent of water use in the country (Figure 4.1).
FIGURE 4.1. DISTRIBUTION OF IRRIGATED AGRICULTURAL AREAS AND IRRIGATED WATER USE, BY OBLAST
Irrigated agricultural areas, 2020 Irrigated water use, 2016–2020
Oblasts 300,0 2016 2017 2018 2019 2020

Irrigated agricultural
areas, year 2020
250,0
(million cubic meters)
Irrigation Water Use
200,0
150,0
100,0
50,0
0,0
Andijon
Bukhoro
Ferghana
Karakalpakstan
Kashkadarya
Jizzakh
Khorezm
Namangan
Navoi
Samarkand
Sirdaryo
Surkhandarya
Tashkent
UZBEKISTAN
Source: World Bank analysis based on remote sensing data.

Орошаемые сельскохозяйственные площади, 2020 Использование воды для орошения, 2016–2020
Agriculture’s extreme reliance onОбласти

irrigation exposes 300,0the economy to risks
2017 of 2018
large losses from
2020 droughts
Использование оросительной
2016 2019
and water shortages, calling for сельскохозяйственные
increased water-use efficiency in irrigation. By 2050, agricultural yields
Орошаемые
воды (млн кубометров)
площади, 2020
250,0
are projected to shrink by 10 percent without extensive
Каракалпакстан
200,0 interventions to improve water-use efficiency or to
150,0
Навои 100,0
Ташкент Наманган
38
USAID 2018.
Хорезм Андижан 50,0
Сырдарья Фергана
Джиззак
Бухара
0,0
Джиззак
Андижан
Бухара
Фергана
Кашкадарья
Хорезм
Наманган
Навои
Самарканд
Сырдарья
Сурхандарья
Ташкент
УЗБЕКИСТАН
Самарканд
Сурхандарья 38
increase by up to 62 percent with measures to modernize irrigation infrastructure and adopt more efficient water
management practices. The productivity of irrigation water varies across the country (Figure 4.2), but current
irrigation efficiency is low, at about 40 percent. Although 4.3 million hectares of land are equipped for irrigation,
only 2.6 million hectares were irrigated in 2019. Multiple factors may prevent the use of irrigation and drainage
infrastructure, including infrastructure damage, electricity shortages, and salinization of soils, which can lead to
the abandonment of agricultural lands), and lack of water availability due to competing uses (such as for urban
and industrial centers). Uzbekistan’s investment in irrigation and drainage is lower than in neighboring countries;
for example, Kazakhstan’s average CAPEX over 2015–2019 was four times greater than Uzbekistan’s.
FIGURE 4.2. IRRIGATION WATER PRODUCTIVITY BY OBLAST, 2020
Irrigation water productivity, 2020 Irrigation efficiency, 2016–2020
IWP, Year 2020 [kg/m3]

0.15 - 0.2 80,0% 2016 2017 2018 2019 2020
0.2 - 0.25
0.25 - 0.3 70,0%
Irrigation Efficiency
0.3 - 0.35
Karakalpakstan
0.35 - 0.4
0.4 - 0.45
60,0%
0.45 - 0.5
0.5 - 0.55
50,0%
0.55 - 0.59
40,0%
0 100 200 km 30,0%
Khorezm
Navoi 20,0%
10,0%
Tashkent
Namangan 0,0% Andijon
Bukhoro
Ferghana
Karakalpakstan
Kashkadarya
Samarkand
Sirdaryo
Surkhandarya
Tashkent
Jizzakh
Khorezm
Namangan
Navoi
UZBEKISTAN
Bukhoro Jizzakh Sirdaryo Andijon
Ferghana
Samarkand
Kashkadarya
Surkhandarya
Source: World Bank analysis of irrigation performance based on remote sensing.
Производительность оросительной воды (ПОВ), 2020 Эффективность орошения, 2016–2020

Adapting to climate-related water risks will require large investments to modernize irrigation and drainage.
Aging irrigation and drainage infrastructure puts stress on both surface water and groundwater resources, as
ПОВ, 2020 г. (кг/м3)
80,0% 2016 2017 2018 2019 2020
well as on land resources. Poor water management and inadequate drainage are major contributors to land
0.15 - 0.2
Эффективность орошения
0.2 - 0.25
70,0% 0.25 - 0.3
degradation, lowering yields and land productivity.60,0% Half of Uzbekistan’s area equipped for irrigation suffers
0.3 - 0.35
0.35 - 0.4
Каракалпакстан 0.4 - 0.45
50,0%
from soil salinization resulting from human and natural causes, well above Asian averages. More than 500,000
0.45 - 0.5
0.5 - 0.55
40,0% 0.55 - 0.59
ha of land is already water-logged and salinized 30,0% due to poor irrigation practices and inadequate drainage
0 100 200 km
systems. In a moderate spending scenario with the 20,0%

Хорезм
Навои objectives of avoiding further deterioration of irrigation and
10,0%
drainage infrastructure and promoting modernization, total investment needs are projected at about US$6
0,0% Ташкент
billion through 2030. 39 An additional US$1.5 billion in on-farm investments would be needed for improved
Наманган
Джиззак
Андижан
Бухара
Фергана
Хорезм
Наманган
Навои
Самарканд
Сырдарья
Ташкент
УЗБЕКИСТАН
Бухара Джиззак Андижан
Сырдарья Фергана
water management practices to increase water-use efficiency, bringing baseline investment costs to US$7.5
Самарканд
billion. An estimated additional US$1.2 billion would be needed to improve water-use efficiency to adapt to
climate impacts,40 bringing the total capital costs of full modernization of the irrigation system through 2030
to US$8.7 billion.
Improvements in water management practices and monitoring systems will also be crucial for dealing with
water shortage risks. Improved management practices include monitoring the water footprint of crops such as
wheat and cotton across regions to promote production with optimal water efficiency. Increasing the productivity
of water will require water metering and deployment of water-efficient technologies such as drip irrigation.
Digitalization and water accounting systems at all scales will allow for monitoring water use and receiving dynamic
feedback for adaptation of irrigation and drainage systems.
39
Based on an estimated unit cost of US$1,400 per ha and an area equipped for irrigation of 4.3 million ha. Identification of the area equipped for
irrigation comes from Uzbekistan’s Water Sector Development Concept 2020–2030, while unit cost per hectare comes from Izvorski et al. (2019).
40
Adaptation cost, based on estimated additional water-use efficiency investments required in developing countries under high-impact climate change
scenario, come from Rosegrant et al. (2017, table K-2). The additional annual investment of US$170 million needed for adaptation is 0.25 percent of
2021 Uzbek GDP and aligns with the upper range of investment estimates proposed by Rozenberg and Fay (2019).
39
Dams and reservoir storage are important for increasing resilience to droughts and floods. Uzbekistan has
55 reservoirs, with a total volume of about 20.0 billion cubic meters, that need investments to address dam
safety and sedimentation. Optimizing cascades and the operation of existing and future hydropower reservoirs
can help secure energy production and water for irrigation while protecting against flooding. Furthermore, the
region around the Aral Sea basin has immense potential for development of water storage and hydropower
infrastructure, which would benefit all countries in the region through increased energy production and better
control of seasonal water availability. However, transboundary allocation issues and poor regional cooperation
have made it challenging to coordinate the planning and operations of such infrastructure, while the unplanned
and regionally uncoordinated development of infrastructure in upstream regions amplifies the risks of water
shortages for downstream regions.
4.2 Realizing the ‘triple dividend’ through adaptation investments in the

water and agriculture sectors and landscape and forest management
Climate impacts could reverse the progress in poverty reduction and worsen food insecurity as changes in
the seasonal distribution of temperature and precipitation increase uncertainty for agricultural production.
Agricultural productivity is expected to fall as temperatures rise and large swaths of land shift from cold arid and
cold steppe to hot arid and hot steppe status and as water availability for irrigation declines. Rural populations
are likely to be the worst affected because of their high dependence on agriculture, lower ability to adapt, and
high share of income spent on food (50 percent on average).
Investments, policies, and technologies in water management and use in agriculture and in land
restoration are climate-smart options for Uzbekistan that can deliver the triple dividend of avoided losses
(first dividend), induced economic and development benefits (second dividend), and additional social and
environmental benefits (third dividend). Adopting climate-smart agriculture requires a clear road map and an
integrated process for aligning agricultural policies with climate change impacts and identifying and prioritizing
needed investments.
Investment must increase to realize a triple dividend. A growing array of practices show that it is possible to
simultaneously deliver higher agricultural productivity, greater climate resilience, and lower emissions. 41
Efforts have often focused on these aspects independently. However, a focus on increasing synergies for multiple
outcomes advances food security even in the pessimistic climate change scenarios, while enabling agriculture
to become part of the solution for tackling climate change. The triple dividend of resilience approach accounts
for and quantifies the full economic, environmental, and social benefits of climate change adaptation actions,
grouping them along the three dividends.42 The second and third dividends are especially important since they
accrue regardless of whether projected negative climate outcomes materialize.
Climate adaptation measures have strong economic and development benefits in Uzbekistan, making the
investments worthwhile even without considering climate risks. A triple-dividend-of-resilience analysis of water
resources, agriculture, and land restoration out to 2040 reveals a high net present value of adaptation investments
of more than US$9 billion (a benefit-cost ratio or BCR of 2.6). The analysis includes the benefits of avoided losses
from negative impacts on crop yields revealed in the computable general equilibrium (CGE) model (first dividend),
projected increases in crop production and water savings (second dividend), and GHG emissions reductions due to
energy savings in the water sector (third dividend) with a value based on the World Bank’s shadow cost of carbon.
Further benefits, while assumed to be large, were not included in the analysis due to data gaps.43
41
Important among these are silvopastoral livestock systems, agroforestry, intercropping, diversification of production systems toward less water-
and emission-intensive crops, improved pasture management, better fertilizer use, minimum tillage, alternative wetting and drying of rice, biogas
production from agricultural waste products/livestock manure, less food loss and waste, and greater irrigation and drainage efficiency, including
lowering GHG emissions by reducing energy consumption of pumping station.
42
Heubaum et al. 2022.
43
A sectoral triple dividend analysis can raise awareness of the full benefits of adaptation, improve impact evaluation, and support investment decision-
making. Also important, it can enable better distinguishing between public and private benefits as a basis for designing blended finance approaches. To
facilitate such analysis, the quantified benefits included in Figure 4.4 focus on water resources, agriculture, and land restoration. Similar assessments
can be undertaken for other sectors, for example road transport, but require data to be available on costs and benefits across all three dividends
40
High second and third dividend benefits drive a forceful economic and financial case for investment. Avoided-
loss benefits only about break even with the cost of adaptation interventions over the period to 2040 (Figure
4.3), while large induced economic benefits exceed costs by roughly 50 percent (a BCR of 1.5). In the later
period (2041–2050), avoided-loss benefits grow significantly due to greater climate impacts on crop yields. This
increase in avoided-loss benefits raises the overall BCR for the 10-year period to 3, meaning that the benefits of
adaptation interventions over this period are three times greater than the costs, at a net present value of roughly
US$10.4 billion.
Continuing to reform agricultural policies and FIGURE 4.3. CLIMATE ADAPTATION INVESTMENTS IN
avoiding policy reversals are preconditions for UZBEKISTAN HAVE A HIGH TRIPLE DIVIDEND, 2021–2040 AND
adopting climate-smart agriculture practices 2041–2050
at scale. Major progress has been achieved Benefit to cost ratio of investments in water resources,
since 2018 in reforming wheat and cotton 3,5 agriculture, and land restroration
production, which account for 70 percent of 3
irrigated planted area, 70 percent of irrigation 2,5
water, and 80 percent of public expenditure on 2
agriculture. Notably, wheat and flour prices have 1,5
been liberalized, production targets eliminated, 1
and the share of wheat sold by farmers through 0,5
state procurement mechanisms greatly reduced. 0
In cotton production, forced labor and child labor 2021-2040 2041-2050
First dividend Second dividend Third dividend
have been eliminated, enabling Uzbekistan to
sell cotton yarn freely on high-value markets;
production targets have been eliminated;
Note: First dividend is avoided losses from climate change (negative
and the share of cotton sold through the impactsСоотношение on crop yields выгод и затрат
drawn от инвестиций
from the CGE model), в водные
second ресурсы,
dividend is
state procurement system has been reduced. induced economicсельское and хозяйствоbenefits
development и мелиорацию земель
(increases in crop production
3,5
Increasing farmers’ income from wheat and and 3
water saving benefits), and third dividend is environmental benefits
cotton production is a precondition for broader (GHG 2,5
emission reductions).
adoption of climate-smart agriculture practices, 2
which require heavy investments by farmers (such as1,5 planting orchards and purchasing high-quality seeds and water-
efficient equipment). In livestock production, transitioning
1 to climate-smart farming requires more and better-quality
feedstock. Major next steps on the policy reform agenda0,5 are improvements in land tenure security and elimination
of the crop placement system, which prevents farmers0from making planting decisions based on market opportunity.
2021-2040 2041-2050
Adapting agriculture to adverse climate impacts will also require greater investment
Первый дивиденд in public
Второй дивиденд goods,
Третий including
дивиденд
agricultural knowledge and innovation. The government has been redirecting some public expenditures in line
with its agriculture strategy. Since 2019, it has allocated more investments to support farmers through better
access to finance and matching investment grants and to general support services such as agricultural knowledge
and innovation systems, which have demonstrated an ability to generate good economic returns worldwide.
While the composition of Uzbekistan’s public spending on agriculture is improving, it needs to shift even more
from farm support that stimulates production and input use to support that facilitates on-farm investments and
increases general support services. Enhancing national capacity in rural advisory, agricultural extension, input,
and credit service delivery systems will encourage and incentivize the private sector to provide these services and
to manufacture needed equipment.
At the same time, investments in restoring degraded lands and forests are essential to climate change
adaptation and mitigation (box 4.1). Measures to restore lands involve stabilizing soils and mitigating sand
and dust storms in the cold desert area and the Aral Sea area, including afforestation of exposed dry seabed
and upstream areas of the Aral Sea, protecting river banks and water flow; restoring tugai forests along the main
rivers, establishing and restoring shelterbelts to protect agricultural soils, reducing erosion and preventing further
land degradation, and conserving and sustainably developing the country’s unique mountain forests.
41
BOX 4.1. CLIMATE ADAPTATION THROUGH RESTORATION OF DEGRADED LANDS AND FORESTS
Geographic and climate factors limit Uzbekistan’s forest coverage. Its estimated 3.9 million ha of forested
land covers just 8.7 percent of the country’s land area. The largest forest areas (estimated at more than 3 million
hectares) are in cold desert areas and consist mainly of saxaul forests, which have the characteristics of woodlands
rather than forests. Submontane and mountain forests account for more than 300,000 ha of total forested area and
include broadleaf trees (for example, pistachio and walnuts) and juniper trees (locally known as archa). In addition,
there are around 95,000 ha of riparian forests (tugai forests) distributed in patches along the larger river belts of
the country. Although limited in land cover, forests in Uzbekistan are important for preventing desertification and
supporting healthy landscapes.
Large areas of forest and woodlands suffer from degradation. Overgrazing, which can make tree regeneration
next to impossible, is a major cause of forest degradation. Local forest enterprises under the State Committee on
Forestry (leskhozes) generate much of their revenue from grazing leases. Unsustainable agricultural practices, poor
management of irrigation, and the degradation of shelterbelts and riparian strips also contribute to land degradation.
Forests sequester carbon and increase the resilience and reduce the vulnerability of people and ecosystems
to the effects of climate change while also likely to being harmed by climate change. Even small changes in
temperature and precipitation could greatly affect future forest growth and survival in Uzbekistan.
4.3 Reducing climate change and land degradation risks through

integrated landscape restoration
Over the last 20 years, productivity has FIGURE 4.4. LAND DEGRADATION HOTSPOTS: COMPOSITE MAP OF
declined continuously on one-third of RISK FROM CLIMATE CHANGE, LAND DEGRADATION, AND POPULATION
PRESSURES, BY DISTRICT IN UZBEKISTAN BY 2041–2050
agricultural land. Given the extent of
land degradation in Uzbekistan and the Cities Aggregated Risk Score
large scope for investments that benefit Provinces

Districts
Low - 20 th percentile
40 th percentile
productivity and climate adaptation, Kazakhstan
60 th percentile
80 th percentile
resilience, and mitigation, this report Maximum
has identified areas with the highest

economic, social, and environmental
benefits from investments to slow or Nukus
reverse land degradation. The rate of Urgench

Uzbekistan
Kyrgyz
land degradation and its causes vary Tashkent
Namangan
Republic
widely by province. Fergana Valley, the Gulistan

Fergana
Andizhan
Gulistan–Dzhizak corridor and north of Navoi Dzhizak

Bukhara
Nukus, north Namangan, and around
Samarkand
Turkmenistan
Tashkent are hotspots of degradation of Karshi
Tajikistan
agricultural land (Figure 4.4). However,
the most severely affected natural
ecosystem, as measured by total area, I. R. of Iran Termez
Afghanistan
Pakistan
is the desert shrublands in the steppes
north of Navoli in Navoiy Province and Source: World Bank analysis.
west of Aydar Lake in the center of the
Города Совокупная оценка риска
country. Области Низкий - 20й процентиль
Районы 40й процентиль
60й процентиль
The rates of land degradation and its probable causes vary widely44 In the intensive
Казахстан
cropland hotspots (Fergana
80 процентиль й
Максимальный
Valley, Gulistan–Dzhizak corridor), a combination of water stress, soil degradation, and salinization seem to be
Нукус
44
A land degradation hotspot is defined as a land parcel where vegetation gross primary productivity has been declining in the last 20 years based on
remote-sensing data. A land parcel is considered to be in a degradation trend when its annual
Ургенч rate of decline is greater than 1 standard deviation
Узбекистан from
Кыргызская
country average measurements and in severe degradation when the rate of decline is greater than 2 standard deviations fromТашкент the country average
Наманган
Андижан
Гулистан
42 Фергана
Country Climate and Development Report: Uzbekistan Бухара
Самарканд
Туркменистан
Карши
Таджикистан
the main causes of land degradation. In agricultural areas surrounding densely inhabited areas, land use change
due to urban sprawl (around Tashkent, Namangan, and Fergana) seems to be driving waning productivity. And in
western areas, water scarcity, desertification, and dust storms are likely responsible for the declining productivity
of croplands, natural desert shrublands, and riparian flooded vegetation.
Degradation of natural capital, especially water resources, agricultural land, and forests, is exacerbated
by the chronic impacts of climate change and natural hazards. Some 30 percent (13.7 million ha) of the
country’s land is severely degraded. Half of this is natural pasturelands, while 40 percent is land that is not used
for agriculture, pasture, or forest. A map of land degradation hotspots displays the composite risk from climate
change, land degradation, landslides (and their impact on infrastructure), and population growth, with red areas
indicating the greatest risk (Figure 4.4). Negative impacts are estimated to be greatest, along with population
increases, in agricultural areas of the Fergana Valley and around Samarkand, Karshi, and Tashkent.
The cost of inaction on severely degraded land is estimated at 4.6 percent of GDP. The cost includes the loss
of agriculture productivity, increased soil erosion, reduced water availability, and loss of carbon sequestration
and ecosystem services.
In contrast to land degradation hotspots, adaptation opportunity hotspots are areas where integrated adaptive
and climate-smart technologies can have the greatest positive impact on both agricultural productivity
and ecosystem services. These areas also have the greatest potential to alter trends in land degradation.45 Key
technologies can be used in an integrated way to maximize their benefits for crop production, pastures, forestlands,
water, landslide/flood management, and carbon sequestration (Figure 4.5). Integrated adaptation technologies
include measures to control erosion and reduce soil loss and sediment export; improve water regulation (slow quick
flow and surface runoff to reduce flood risk and nutrient leaching) and quality in reservoirs/dams; and stabilize
slopes to reduce landslides. Results from erosion control, water regulation, landslide models (showing the impact on
agriculture productivity), and carbon sequestration were converted into a composite adaptation opportunity score
for each district (Figure 4.6). Blue shades indicate areas with higher potential for landscape restoration at the farm
level to maximize ecosystem services and increase agriculture and water productivity.
FIGURE 4.5. TECHNOLOGIES RECOMMENDED FOR INTEGRATED LANDSCAPE RESTORATION IN ADAPTATION

OPPORTUNITY HOTSPOTS
Estimating cost and benefits of the sustainable technologies (ICARDA)

• Cost of Inaction in DEGRADATION hot spots (the ecosystem services that are lost and their monetary values)
• Benefits of Action in OPPORTUNITY areas and Costing of adaptation policy
• Cost/benefit analysis of adaptation policy
Crop production Grazing lands Forest lands Farm level water Floods and landslides
management prevention
1. Conservation practices 1. Rotational grazing and 1. Reforestation using
season al resting appropriate 1. Irrigated fams: 1. In the plains / steppe:
2. Crop diversification, tree/shrub species Mechanized Raised Levee - setbacks,
rotation, agroforestry 2. Participatory: establish Beds; Drip Irrigation; reconnecting floodplains /
pastures on poor crop 2. Protection and Sprinkler irrigation; floodway
3. High - yield, water lands or alternate management of weather-based
efficient, heat/ drought components of vegetation irrigation scheduling; 2. In the hills: Reforestation,
/salt/cold tolerant, rotations for drought laser-assisted land landscaping, terracing,
disease resistant prone areas such as 3. Agroforestry leveling; communal bioengineering (headwater
varieties alfalfa and sainfoin structures watershed management
4. Planting wheat on 2. Rainfed farms: Water 3. Small river channels:
standing cotton harvesting Series of check dams,
riverbank stabilization with
gabions or anchored
vegetation
Оценка затрат и выгод при использовании устойчивых технологий (анализ произведен ICARDA для CCDR), включая оценку
• Adaptation potential to enhance
от ecosystem services
гдеwas estimated using the InVEST Sediment Delivery Ratio and Seasonal Waterуслуги
Yield models,
и их and
45
Дополнительных потерь бездействия наблюдается деградация земель (потерянные экосистемные
a landslide/slope stability model.
денежния оценка)
• Выгод от своевременных действий где наблюдаются наибольшие выгоды от восстановления ландшафтов; и затрат
на адаптацию 43
• Оценку затрат и выгод от адаптации Country Climate and Development Report: Uzbekistan
Растениеводство Пастбищные Лесные угодья Управление водными Предотвращение

угодья ресурсами на уровне наводнений и оползней
While investing in adaptation and FIGURE 4.6. ADAPTATION OPPORTUNITY HOTSPOTS IN UZBEKISTAN:
integrated landscape restoration COMPOSITE SCORE (BY 2041–2050)
benefits the entire country, the
highest opportunity areas are in Cities Ecosystem
Services Aggregated
the east. These are predominantly Provinces OPPORTUNITY score
Districts
Kazakhstan 0.06 - 0.19
in Tashkent, Surkhandarya, Kash- 0.19 - 0.35
kadarya, Samarkand, Jizzakh, and 0.35 - 0.5

0.5 - 0.66
Syrdarya. In the southwest, smaller 0.66 - 0.84
but still significant potential is iden-

tified in highly degraded Khorazm,
Qaraqalpaqstan, and Bukhara.
Integrated landscape restoration

and adaptation actions also
preserve the carbon stock above
and below ground. Using the trend
in gross primary production as an
indicator in estimating carbon stock
reveals that implementing integrated I. R. of Iran
landscape restoration technologies

would stop or reverse losses in carbon Source: World Bank analysis.
stock (the sum of all above and below Note: Composite map shows areas where integrated adaptive and climate-smart
ground carbon). The carbon stock in technologies can have the greatest positive impact on ecosystem
Города
services and
Совокупная оценка
agricultural productivity.
biomass in Uzbekistan was estimated Области
ВОЗМОЖНОСТЕЙ
экосистемных услуг
Районы
at about 95.4 million tons of carbon in 2020. By 2030, the expected carbon Казахстан stock in the business-as-usual
0.06 - 0.19
0.19 - 0.35
scenario is estimated at 92.8 million tons of carbon. By 2030, carbon sequestration in the hotspots of 0.35 opportunity
- 0.5
0.5 - 0.66
(1.6 million hectares) rises from 40 percent in the business-as-usual scenario to 100 percent in the0.66integrated - 0.84
landscape restoration scenario (to 4.7–6.7 million tons of carbon). Under business as usual, the loss of economic
Нукус
benefits from reductions in agricultural productivity, forest productivity, and water availability total an estimated
US$2.8 billion. Ургенч
Ташкент
Наманган
The national adaptation opportunity hotspots (an area of 1.6 million ha, which is 3 percent of total landАндижан area
Гулистан
and 10 percent of agricultural land) are prioritized for interventions based on Навои
the potential
Джиззак for adoption
Фергана
of
the technologies, the speed of investment recovery, and socioeconomic factors. An immediate optimization
Бухара
Самарканд
of ecosystem services is constrained to avoid the unrealistic

assumption of anКарши unlimited adaptation budget.
Opportunities are identified in areas (1.6 million hectares) where the targeted, limited budget forТаджикистан investments in
sustainable technologies can make a greater difference. With a limited budget, deciding on measures becomes
an optimization of resources problem. Иран Термез
Пакистан
With implementation of integrated adaptation technologies over the 10-year horizon, crop production
increases by about US$4.6 billion, production on natural pastures rises US$0.1 billion, and 1.8 billion
cubic meters of water are saved annually.46 Accounting for the full benefits of adaptation investments across
croplands, water, forests, and associated sectors reveals a high triple dividend, with strong BCRs underpinned
by commonly unquantified economic benefits. By integrating traditionally excluded benefits, the triple dividend of
resilience approach can help both the public and private sector address information market failures and catalyze
the required level of investment.
Large, induced development benefits (the second dividend) are particularly important for attracting private
sector investment, while building resilience through nature-based solutions can also generate high third
dividend benefits. Shifting the debate toward a broader adaptation framework informed by a triple dividend of
resilience approach can help make the case for scaling up investments in adaptation and resilience.
46
These benefits are estimated conservatively taking into account additional monetizable benefits in agriculture and forestry.
44
Investment needs for the national adaptation opportunity hotspots (1.6 million ha) are estimated at about
US$489–US$560 million over 10 years (US$305–US$350 per ha), which is 0.7–0.8 percent of GDP in 2021. The
cost of action in the adaptation opportunity hotspots is some three to four times lower than the cost of inaction.
The largest shares of the investment are for technologies for croplands (48 percent) and the water sector (45
percent), followed by natural pastures (4 percent) and forests (3 percent). Benefits follow the same pattern.
Forest landscape management presents opportunities for sustainable development and for climate
adaptation and mitigation as well, despite multiple challenges. Increasing forest area requires a holistic
approach to soil degradation that includes improved livestock husbandry, better soil management, and
agricultural practices. Landscape restoration practices that maximize ecosystem services through increased soil
retention and reduced soil erosion are closely linked to increased vegetation cover in croplands and pastures.
Reforestation, afforestation, and sustainable forest management are a pillar for resilience building, enhancing
both climate change mitigation through carbon sequestration and adaptation through sustainable restoration of
degraded landscapes. Leskhozes (local forest enterprises under the State Committee on Forestry) are central
to transforming forests into an economically vibrant sector that helps address climate change, so augmenting
their capacity and skills should be an important part of the response to land degradation. Equally important is
to encourage community participation through the mahallas and create favorable conditions for private sector
involvement.
To inform optimal investment decisions, an urgently needed next step is to invest in improving data
availability and the capacity to model biophysical systems. Development of sophisticated but transparent
modeling and monitoring tools would allow for better targeted infrastructure planning and development. This is
especially pertinent where there is a need to generate consensus and coordination with neighboring countries
on shared resources that require modeling at a regional scale. A critical example is water resources, whose
transboundary nature is a defining feature of the broader region in which Uzbekistan is situated. A calamitous
example is the decline of the Aral Sea, which can be viewed as a tragedy of the commons, rooted in the inadequate
availability of transparent information on water resources and their competing uses. Current hydrological models
of the region contain large uncertainties, often leading to inaction or even suboptimal investment decisions. The
availability of new technologies, such as vastly improved computation capacity and remote sensing capabilities,
and the increasing salience of climate challenges, create a strong impetus for developing improved hydrological
and meteorological modeling systems that can account for the changing stock of and competing demands for
natural resources such as water in the face of climate, demographic, and economic pressures.
45
Chapter 5
Economic implications
of an economywide
policy of green
transition
The view of Tashkent city, Uzbekistan.

5.1 Modeling the economy-wide transition
Without action on climate, Uzbekistan cannot achieve its development vision. Uzbekistan is on a rapid
growth path but one that does not lower emission intensity. The realities of climate change are increasingly
likely to undercut the country’s ambitious economic goals for two main reasons. First, the rapid population and
economic growth projected for Uzbekistan will place unreasonable strains on key resources and ecosystems.
Thus, this trajectory is likely to be unattainable unless growth is made more sustainable. And second, unless
action is taken on adaptation, climate change will cause serious harm to Uzbekistan, whose geography, ecology,
and unsustainable economic structures mean that climate change damages will be severe. Macroeconomic
modeling reveals that climate change impacts are likely to lead to greater economic volatility and lower growth,
with the economy 10 percent smaller by 2050 than it would have been without climate damages (Figure 5.1).
The results are similar whether climate change leads to a ‘wet-warm’ or ‘dry-hot’ pattern.47
Economic modeling illustrates FIGURE 5.1. GDP WITH AND WITHOUT THE EXPECTED EFFECTS
the macroeconomic path of pos- OF CLIMATE CHANGE, 2023–2050
sible decarbonization. Net zero
3,500 10%
transition brings economic benefits
in terms of improved productivity 9%
3,000
GDP per cpaita (constant prices)
and market opportunities. 8%
Percentage change relative

Reduced emissions are also 2,500 7%
associated with health benefits 6%
to baseline
2,000
of reduced localized air pollution, 5%
which is monetarized and included 1,500
4%
in the macroeconomic estimates.
1,000 3%
But during the transition period,
the high investment needs and 2%
500
a relatively rapid transition from 1%
energy intensive to low carbon 0 0%
2023
2025
2027
2029
2031
2033
2035
2037
2039
2041
2043
2045
2047
2049
leads to a temporary drop on the
efficiency of carbon-intensive
factors of product and a crowding- Average loss relative Wet-warm
out effect on other investment, to baseline (RHS) scenario (LHS)
particularly in the peak investment Baseline (LHS) Dry-hot scenario (LHS)
period between 2034 and 2040.
The economic effects of net zero
Note: See box 5.1 for an explanation of the scenarios.
transition broadly offset each
other, which the economy about the same size it would have been without decarbonization, but with annual
3,500 10%
ВВП на душу населения (в постоянных ценах)
growth higher going forward. The withdrawal of energy subsidies, a critical prerequisite for decarbonization and
Процентное изменение относительно
9%
already government policy, leads to a temporary
3,000 loss of growth in the first few years, but is also associated
with more air pollution reduction benefits (Figure 5.2). Modeling assumes that the government implements 8%
исходного уровня
2,500
countercyclical policies to reduce adjustment costs by increasing social transfers, reducing labor taxes, 7% and
raising public investment in energy efficiency
2,000
programs by 2.5 percent of GDP over the four years. 6%
5%
1,500
4%
1,000 3%
2%
500
1%
0 0%
2023
2025
2027
2029
2031
2033
2035
2037
2039
2041
2043
2045
2047
2049
Средние потери относительно Сценарий «Влажно-тепло»

47
Scenarios in which the outcomes are the most ‘dry’ and ‘hot’ and scenarios
базовогоin three which the outcomes are the
сценария most сторона)
(левая ‘wet’ and ‘warm’ (less hot; see
box 5.1). (правая сторона)
Базовый сценарий Сценарий «сухо-жарко»
(левая сторона) (левая сторона)
47
BOX 5.1. MODELING THE MACROECONOMIC IMPLICATIONS OF CLIMATE CHANGE
A new, environmentally informed CGE model was developed for this CCDR to assess the macroeconomic
implications of climate change. The Mitigation, Adaptation and New Technologies Applied General Equilibrium
(MANAGE) model, a recursive dynamic single-country CGE model developed at the World Bank, is the first fully
specified CGE model based on complete input-output tables known to have been produced for Uzbekistan. Based
on core data for 2017 to 2019, the CGE model results presented in the chapter draw from several different
scenarios. A first set of scenarios quantifies the impacts that climate change is expected to have on Uzbekistan,
while a second set looks at Uzbekistan’s green transition. The two sets of scenarios are summarized below.
Modeling climate change damages
Analysis of possible climate damages using the CGE model is based on two scenarios, wet-warm and dry-hot,
relative to an artificial baseline of no-climate impacts. There are 14 underlying scenarios that reflect different
possible paths of climate variables. The two composite scenarios average three scenarios that present the most
‘dry’ and ‘hot’ outcomes and three that present the most ‘wet’ and ‘warm’ (less hot) scenarios. In each, there are
six major channels through which climate change affects the economy: heat stress on labor productivity, human
health, damages to roads and bridges, losses on livestock, losses in irrigated and unirrigated crop yields, and
losses in hydropower generation. These shocks affect labor productivity, labor supply, capital supply, and the
production of agriculture and hydropower in the CGE model. The model has an endogenous adaptation mechanism
through which the factors of production adjust to the climate shocks. Any additional adaptation investment can
reduce the magnitude of the climate shocks.
Modeling a green transition
Analysis of the economic implications of policy action to support a green transition is based on two scenarios
and a baseline. The baseline assumes that Uzbekistan continues to implement its current economic reform
program but does not take strong measures to decarbonize. Under baseline assumptions, the returns to ongoing
reform programs intended to make domestic markets more competitive, open access to external markets, and
develop education, finance, and labor markets are expected to yield rapid GDP growth and rising productivity.
Growth peaks at 7 percent around 2030, before gradually declining to 4 percent a year by 2060. However, in this
baseline, the country does not address its huge energy subsidies, nor does it implement the recommendations for
decarbonization contained in this report. As a consequence, emission intensity remains high.
The first scenario, called the reference scenario, is aligned with the same scenario for the energy sector presented
in chapter 3. An important policy change in this scenario is that energy subsidies are withdrawn, but no further
action is taken to support decarbonization. In the second scenario, NZ2060, a full range of policies are taken to
support decarbonization. These policies are reflected in the CGE model in a stylized way as a carbon tax, fiscal
policies to soften its impact on households, and energy efficiency investments. Energy sector decarbonization is
aligned with results presented in chapter 3.
The structural change associated with decarbonization will create more jobs in high value-added sectors,
but workers must have the skills to fill these jobs. Decarbonization is expected to accelerate the relative
decline of agriculture and growth in manufacturing, with services maintaining its share in the economy. Certain
subsectors, such as renewable energy, will see massive job growth, while higher value-added service sectors
such as insurance and information and communication technologies as well as other service sectors such as
hospitality are expected to create more jobs in the NZ2060 scenario than in the baseline. The energy sector is
expected to see a net increase in jobs. These include new jobs in construction, installation, and operation and
maintenance of new, greener technologies and take into account a loss of jobs in declining technologies. A major
challenge is to ensure that workers have the right skills to fill the new jobs.
Compensatory policies are important to ease the impact of changes with adverse impacts on the vulnerable
and share the benefits widely. Targeted transfers and generalized tax reductions can ease the impact of the price
increases that result from these policies. The price increases that are needed to make the energy sector viable
in the absence of subsidies and incentivize investments in green sectors will also increase consumer prices, both
directly as higher energy prices and indirectly through the increased costs of energy embedded in other products.
48
The poorest households will be most FIGURE 5.2. REMOVING ENERGY SUBSIDIES TRIGGERS A MAJOR
exposed to these price increases STRUCTURAL CHANGE THAT COMES WITH A SHORT-TERM COST BUT BOOSTS
because they pay proportionately more GROWTH OVER THE LONGER TERM, BASELINE AND POLICY SCENARIOS,
2022–2060
of their limited budget for essentials
such as energy and transport (figures 0,2%
Difference in GDP growth from baseline

5.3 and 5.4). However, fiscal savings
(annual average percentage change)

0,0%
are sufficient to finance compensatory
programs to ensure that most of
-0,2%
the population is no worse off than
before, with the poorest significantly -0,4%
better off and only those in the richest
decile slightly worse off in a energy -0,6%
subsidy reform only scenario.48 These
scenarios assume that 40 percent -0,8%
of the increased fiscal resources are
used for targeted transfers to the -1,0% Energy subsidy removal only
NZ2060 transition
bottom four deciles of the income
-1,2%
distribution, 30 percent to income tax
2023-29 2030-39 2040-49 2050-59 2060 -
reductions, and 30 percent to higher
public investment. Note: Impacts include the monetized benefit of reduced air pollution.
FIGURE 5.3. DISTRIBUTIONAL IMPLICATIONS OF FIGURE 5.4. DISTRIBUTIONAL IMPLICATIONS OF SUBSIDY

SUBSIDY REFORM POLICY PACKAGE REFORM PLUS CARBON TAX REFORM PACKAGE
Decile 8уровнем (среднегодовое процентное изменение)
Разница в росте ВВП по сравнению с исходным
0,2%
35 60
0,0%
30 50
Percentage change in hhld income
25 -0,2% 40
20
-0,4% 30
15
20
10 -0,6%
10
5 -0,8%
0
0
-1,0% Только отмена энергетических субсидий
-5 -10
Переход на НБВ 2060
-10 -1,2% -20
2023-29 2030-39 2040-49 2050-59 2060 -
Poorest
Decile 7
Wealthiest
Wealthiest
Decile 2
Decile 3
Decile 4
Decile 5
Decile 6
Decile 9
Poorest
Decile 2
Decile 3
Decile 4
Decile 5
Decile 6
Decile 7
Decile 8
Decile 9
Direct + indirect price effects Targeted transfer Current spending

Labor tax reductions Public investment Net change
Source: World Bank analysis using the Climate Policy Assessment Tool Source: World Bank analysis using the CPAT model.
(CPAT) model.
35 60Note: Policy simulations based on latest available household
Процентное изменение дохода домохозяйств
Note: Policy simulations based on latest available household data. The data. This policy mix allocates 30 percent of energy subsidy
subsidy
30 reform policies allocate 30 percent of energy subsidy savings to 50savings to targeted transfers to the bottom four deciles of
targeted transfers to the bottom four deciles of the income distribution, the income distribution, 30 percent to income tax reductions,
25
30 percent to income tax reductions, and 40 percent to higher public 40and 40 percent to higher public investment and add a carbon
investment.
20 The model assumes a social protection leakage rate of 25 tax. The model assumes a social protection leakage rate of
percent. 3025 percent.
15
20
10
48
Raising the revenue recycling to general labor tax reductions can lead to all deciles
10being better off, but it results in lower benefits to the poorest and
less5public investment, so it not presented as the lead option here.
0
0
-5 -10
49
-10 Country Climate and Development -20
Report: Uzbekistan
Самый
бедный
Дециль 2
Дециль 3
Дециль 4
Дециль 5
Дециль 6
Дециль 7
Дециль 8
Дециль 9
Самый
богатый
Самый
бедный
Дециль 2
Дециль 3
Дециль 4
Дециль 5
Дециль 6
Дециль 7
Дециль 8
Дециль 9
Самый
богатый
5.2 Creating the environment for a green private sector
The private sector is pivotal for achieving Uzbekistan’s development objectives, and so too for a successful
green transition. The rationale behind the bold economic reforms now well under way in Uzbekistan is that a
strong, independent, and vibrant private sector will better serve the people and create jobs than the largely state-
planned model did. The authorities have a critical role in setting the course for achieving these objectives, and the
same is true for the green transition. It will be crucial to accelerate movement along the reform path on which the
country has already embarked to enable needed private investment and support productive green growth. This
section discusses key policy areas of focus toward this goal.
Businesses are more active in green sectors of the economy in Uzbekistan than in other economies in the
region. There is evidence that businesses are at the forefront of green investments and practices even though
climate change is a recent public policy issue in Uzbekistan. By 2019, nearly 90 percent of firms in Uzbekistan
were already making some form of green investments (Figure 5.5), while 80 percent of firms monitored green
results and half had green targets (Figure 5.6). The business community shows greater attention to climate in
Uzbekistan than in three neighboring countries. However, in business planning and setting of strategic objectives,
only 10 percent of firms factor in green issues and only 8 percent have a clearly assigned management role for
green issues.
FIGURE 5.5. SHARE OF FIRMS THAT ENGAGED IN FIGURE 5.6. SHARE OF FIRMS ENGAGING IN GREEN
ANY GREEN INVESTMENTS IN THE PAST THREE MANAGERIAL PRACTICES, 2019
YEARS, 2019
88,4 84,1
80
in any type of green investments
72,5
80
% of firms that have engaged
72,2
62,5
in any type of green investments
64,2 60
% of firms that have engaged
63,8 54,1
50,9
60
40
32,8
27,3
40
20 18,5 18,1
15,2 13,6
9,6 10,0
6,8 5,4 7,8
20
0
Kazakhstan Kyrgyz Republic Tajikistan Uzbekistan
0 Green strategic objectives Green management resp
Kazakhstan Kyrgyz Tajikistan Uzbekistan Green monitoring Green targets
Republic
Source: Iootty et al. 2022. Source: Iootty et al. 2022.

Note: Share of private firms in manufacturing and services Note: Share of private firms in manufacturing and services based on
88,4 84,1
based on 2019 Enterprise Survey. 201980Enterprise Survey.
% фирм осуществлявших какие-либо
% фирм осуществлявших какие-либо
72,5
80
Holding the course on72,2Uzbekistan’s reforms to make the economy more open and competitive 62,5 is a prerequisite
"зеленые" инвестиции
63,8 64,2 60
for a successful, private sector-led, green transition. Underdeveloped market institutions and an excessive
"зеленые" инвестиции
54,1
50,9
60
state presence in the economy must be addressed to enable the private sector to grow and respond to new,
40
green opportunities. Perceptions about market competition have become more32,8 positive in 27,3
Uzbekistan since
40
2016, but much remains to be done. Uzbekistan has the largest
20
share 18,5of state
18,1 enterprises in the economy among
15,2
comparator countries (Figure 5.7) and an underdeveloped competition 9,6 policy 13,6
framework6,8to ensure a10,0 level
7,8
playing
5,4
20
field (Figure 5.8). Nearly 80 percent of Uzbekistan’s state0 enterprises operate in competitive sectors where the
case for their presence is weak. Reforms are moving in the right direction,
Казахстан but the pace
Республика of change
Таджикистан needs to
Кыргызстан
accelerate. Until the private sector has the space to operate«Зеленые»
0 more freely, the economy«Зеленое»
стратегические цели
will lack the dynamism
управление
needed toКазахстан
transformРеспублика Таджикистан Узбекистан
and adapt to a green economy.
Кыргызстан «Зеленый» мониторинг «Зеленые» цели
50
FIGURE 5.7. STATE ENTERPRISE REVENUE IS HIGH FIGURE 5.8. MARKET COMPETITION FRAMEWORKS
AS A SHARE OF GDP, LATEST AVAILABLE ARE IMPROVING BUT ARE STILL WEAK, 2016 AND 2022
45 BTI competition index

40 10
Worst (1) to best (10)

35 8
30
Percent
25 6
20
4
15
10 2
5
0 0
North Macedonia
Uzbekistan (2021)
Russia (2019)
Bosnia and
Herzegovina
Tajikistan
Uzbekistan
Republic
Kazakhstan
Slovenia (2019)
Serbia (2019)
Hungary (2019)
Kyrgyz Republic
Kyrgyz
Russia
Georgia
Turkey
Serbia
Poland
Tajikistan (2020)
Poland (2019)
Estonia (2019)
Lithuania (2019)
2016 2022 Post-Soviet average (2022)
Source: World Bank Integrated State-Owned Enterprises Source: Bertelsmann Stiftung Transformation Index (BTI).
Framework (iSOEF) reports (multiple), World Bank Business
of the State, World Bank staff estimates.
от худшего (1) к лучшему (10)
45 Индекс конкуренции BTI
Note:40Orange line is average for all countries in the sample. 10
35 8
lack of reliable access to electricity is a top-cited concern of businesses. According to the latest Enterprise
The30
Процент
Survey, 6
25 access to reliable electricity is the third most cited constraint (after tax rates and practices of the informal
20
sector)
15 by businesses in Uzbekistan. Frequent blackouts and
4 power variation raise the cost of doing business
and10affect business activity. The transition to a modern, green 2 energy system will make it easier for firms to do
5
business in Uzbekistan. While the withdrawal of energy subsidies,
0 along with improved sector governance, will
0
help overhaul energy service delivery, this is likely to take time. Until then, businesses may face both higher costs
Северная
Македония
Казахстан
Россия
Грузия
Узбекистан (2021
Босния и
Герцеговина
Турция
Сербия
Польша
Россия (2019)
Словения (2019)
Сербия (2019)
Польша (2019)
Эстония (2019)
Литва (2019)
Венгрия (2019)
Таджикистан (2020)
and continuing weak service, which will call for careful management by electricity service providers.
Increasing FDI is a priority to accelerate the development of low-carbon sectors. FDI in low-carbon sectors is
a key priority as it brings both finance and technological know-how.2016
To date,
2022
Uzbekistan has underperformed in
Бывшие советские республики
attracting FDI overall, especially in green sectors. Uzbekistan’s stock of FDI is far below regional
в среднем averages and that
(2022)
of its neighbors (Figure 5.9). While increasing over the last five years, FDI inflows remain modest (at 2.4 percent
of GDP in 2022) and are concentrated in mining and quarrying (Figure 5.10). Raising FDI levels depends on the
reforms already described to roll back the state in, and strengthen, competitive markets. Especially important for
FDI is to ensure transparent and stable regulations, strong property rights, a coherent government coordination
framework, and stronger investor service delivery.49
FIGURE 5.9. UZBEKISTAN’S STOCK OF FOREIGN FIGURE 5.10. HALF OF GREENFIELD FOREIGN DIRECT
DIRECT INVESTMENT IS BELOW THAT OF COMPARATOR INVESTMENT HAS BEEN IN COAL, OIL, AND GAS,
COUNTRIES, 2019 2003–2019 AVERAGES
200 Inward FDI stock (% of GDP) 2019
Inward FDI stock (% of GDP)
95% Cl Fitted values

150
Manufacturing 33%
100 Turkmenistan Coal, oil & gas 49%
Kyrgyz
Republic Renewable energy 5%
Kazakhstan Labor- intensive
services 5%
50 Tajikistan Communications 3%
Financial services 2%
Uzbekistan Metals 2%
Knowledge-intensive
0 services 1%
5 6 7 8 9 10
GDP per capita 2019 (log)
Source: World Bank 2022b. Source: World Bank estimates, FDI Markets, and Thomson Reuters
database.
49
World Bank 2022b.
200
Объем притока ПИИ (% от ВВП) в 2019
а ПИИ (% от ВВП)
95% Cl Установленные значения 51

150 Country Climate and Development Report: Uzbekistan
Производство 33%
100 Туркменистан Уголь, нефть и газ 49%
Accelerating trade integration would increase competition, efficiency, and productivity and enable firms to
access external markets in a green transition. Since 2016, Uzbekistan has seen robust growth of relatively
less carbon-intense exports. Historically high exports of cotton and natural gas have fallen to low levels, while
textile and service exports have grown rapidly (Figure 5.11). Uzbekistan faces high trade costs, and their impact is
compounded by poor logistics, delays, and uncertainties imposed by trade regulations (Figure 5.12). And despite
large reductions in customs tariff rates, tariffs in Uzbekistan remain some of the highest in the region. Easing
these constraints will help firms access large markets and drive growth and job creation.
FIGURE 5.11. EXPORT GROWTH IN LESS CARBON- FIGURE 5.12. UZBEKISTAN’S TRADE
INTENSE SECTORS HAS ACCELERATED, 2016–2022 FACILITATION IS WEAK IN SEVERAL AREAS, 2022
20
Average trade
18 facilitation
16 K - Governance A - Information
14 and impartiality availability
$ Billion
12 J - External B - Involvement
10 border of the trade
8
6 I - External C - Advance
4 border rulings
2
0 H - Procedures D - Appeal
2016 2017 2018 2019 2020 2021 2022 procedures
G - Automation E - Fees and

Services Machinery & other Cotton Fiber charges
F - Documents
Textiles Chemicals (fertilizer) Gold
Food products Other metal Natural Gas Uzbekistan Lower Europe and
middle income Central Asia
Source: World Bank analysis based on national data sources. Source: Organisation for Economic Cooperation and
Development (OECD) Trade Facilitation Indicators.
Note: Percentile rank among all countries:
0 (lowest) to 100 (highest).
Uzbekistan has considerable potential for green exports. Global trade gravity modeling by the World Bank
20
indicates
18 that Uzbekistan has sizable green export potential of US$2 billionCреднее упрощение
per year,
процедур equivalent to more than 10
торговли
Миллиард, Дол. СШA
16
percent of exports of goods and services now. 50
By export destination, Uzbekistan
К - Управление и has the greatest potential to
А - Доступность
14 беспристрастность информации
export
12 green goods to the Europe and Central Asia region, but JNorth - ВнешняяAmerican and East Asia Pacific also have
B - Вовлечение
10 граница торговли
considerable
8 potential (Figure 5.13). By product, the highest green export potential lies in exports of machinery
and 6electrical appliances used for green purposes (Figure 5.14).I - Внутренняя С - Предварительные
4 граница решения
2
FIGURE
0 5.13. EUROPE AND CENTRAL ASIA HAS FIGURE 5.14.Н -MACHINERY
Процедуры AND ELECTRONICS ACCOUNT FOR
D - Процедуры
THE HIGHEST
2016 GREEN
2017 EXPORT
2018 POTENTIAL
2019 VALUE,
2020 2021 BY FAR THE LARGEST SHARE OF MISSING GREEN
2022 EXPORTS,
обжалования
MISSINGУслуги
GREEN EXPORTS BY REGION, 2010–2020 BY PRODUCT,G2010–2020
Машины и оборудование
- Автоматизация Е - Сборы и надбавки
700 Текстиль Химикаты (удобрения) F - Документы
600 Пищевые продукты Прочие металлы 1200 Узбекистан

Золото Натуральный газ Доход ниже-среднего
500 1000
$ Million
Хлопок-волокно Европа и Центральная Азия

400 800
300 600
200 400
100 200
0 0
Europe and
Central Asia
North
America
East Asia
and Pacific
Middle East
and North Africa
South Asia
Latin America
and Caribbean
Sub-Saharan
Africa
Machinery
Electronics
Metals
Transportation
Miscellaneous
Plastic & Rubber
Stone & Glass
Foodstuffs
Chemicals
Textiles Clothing
Wood
Minerals
-200
-400
-600
Source: Mulabdic 2023.

Note: Missing exports is the gap between potential and actual exports. Categorization of 543 environmentally beneficial products that were
identified by Penny Mealy & A. Teytelboym (2022), Economic complexity and the green economy, Research Policy, Volume 51, Issue 8, using
existing OECD, WTO, and Asia-Pacific Economic Cooperation (APEC) lists.
700
Миллионы, Дол. США
50 600
This 1200
estimate is based on the results of a gravity model that compares actual trade with trade that would be predicted by countries’ bilateral distance,
bilateral
500 trade policy frameworks, and other country characteristics. The estimate is indicative only. More detailed market feasibility analysis would
1000
be required for a more precise estimate.
400 800
300 600
52
200 400
100 200
0 0
ия
ка
ва
ие
ое
ль,
да
во
аи
ия
ая
ка
ия
ия
ток
ка
ра
ка
ка
и
лы
рт
ты
ик
на
нь
ло
ты
ия
лы
5.3 Financing a green transition
Uzbekistan’s fiscal position will quickly become unsustainable if the public sector must shoulder large green
transition costs without creating fiscal space elsewhere. At 34 percent of GDP in 2022, Uzbekistan’s public
spending is already higher than that of most of its income-level peers. And while, in the past, revenues have been
buttressed by natural resource receipts, these are declining. As a result, a sizable budget deficit has emerged,
limiting the capacity of the public sector to take on major additional financing demands. Investment will require
a mix of public and private financing. The temptation may be to rely more on public finances, which can be
mobilized quickly and do not require the tough policy reforms needed to attract private investment. But scenario
analysis indicates that this would move the budget onto an unsustainable path. Under a scenario where half of
the investment costs of the green transition is financed by the budget, the public debt-to-GDP ratio could exceed
the benchmark for sustainable levels before 2050 and could move much higher if there are adverse economic
shocks over the period (Figure 5.15).51
The government needs to improve public expenditure management and Increase its efficiency to create fiscal
space for financing some of the costs of the green transition. A strong consolidation strategy to move toward
fiscal balance will be important to create space for the transition. Measures could include reducing inefficient
spending, such as unproductive tax incentives and subsidies (energy subsidies in particular) and raising additional
revenue. The investment needs of the decarbonization transition alone are substantial (see section 3.3).
FIGURE 5.15. PUBLIC DEBT RISES SHARPLY IF ONE-THIRD OF EXPECTED TRANSITION COSTS ARE MET BY THE PUBLIC BUDGET
PV of Debt-to-GDP Ratio
110
100
90
80
70
60
50
40
30
20
10
0
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
Baseline scenario Combined shock scenario
Public Debt Benchmark Baseline scenario (inc. transtion costs)
Combined shock scenario (inc. transtion costs)
Source: DSA Excel tool, World Bank staff estimates.

Note: The investment cost of the energy transition alone is estimated at around 5 percent of GDP annually (see section 3.1.3). In this scenario,
the assumption is that half of this investment will be met by the public sector.
Adjusting prices by removing energy subsidies and introducing carbon pricing is a key ingredient for
Приведенная стоимость отношения долга к ВВП
triggering
110 the green transition. Removing energy subsidies and introducing carbon pricing, such as through
a100
carbon tax, will generate fiscal space for green investment, spur private investment needed to reach net zero
90
emissions,
80
and create positive behavioral incentives for transition. Macroeconomic modelling suggests that
these
70 two policies combined can create as much as 5 percent of GDP worth of additional fiscal space over the
transition
60 period. These resources can be used to leverage private finance by providing smart subsidies for green
50
investment, support accelerated transition in difficult sector such as residential energy efficiency, and finance
40
essential low-carbon public goods, both physical infrastructure and the strengthening of education and labor
30
20
10
0
51
This illustrative scenario is based on the application to Uzbekistan of a tool that the International Monetary Fund and the World Bank use to conduct
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
debt sustainability analysis. It is a risk scenario and should not be interpreted as a central estimate.
Базовый сценарий Комбинированный шоковый сценарий

53
Предел государственного долга Базовый сценарий (включая расходы на переход к «зеленой экономике»)
Комбинированный шоковый сценарий (включая расходы на переход к «зеленой» экономике)
market frameworks to build human capital for the green transition. As shown in table 3.1, these policies will also
enable higher share of private sector investments, further relieving the pressure on the public budget.
A successful decarbonization will require follow-through on the authorities’ plans to phase out energy
subsidies. Removing energy subsidies in the gas, electricity, and heating markets is an essential component
of a green transition, supporting the efficiency and financial viability of the energy sector, reducing the sector
burden on the public budget, and providing incentives for energy-efficient options. As described in box 5.2, energy
subsidies in Uzbekistan are among the highest in the world. The current system of artificially low energy tariffs
and high subsidies undermines investment and results in obsolete energy assets in need of modernization, an
inadequate price signal for a green energy transition, and lack of incentives to save energy. To close the cost
recovery price gap by the end of 2026, the government intends to introduce tariff adjustments over 2024–2026
and removing energy price subsidies is an indispensable part of the strategy. However, as this could lead to a
rise in production costs and reduce firm-level competitiveness, targeted measures are needed that facilitate the
green transition while minimizing the potential losses to competitiveness by altering the micro-level incentives
for private firms to improve their green credentials. Measures could include strengthening green regulations,
such as environmental standards and energy audits; implementing programs to improve firm; green management
practices; and eventually conditioning credit concessions on the adoption of green technologies. These measures
would improve firm incentives to adopt green-friendly solutions while increasing their ability to access more
sophisticated export markets with stricter customer preferences.
BOX 5.2. ENERGY SUBSIDY REFORMS IN UZBEKISTAN
Uzbekistan is one of the top 25 BOX 5.2.1. COUNTRIES WITH LARGEST ENERGY SUBSIDIES, 2020
countries in the world with the
largest energy subsidies, which
16% 32
accounted for 6.6 percent of Oil Electricity Gas Coal
GDP in 2020. Electricity and Total subsidies as % of GDP (MER)
natural gas prices are among
12% 24
the lowest in the world, with
average electricity tariffs
billion USD
standing at around US¢4.5 per 8% 16
kWh, which is around 70 percent Uzbekistan
of its cost, placing the country Total subsidies as
% of GDP (MER): 6.6%
among the top 10 countries with 4% 8
the cheapest prices out of 230
countries. Similarly, natural gas
tariffs are among the lowest 0% 0
in the world, with the average
Qatar
Iran
Russia
Algeria
Turkmenistan
Bangladesh
Pakistan
Ecuador
Azerbaijan
China
India
SaudiArabia
Egypt
Indonesia
UAE
Venezuela
Iraq
Kazakhstan
Argentina
Uzbekistan
Libya
Kuwait
Ukraine
Mexico
Angola
tariff of around US¢72 per m3

standing at about half of its
prevailing cost and at 40 percent
of its opportunity cost.
The below-cost recovery tariffs Source: IEA
have created continued disincentives16% to efficiently consume energy asideЭлектричество
Нефть
from being a drain
Газ
on government
Уголь
32
finances. First, the low tariff resulting from subsidies creates a lack Ообщий
of incentive for households and
объем субсидий в % от ВВП (MER) businesses
to conserve energy or invest in energy efficiency measures, thereby hindering efforts to optimize energy
consumption. Moreover, these subsidies 12%are limiting the GoU’s fiscal capacity for other pressing priorities24 such
млрд долл. США
as education and health, as the GoU has been allocating direct budget transfers of around US$1.0–1.5 billion
annually toward the energy sector over recent years.
8% 16
The GoU has committed to continue pursuing energy subsidy reforms with a target to reach cost recovery in both
electricity and gas sectors by 2026. In April 2019, the GoU adopted a new electricity общийtariff
объемsetting
субсидийmethodology,
в % от ВВП (MER): 6,6%
defining a path for tariffs to be systematically
4% adjusted in the future. Similarly, a new natural gas tariff methodology
8 is
0% 0
Иран
Саудовская
Китай
Индия
Аравия
Россия
Алжир
Египет
ОАЭ
Индонезия
Венесуэла
Ирак
Казахстан
Аргентина
Ливия
Кувейт
Украина
Мексика
Ангола
Пакистан
Азербайджан
Эквадор
Катар
Бангладеш
54
Box 5.2.
being finalized by the GoU. The GoU BOX FIGURE 5.2.2. ENERGY TARIFFS HISTORICAL ADJUSTMENT AND
also established a separate tariff COST RECOVERY TRAJECTORY, 2010-2026, % YOY
commission under the Cabinet
of Ministers to set out a path for 80%
Electricity tariffs
tariffs to be adjusted towards 70% Inflation (CPI)
full cost recovery levels. The GoU Gas tariffs
also implemented three tariff 60%
adjustments in 2018–2019 that
Planned reforms
Recent reforms
50%
COVID19
collectively doubled the weighted-
average tariff of electricity and 40%
gas. Although tariff reforms were

30%
paused in 2020–2021 due to the
impacts of COVID-19, the GoU 20%
further adjusted electricity and gas
10%
tariffs for selected non-residential
customers in May 2022. However, 0%
despite the recent tariff reforms,
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
the current level of retail electricity
and gas tariffs is not sufficient to
Source: WB team based on the GoU data.
recover the cost of supply. The box
Figure here illustrates the historical tariff adjustment and planned tariff cost recovery trajectory.
The government has prioritized social protection measures and communication campaigns to accompany
80%
tariff reforms. The authorities reviewed several mitigation
Тарифы options to address negative impacts, including (a)
на электроэнергию
phasing tariff increases to allow adaptation

70% among users,
Инфляция (ИПЦ) (b) adjusting social transfer amounts and coverage to
offset the budgetary impact of tariff increases, (c) adjusting

Тарифы на газ the tariff design itself, and (d) potential lifeline tariffs.
Phased tariff increases are standard in60% reform policies that may have particularly adverse effects on vulnerable
Запланированные
groups rather than increasing tariffs to 50%
full-cost recovery levels in a single large step. This has been the principal
КОВИД 19
Недавние
Реформы
реформы
approach to mitigate the impact of tariff reform the government has taken over the past decade. The approach
40%
allows consumers to prepare for increases, for instance, by adapting their energy use or more quickly retiring
inefficient appliances. Under plausible assumptions
30%
of adaptive behavior on the part of energy consumers, a more
gradual approach is expected to moderate welfare losses and the resulting increase in poverty.
20%
10%
The government could support the FIGURE0%

5.16. SHADOW CARBON PRICES IN THE NZ2060 SCENARIO,
green transition with financing 2025–2060
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
and market-based incentives using 1800
carbon pricing instruments. Carbon 1600

$ per tCO2 (2015 prices)
pricing uses regulatory instruments― 1400

such as a tax or tradable quota―to 1200
raise the cost of emission-creating 1000
activities. This makes lower-carbon 800
alternatives more attractive, and 600
as these alternatives scale up, 400
their prices can fall below those 200
of the original polluting activity, 0
increasing their uptake, as is now 2025 2030 2035 2040 2045 2050 2055 2060
happening with several renewable
Source: World Bank estimates.
energy technologies worldwide. The Note: The high 2060 shadow carbon price represents the difficulty of eliminating the
NZ2060 scenario assumes that last 1 percent of emissions in the energy cost, which comes at a very high cost of using
the energy system reaches net zero direct air capture. Costs could be reduced by offsetting emissions in other sectors or by
emissions in 2060, which could be applying technologies that become available over the next decades.
achieved through a mix of incentives and regulatory
1800 measures, such as a carbon tax to trigger investment in
а тонну CO2 (цены 2015 года)
decarbonization across the economy (Figure1600

5.16).
1400
1200
1000 55
Country Climate
800and Development Report: Uzbekistan
600
400
5.4 Developing fiscal policies for resilience and green transition
In most countries, funding the transition to a less carbon-intensive economy relies heavily on the financial
system. Financial institutions can accelerate the flow of funds into green economic activities and demand
transparency through public disclosure requirements about green and brown investments. Funding a green
transition hinges on the availability of a clear, transparent, and consistent definition of what qualifies as a green
investment or activity and independent verification of green impacts. Uzbekistan could begin by developing a
well-defined and clearly structured green taxonomy that focuses primarily on screening (labeling) investments
and activities. Further measures would be needed to promote transparency and accountability for green impacts,
such as requiring sustainable reporting standards or developing an independent impact verification industry to
assure investors and financiers about positive
FIGURE 5.17. SOME 40–50 PERCENT OF BANK LENDING IN green impacts and forestall greenwashing and
UZBEKISTAN MAY BE EXPOSED TO SIGNIFICANT TRANSITION
green bubbles.
RISK, AND THIS EXPOSURE APPEARS TO BE GROWING,
2021–2022 For financial system stability, regulators need
a.Exposure of Uzbek banks to transition risk based to ensure that the banking sector identifies
on international classification of Climate Policy–Relevant Sectors and manages climate and transition risks.
40% Light bars - 2021 Support for green financing from the Central
35% Darker bars - 2022 Bank of Uzbekistan (CBU), a supervisory
Percent of outstanding
30% authority that has traditionally limited its

25% activities to ensuring price and financial
loans
20% stability, could be contentious since such

15%
activities are not explicitly within its mandate.
10%
But climate change is inextricably linked to
5%
0% these traditional goals. The CBU should focus
on assessing and mitigating climate-related
Other
Scientific R&D
Finance
Agriculture etc.
Transportation
Buildings
intensive
Energy
Utilities
Fossil fuel
risks in the banking system and building bank

resilience to residual risks that cannot be
mitigated. The CBU could develop a regulatory
b.Carbon intensity of credit and sectoral loan dynamics framework that incorporates a climate risk
based on actual GHG emission strategy to ensure that banks pay close
7 30% attention to climate-related and environmental
5 20% risks and properly disclose their exposures to
3 these risks. The CBU should regularly assess
10%
1 the banking system’s exposure to these risks,
0% develop green and sustainability dashboards,
-1
Electricty
& heat
Transport
Fugitive
emissions
Industry (other)
Manufacturing
& construction
Agriculture
Buildings
-10% and regularly conduct and publish the results

-3
-20% of related system-wide investigations.
-5
-7 -30% Analysis reveals that 42 percent of bank
-9 -40%
lending in Uzbekistan was exposed to high-
Log carbon intenisty of credit (LHS) emission-prone sectors by the end of 2022,
Loan growth 2021-2022 (RHS) mainly through the financing of fossil fuels,
utilities, and energy-intensive sectors. Credit
Source: Worlda.Подверженность
Bank analysis based on CBUбанков
узбекских data. риску «зеленого» to internationally defined52 energy-intensive
Note: Panel перехода,
a reflects основанному
analysis of bank lending that rates
на международной the exposure of
классификации
sectors dominates bank lending and was the
bank credit отраслей,
to economicзначимых
sectorsдля
byклиматической
transition risk.политики
Panel b approximates
carbon40%
intensity using a ratio to GDP of total GHG emissions
Cветлыеproduced
полосы -by each
2021
fastest-growing share of bank financing during
Процент от непогашенных
adjusted for credit for sectors for which dataТемные

sector 35% on GHGполосы - 2022
emission were 2021–2022 (Figure 5.17a). Based on actual
30%as of 2019 (https://ourworldindata.org/grapher/ghg-emissions-by-
available emissions in Uzbekistan, bank lending for
sector?time=1990..latest&country=~UZB).
25%
кредитов
20%
15%
52
The Climate Policy-Relevant Sectors methodology scores economic sectors based on their propensity to produce GHGs and rates their credit financing
10%
from high risk (1) to low risk (9).
5%
0%
Другое
-конструкторские
вательские и опытно
работы (НИОКР)
Научно-исследо-
Финансы
Сельское
хозяйство и т.д.
Транспорт
Здания
Энергоемкий
предоставляющие
коммунальные услуги
Компании,
Ископаемое
топливо
56
buildings and electricity and heat was the most GHG intensive during 2021–2022 (Figure 5.17b), and highly
carbon-intensive sectors accounted for the greatest increase in bank lending. This may suggest that banking
system exposure to transition risk is rising unless the buildings and transport loans are for greening projects.
Agriculture, the least GHG-intensive sector, appears to be starved for credit.53
Support for green finance should not rest on a lax regulatory framework. The CBU introduced temporary
amendments in its capital adequacy regulation in March 2023 that excluded banks’ investments in start-ups
engaged in renewable energy from deductions in banks’ regulatory capital and that risk-weighted at 0 percent
their loans to such start-ups. Amendments to prudential requirements to promote credit to the green economy—
such as lowering reserve requirements, capital buffers, or credit risk weights on assets—should be carefully
thought out to avoid undermining the effectiveness of prudential instruments or creating unintended regulatory
risks. Likewise, any direct intervention tools such as minimum green quotas or maximum limits on lending to
brown sectors should be applied cautiously.
The public sector can incentivize private green finance. Once banks establish appropriate frameworks to
incorporate environmental risks into credit decisions and their internal systems, the government may further
incentivize green lending through financial support measures for green funding intermediated by banks and
other financial institutions. Measures to stimulate green investment through green funds, for instance, could
include direct investments (debt or equity), co-investments, or de-risking instruments such as credit and equity
risk guarantees. Improvements in bank environmental, social, and governance frameworks can build on green
taxonomy and impact verification systems to help the banking sector tap the sizable resources of international
financial institutions for green finance.
The insurance sector could do a lot more to support robust climate risk management. The GoU shoulders
much of the contingent liability arising from disaster damages. Despite the high exposure to climate risk, there is
little involvement by the private insurance industry. The capacity of the government, businesses, and individuals
to cope with the costs of climate-induced disasters is very limited. Although there are numerous insurance
companies in Uzbekistan, penetration of disaster insurance is very low. For example, fewer than 10 percent
of residential dwellings are insured against natural perils, fire, lighting, explosion, and aircraft damage risks. In
2022, the ratio of premiums to GDP was just 0.7 percent, compared with a global average of 7.0 percent and an
average of 3.7 percent for Emerging Asia.
Uzbekistan should consider developing a national disaster risk financing strategy to cope with climate
change-induced disasters. Uzbekistan does not have a comprehensive strategy for post-disaster financing.
The government takes a mostly reactive approach to financing disaster response, recovery, and reconstruction,
but reserve funds for this purpose are limited. Current funding available for disaster relief seems insufficient
to cover even the recurrent losses from disasters and certainly not the capital costs. The damage caused by
weather-related events is likely to increase with climate change. The government may wish to develop a disaster
risk finance strategy, which could define government policy priorities and set out a cost-effective risk layering
approach. Risk layering could include developing local private insurance markets or accessing global capital/
reinsurance markets to increase private capital participation.
53
Because data reporting for sectoral GHG emissions does not match data reporting for bank sectoral lending in Uzbekistan, better data alignment is
needed to enable better monitoring of green lending and transition risk exposure. That is especially relevant for sectors such as energy and water, for
which data are particularly difficult to compare.
57
Chapter 6
Climate change
and people
Children playing on one of the streets of the city of Samarkand, Uzbekistan.

Photo by Khusen Rustamov / www.shutterstock.com 58
Climate will affect the people of Uzbekistan in multiple ways and by 2030, at least 8 million people will
be residing in very high climate risk areas across the country. Changes in climate (for example, droughts,
extreme heat, dust storms, and rainfall volatility), climate-induced disasters (for example, pollution, flooding,
and mudslides) and climate mitigation and adaptation policies (for example, carbon taxes, energy price increase
due to the removal of fossil fuel subsidies) could lead to losses in agricultural productivity; reductions in labor
productivity caused by health hazards; and limited access to green skills, food insecurity, and shortages of safe
drinking water. In addition, decarbonizing and transitioning to a green economy will affect people’s lives and
livelihoods, for example, through loss of employment/reduction in income due to economic volatility, as the labor
market transitions from brown to green jobs. By 2030, at least 8 million people in rural and urban areas in
Uzbekistan will be residing in very high climate risk rural and urban areas, including the Ferghana Valley, Khorezm,
Bukhara, and Surkhandarya regions.
The distributional impacts of climate change and climate policies are uneven on the poor and other
vulnerable groups. The costs of transition and the adverse climate impacts are disproportionally higher on
the poor and disadvantaged communities as they tend to be less resilient to cope with natural shocks, land
degradation, increased temperatures, price increases, and displacement. Agriculture will likely be the worst
hit, and the rural poor are particularly at risk, especially the rural women, who represent 50 percent of cotton
pickers in the country. Poverty levels among the rural population will also likely increase as rising temperatures
will reduce livestock production by 8–13 percent by 2040. Other vulnerable groups include the elderly, women
(especially those employed in agriculture), high-risk communities (especially near the Aral Sea and other climate-
risk areas), and people with disabilities (because of social marginalization, lower skills, and inaccessible public
infrastructure).54
People with disabilities are at greater risk from climate change impacts because they are largely excluded
from social and political engagement. Challenges in accessing essential public services and infrastructure,
such as medical exams, assistive devices, disability pensions, public transportation, and public facilities, will be
greater in the aftermath of climate-induced disasters. The demand for social and medical assistance usually rises
following a disaster, and the logistical challenges associated with accessing assistance multiply.
The impact of extreme temperatures FIGURE 6.1. REDUCTIONS IN REPORTED EMPLOYMENT AMONG WORKERS
due to climate change will reduce IN UZBEKISTAN DURING PERIODS OF EXTREME HEAT, BY AGE RANGE,
labor productivity and increase 2018–2023
Reported reduction in work when temperature
mortality risk. High temperatures is above 37° C (vs. 35°C or below)
affect the productivity, health, and
15-25 26-35 36-45 46-55 56+ Total
safety of workers, particularly those 0,0%
in outdoor or physically demanding -2,0%
occupations. As temperatures rise, -4,0%
workers experience accelerated -6,0%
fatigue, dehydration, and other heat- -8,0%
related ailments, which reduce a -10,0%
person’s ability to engage in strenuous
-12,0%
activity. In Uzbekistan, extreme
-14,0%
temperatures during the summer
-16,0%
months lead to large reductions in
Reduction in any work (week)
the number of days of work. By 2040, Reduction in work days (in week)
heat stress could result in a labor
Source: World Bank estimates using Listening to the Citizens of Uzbekistan survey
supply shock ranging from around data, 2018–2023.
–0.07 to –0.13 percent of the labor Сообщалось
Note: Figure depicts о сокращении
reductions in reportedвыхода
work на работуsummer
during при температуре
months when
выше 37°C
temperature is 37°C or higher (по сравнению
(any reported work inс 35°C или ниже)
preceding 7 days or number
force and job losses as high as 2.0–
of days worked
15-25in previous 7 days) relative
26-35 36-45 to a benchmark
46-55 of 56+
no recordedВсего
high
3.5 percent are possible over 2041– temperature (35°C or lower). Temperature is measured using remote sensing;
0,0%
2050. Reported employment could reported work is based on monthly survey data.
-2,0%
-4,0%
-6,0%
54
Auerbach and Yusupov 2023.
-8,0%
-10,0%
-12,0%
59
-14,0%
-16,0%
Сокращение любой работы (неделя)
Сокращение рабочих дней (в неделю)
decline by up to 7.1 percent during weeks with any number of days of extreme heat. Youth (ages 15–25) and
older workers (56+) are particularly vulnerable and as much as twice as likely to reduce their days worked during
periods of extreme heat (see Figure 6.1). Illness and excess mortality rates rise with the frequency of abnormal
temperatures, especially among people with chronic lung or heart illnesses or other health conditions and the
elderly. A review of temperature-related effects on mortality across 13 countries found that more than 7 percent
of mortality was attributable to suboptimal temperatures.
By increasing the pressure to migrate in search of better livelihood opportunities, climate change could
lead to higher rates of internal migration unless adaptation measures are adopted. The agricultural system
is resource inefficient in Uzbekistan compared to comparator countries, with output per unit of water among
the lowest in the world. As climate change threatens to reduce the availability of resources, especially water,
maintaining or increasing agricultural output will require large efficiency improvements. The least productive
agricultural areas may become uneconomical due to increased resource scarcity. As a result, domestic migration
may become more pronounced in those hotspot areas. The regions most likely to be under the greatest stress,
including west of Urgench, Karakalpakstan, and the area surrounding the Aral Sea (see map 6.1), may experience
more rapid out-migration than otherwise similar parts of the country. Climate-induced in-migration opportunity
hotspots are projected in more fertile areas of the Ferghana Valley and in the area around Tashkent by 2050,
driven largely by greater water availability and crop productivity.55
The people of Uzbekistan will drive FIGURE 6.2. CHANGE IN POPULATION IN CITIES, PROVINCES, AND
the country’s green transition DISTRICTS OF UZBEKISTAN BY 2041–2050
through their skill sets, knowledge,
Cities Population Change
innovation, and behavior change. Provinces Hab/Sq km/Yr
The NZ2060 scenario forecasts Districts -15

-8
Kazakhstan
massive job growth in the renewable 0
8
energy sector, manufacturing sector, 15
higher value-added service sectors,

such as insurance and information Nukus
and communication technologies,

Uzbekistan
and other service sectors such Urgench Kyrgyz
Republic Tashkent
as hospitality. New jobs are also Namangan

Andizhan
Gulistan
expected in construction, transport, Navoi Dzhizak
Fergana
and the installation and operation Bukhara

Samarkand
and maintenance of new, greener Turkmenistan

Karshi
technologies, which will require Tajikistan
workers with the right skills. A

successful and sustainable green I. R. of Iran
Afghanistan
Termez
transition will therefore rest on having Pakistan
enough people with the skills to fill the Source: World Bank analysis. Forthcoming.
new jobs and innovate and willing to
change their behavior in ways needed to sustain the transition. Города Изменение численности
населения, чел/кв.км./год
Области
-15
Районы
Integrating human development policies in education, social protection, health, and social cohesion -8 within
Казахстан 0
the GoU’s policy instruments to support its Climate Change Action Plan and green growth will 8 be crucial
15
in bolstering resilience and helping people adapt to climate change and reduce carbon emissions (table
6.1). Such policies can play a vital role in strengthening the resilience of people against changing climate and
climate shocks, mitigating the unintended negative consequences
Нукус
of climate actions on the most vulnerable,
and ensuring that the gains of a greener economy are equally distributed
Ургенч
Узбекистан and shared. The needs of vulnerable
groups should be at the center of the climate change agenda, to ensure that the transition isТашкент people centered
Наманган
and inclusive. Policies should focus on adaptive labor market programs, knowledge and skillsГулистан development, and
Андижан
Фергана
awareness building to incentivize behavior change. Бухара
Самарканд
Карши
55
Clement et al. 2021.
Иран Термез
Пакистан
60
The rest of this chapter describes key pathways for strengthening people’s resilience to climate change
impacts—as well as other sources of welfare risks—through human development policies that enable a just
transition. These pathways include the following:
• Developing an ASP system capable of rapid response when vulnerable population groups are heavily affected
by various welfare risks, including climate-related risks.
• Building the skills to prepare people for a green transition, including through job training and other active
labor market policies.
• Changing mindsets and behavior to raise awareness of climate change and thereby inform people about
adaptation options and opportunities from decarbonization.
• Strengthening integrated information systems to better prepare Uzbekistan’s institutions for targeted and
timely response.
• Establishing cross-sector and inter-agency coordination mechanisms.
• In Uzbekistan’s cultural context, local-level institutions can play a major role in identifying vulnerable
populations and implementing solutions.
TABLE 6.1. A PEOPLE-CENTERED FRAMEWORK FOR CLIMATE CHANGE AND THE GREEN TRANSITION
Integrating Abating
Adapting to Mitigating climate Enabling the workers and unintended
climate change change green transition societies into consequences of
green economy climate change
Resilient edu- Decarbonization Education sys- Inclusive ed- Inclusive educa-
cation systems of human devel- tems to support ucation and tion and health
(curricula, pro- opment service skills develop- health policies policies to sup-
grams, institu- delivery (educa- ment, research, to support and port poor peo-
tions) tion, social and and innovation broadly share the ple’s adaptation
health services that enable green benefits of green to the impacts of
ASP systems
provision) transition (cur- transition some reforms
Human
Responsiveness ricula, programs,
and social Public works with Safety nets and Social protection
to shocks and institutions)
development mitigation focus active labor mar- and labor market
inclusive health
Social protection ket programs for reforms to pro-
systems Targeted sub-
and labor market just transition tect the well-be-
sidies (energy,
reforms to sup- ing of poor peo-
housing) Inclusive health
port green jobs ple in the face of
systems to cope
and changing reform impacts
with emerging
nature of work
diseases Public works
Adaptation of human development
infrastructure (education and health
facilities)
Decarbonization of human develop-
ment infrastructure (education and
health facilities, health waste man-
Cross-cutting agement)
areas
Skills development across life cycle
Education, health care services, and skills development for climate adaptation
Education and skills and research and development (R&D) for green transition
Behavior changes and increased awareness
Enabling behavior change through technological innovations and education
Source: World Bank compilation based on Rigolini, Jamele. 2021. Social Protection and Labor: A Key Enabler for Climate Change Adaptation
and Mitigation. Social Protection and Jobs Discussion Paper; No.2108. World Bank, Washington, DC. and Sanchez-Reaza et al. 2023.
Making the European Green Deal Work for People. World Bank, Washington DC.
61
6.1. Adjusting social protection programs to adapt rapidly to
people’s needs
Effective social protection climate-adaptation response requires stronger institutions and financing
anchored in a solid policy framework for ASP. The newly created Agency for Social Protection is mandated to
coordinate and oversee the full range of social protection measures.56 The establishment of a dedicated agency
for social protection sets the right momentum to develop a policy framework, which Uzbekistan currently lacks.
A robust policy framework would define (a) the ASP policy objectives and links with the national social protection
strategy; (b) specific social protection program adjustments to be made in the event of a disaster; (c) interagency
disaster and emergency response arrangements across relevant state actors namely the Ministry of Employment
and Poverty Reduction (MEPR), the Ministry of Emergency Services, Uzhydromet, and the Pension Fund, among
others; (d) the financing sources and emergency budget procedures; and (e) monitoring and evaluation indicators,
data collection sources, and frequency of reporting. The Agency for Social Protection is best positioned to develop
such a policy framework for adaptive social protection, including the preparation of the necessary legislation and
protocols for social protection programs scale up and down. New climate financing instruments could be deployed
based on savings from the removal of energy subsidies and carbon taxes.
Investments are required in adaptive social protection delivery and information systems to strengthen
crisis preparedness and enable timely and inclusive response to climate-induced disasters. The social
protection system in Uzbekistan covers over 50 programs nationwide, reaching 55 percent of the population.
Most social protection programs are designed to address traditional social risks, not emergencies. Predefined
response mechanisms and operational procedures to activate the social response in a timely manner during
and after climate-related shocks are not existent. Currently, the government responds to crises with ad hoc
support, making one-off decisions to provide benefits and services after disasters or to adjust delivery processes
(payment and benefit amount) following a disaster event. Operational processes to govern the implementation of
social protection program adaptations to climate risks and shocks need to be developed and adopted.
The MEF has made substantial progress in the past five years to roll out an electronic and inter-operable
social registry nationally. However, only one in four households in the poorest per capita income quintile
is registered; hence, outreach and poverty targeting rules should be reformed to reduce exclusion errors. In
addition, it takes time to verify eligibility which is based on the average per capita family income over the past 12
months. The ‘adaptation’ potential of the social protection delivery system could be better exploited by defining
specific climate events and indicators triggering social protection responses.57 For example, the social registry—
now hosted in the new Social Protection Agency—should be upgraded to enable automatic enrolment procedures
of vulnerable citizens in affected areas through their integration with other disaster risk management (DRM)
information systems, such as the proposed ‘seismic early warning system’. With adaptive delivery systems, social
protection benefits such as cash transfers, minimum crop guarantees and vouchers to purchase seeds could be
activated to respond to crop losses for example, and food transfers activated to address reduced access to food
and displacement due to climate-related disasters.
Livelihood support and social insurance policies would need to be adapted to increase long-term resilience
to climate change and address losses due to a changing climate. Strong social insurance programs for
individuals, businesses, and the self-employed in high-risk areas will help protect against the loss of property
and livelihoods. Farmers and people who experience the harshest negative impacts of climate change need
to be assisted in moving to less affected areas through mobility and housing allowances, assistance in finding
jobs, and access to public education, health, and social protection services. Where households are not able to
relocate, climate-adaptation measures should be integrated into existing social protection programs (including
public works, Low-Income Family Allowance (LIFA), and in-kind assistance for farmers to strengthen the resilience
56
Decree of the President of the Republic of Uzbekistan dated 01.06.2023, No. 82. The seven remits of the agency are social protection, persons with
disabilities, protection of minors, improving women’s protection, working with families, young people, the elderly, and directing social security programs.
57
If drought triggers are used, for example, as in the Kenyan Safety Hunger Net Program, the basic rain or vegetation indexes are applicable.
62
and ability of households and communities to cope with climate shocks. Action should be taken sooner rather
than later to reduce vulnerability and limit future costs.
Finally, mitigating the unintended consequences of government climate actions is central to social
protection policies and important to win support for climate policies and avoid social unrest.
6.2 Building the skills needed for a green transition

Skills development should be a cornerstone of adaptation and the green transition in Uzbekistan (see
chapter 5). Many of the skills required to enable a green transition are foundational, helping people interpret new
situations, adapt their thinking, collect information, and make decisions under uncertainty. For that reason, the
quality of formal education is a critical contributor to green skills. The government is committed to upgrading formal
education curricula. The curriculum at all levels of formal education and training should cover key sustainable
development issues to build climate risk awareness and inspire behavioral and consumption change later in life.
Learning outcomes need improvement too: recent studies find that learners are underperforming in language
comprehension skills and in applying numeracy skills to problems.58 Uzbekistan could benefit from having more
people (than the current 33 percent) enter science, technology, engineering, and math (STEM) programs, which
impart crucial skills for the green transition.59 Finally, gender disparities in science subjects need to be addressed
to maximize the country’s human capital.
Human capital development is also essential to bolster technology adoption and the creation of local
solutions through R&D. Higher education institutions need to offer programs that develop the skills needed to
enable the adoption of new technologies and the creation of local solutions through R&D. Low capacity to adopt
technologies and commercialize research can be explained by inadequate skills development in Uzbekistan.60
Partnerships between industry, research institutions, and universities need to be encouraged to support advances
related to climate change and green transition.
Upskilling may be all that is needed to fill some new jobs, while other jobs may require more education and
training. A mapping of the similarity of tasks between new and legacy jobs indicates, for instance, that the fast-
growing profession of solar photovoltaic panel installer is similar to the existing work of roofers and installation
and repair workers, suggesting that these workers could be upskilled to fill the new jobs (Figure 6.3). In contrast,
wind turbine operators need a new set of skills, and equipping a group of workers at scale with the necessary
skills will require more time and policy support. Active labor market programs could provide targeted training
based on assessments of skills of works. In general, growing occupations in a green transition tend to involve
higher educational requirements than legacy jobs, and so education and well-targeted training programs will be
critical. Policies to encourage skilled migration could also ease labor supply constraints.
58
Uzbekistan has made remarkable progress in expanding access to preschool education from 28 percent in 2017 to almost 72 percent in
2023, but learning gaps remain in basic subjects at the primary school level. The average achievement scores of fourth graders on a nationally
representative assessment were 50 percent in reading, 52 percent in math, and 59 percent in science (with some of the poorest students almost
4 years behind their richest peers). By age 18, an Uzbekistani student has achieved only 62 percent of educational potential (UNICEF 2019a).
59
UNICEF 2019b.
60
Elci 2020; Kurbanbaeva 2020.
63
FIGURE 6.3. TASK SIMILARITY FOR SELECTED GROWING OCCUPATIONS AND LEGACY OCCUPATIONS
Wind Turbine Construction First-Line Supervisors Solar Photovoltaic Electrical Power-Line Electrical
Service Technicians Laborers of Mechanics, Installers Installers Installers and Engineers
and Repairers Repairers
0,16 40
Highway Maintenance Workers
Construction Equipment Operators
0,14 Radio & Cellelar Installers 20
Difference in median wage

Roofers Telecom Line Installers
Rotary Drill Operators, Oil & Gas
Electrical Installers, Transport
Task similarity
Mining & Geological

0,12 Engineers
Mining Machine Operators

Paving Equipment Operators 0
Earth Drillers, Exc. Oil & Gas Installation Agricultural Engineers
& Repair Workers Elevator Installers
0,10 Electrical Installers, Transport
Railroad Signal Operators
Car Electronic Installers Marine Engineers
Tapers Electrical Technicians
Refractory Materials Repairers Heating & AC

Aerospace Engineers
Civil Engineers -20
Avionics Technitians Mechanics Plumbers
0,08 Hoist and Whinch Operators
Telecom Line Installers Construction
Supervisor
Tree Trimmers & Pruners
Parking Enforcers
Stationary Engineers Firefighters
-40
0,06 Construction Managers
Mining & Geological Engineers
Fish & Game Wardens

Note: Bubble size indicates total employment per occupation in the United States. Colors indicate whether moving to the growing occupation
would increase wages (yellow) or decrease them (purple). Occupations with a red label are shrinking in the net zero scenario. Some
occupational titles have been shortened for readability.
Специалисты Строительные Супервайзеры первого Монтажники и Монтажники и Инженеры-

Activeповетряных
labor market policies
обслуживанию
турбин
рабочие 61
should be reoriented
звена механиков
по микросхемам to supportремонтники
ремонтники солнечных
фотоэлектрических workers vulnerable
линий
электропередачи to the green transition
электрики
установок
and integrate them into the green economy. Some workers are more vulnerable than others to the green
transition, in particular, those in brown jobs (polluting sectors) and those workers in jobs expected to undergo
0,16 40
substantial change in taskРаботники content. 62
Existing one-stop shops for employment services and professional
по обслуживанию дорог
training can play a key role in facilitating the transition of workers to greener jobs but are not well equipped
Операторы строительной техники
to play
0,14 this role. The authorities can prepare by developing a forward-looking assessment
радио и сотовой связи and regular monitor
%, разница в среднем возрасте

Кровельщики Монтажники 20
Монтажники телекоммуникационных линий
of skills and occupations in demand,
нефть и газ in close coordination with the private sector, to inform the design of
Операторы роторных буровых
установок,
Сходство задач
Электромонтажники
Инженеры-горняки
training
0,12 curricula and to target active labor market policies. As part of this, employment иsupport геологи centers (ESCs)
Операторы оборудования
0
should establish stronger partnerships
Операторы горных машин для укладки тротуарной
with
плитки
employers
Бурильщики грунта, кроме нефти и газа creating
Монтажники
green jobs to expand and re-orient
Сельскохозяйственные
инженеры
the supply
и ремонт Монтажники лифтов
of internships,
0,10 apprenticeships, and wage subsidies. Vocational training
Электромонтажники canж/дalso
Операторы сигналов be adapted to respond to
Транспорт Морские инженеры
green skills demand.
Намотчики
Механики отопления
Техники-электрики
Аэрокосмические инженеры
Инженеры-строители -20
Специалисты по ремонту огнеупорных материалов
Специалисты по авионике и кондиционирования
0,08 Операторы подъемников и лебедок
Монтажники телекоммуникационных линий Руководители
строительства
Триммеры для деревьев и секаторы
6.3
0,06Changing mindsets and behavior
Охранники парковки
Стационарные инженеры Пожарные
Инженеры-горняки и геологи -40
Руководители строительства Надзиратели за рыбой и дичью
Building public awareness of climate change is indispensable for a sustained green transition. Dissemination
of information about climate change and the threats it poses to human well-being, households, and communities
can be a catalyst for behavioral changes that are supportive of a green transition.63 A survey of over 4,000
households in five regions of Uzbekistan found very low levels of public awareness of the causes and consequences
of climate change (box 6.2)64 Local self-governing bodies that intermediate between local (district) administrations
and citizens, as well as teachers, the media, and other trusted authorities, can play a decisive role in raising
awareness of climate change.
61
Active labor market policies aim to assist job seekers to find employment, keep workers employed, increase their productivity and earnings, and
improve the functioning of labor markets.
62
Lack of data did not allow to quantify the incidence of workers in green and brown jobs.
63
Allcott 2011; Banerjee et al. 2013; Conley and Udry 2010; Zilberman, Zhao, and Heiman 2012. For related literature on how information provision
spurs political accountability, see Pande (2011) and Dunning et al. (2019).
64
Uzbekistan Rural Infrastructure Development Project 2021 Survey.
64
BOX 6.2. PUBLIC AWARENESS OF CLIMATE CHANGE REMAINS LOW IN UZBEKISTAN
A 2021 survey of 4,000 households in Uzbekistan reveals the following:

• Less than half of the people surveyed were familiar with the meaning of climate change. On average, women,
less-educated residents, and lower-income residents demonstrated less awareness.
• When residents were asked about the effects of climate change in their village, only 32 percent of respon-
dents indicated that climate change has caused temperatures to become more irregular in their village.
• Close to 70 percent of respondents who experienced negative economic impacts of climate change and 45
percent of respondents who experienced a recent natural disaster reported having done nothing to cope or
adapt.
• Socioeconomic status shapes adaptation strategies in a consistent pattern: the wealthiest respondents are
far more likely to have taken actions to adapt than the poorest respondents.
• Over half of respondents either believe that there is nothing they can do or do not know what they can do to
mitigate the impact of future disasters on their household.
• Respondents generally believe that the level of resources and training available in their village is insufficient
to cope with the impacts of climate change.
Source: Uzbekistan Rural Infrastructure Development Project 2021 Survey.
Once they understand the issues, people favor investments in decarbonization and in climate change
mitigation and adaptation. Ninety percent of respondents to the Listening to Uzbekistan December 2021
survey support public policies to reduce emissions, and 66 percent think that clean energy should receive
public financial support even if it means reducing fossil fuel subsidies.65 More than half the respondents support
higher taxes on polluting activities. This is a good starting point for increasing public support and incentivizing
behavior change. As Uzbekistan designs its climate change policies, it would be prudent to communicate a
coherent message that climate change mitigation is aligned with social preferences and individual economic
interests and that economic incentives penalize emissions through carbon pricing and reward mitigation-
supporting behavior through lower prices and cost savings. The high cost of lowering emissions, especially
in transport and buildings, argues for incentives for lower socioeconomic groups and less developed regions,
which may face higher obstacles in adjusting their behavior.
6.4 Strengthening integrated information systems

Uzbekistan can benefit from investing in data and information gathering that can be used to better link
climate change challenges to people’s lives. Despite the country’s efforts to collect statistical information
through Labor Force Surveys and Household Budget Surveys, information cannot be easily established about
climate-related challenges facing people. Surveys should include questions on air pollution, heat waves, flooding,
and erosion and their impact on household livelihoods to understand the health, employment, poverty, and
education impacts on people. Uzbekistan could benefit from conducting a shocks and resiliency survey to collect
information on which shock affects households and what coping mechanisms they employ.
Better data collection and analysis can lead Uzbekistan to improve the coverage and ex ante climate
vulnerability targeting of its social protection systems. The Social Protection Single Registry fails to reach
three-quarters of the poorest share of the population. Social protection programs need to be linked to disaster
risk management systems to reduce risk, strengthen and accelerate response, and support recovery. These
developments should be leveraged in an ASP setting and incorporate both poverty and social protection indicators
to better assess beneficiary targeting and program outcomes. Improving targeting ex ante to a shock is important
to be adaptive and efficient.
65
Seitz 2021.
65
Human development policies in education, social protection, health, and social cohesion will be crucial
in bolstering resilience and helping people adapt to climate change and reduce carbon emissions. Such
policies are also vital for integrating people into the green economy and for abating the unintended consequences
of the green transition for vulnerable people. The needs of vulnerable groups should be at the center of the
climate change agenda, to ensure that the transition is people-centered and inclusive. Policies should focus on
ASP programs, knowledge and skills development, and awareness building to incentivize behavior change.
66
Chapter 7
Policy reform agenda
on climate and
development: Summary
of recommendations
The central business district of Tashkent, Uzbekistan. 67

Photo by Uldis Laganovskis / stock.adobe.com Country Climate and Development Report: Uzbekistan
7.1 Urgent climate actions
The CCDR proposes a set of urgent actions to advance decarbonization and adaptation to climate change in
Uzbekistan in the short term. The following actions include key policy and investment priorities to address the
most critical challenges for unlocking a green transition in Uzbekistan.
Priority area Recommended action
Cross-cutting climate action Adopt more ambitious NDC targets and carbon-neutrality targets. It would be
important for the government to issue more ambitious NDC targets and formally
adopt carbon-neutrality targets for the energy sector and the overall economy.
Current targets could also be consolidated into an overarching NZ2060 action
plan.
Cross-cutting private sector Continue and accelerate existing reform programs to improve business
development dynamism, enhance the investment environment, and strengthen the
private sector. Underdeveloped market institutions and an excessive state
presence in the economy must be addressed to enable the private sector to
lead the way in a green transition. Reforms are already under way and need
to continue, including reforming state enterprises; ensuring fair competition
and a low burden of doing business; and establishing a clear, fair, and inviting
environment for foreign investment.
National green taxonomy, Develop a national green taxonomy and monitoring, reporting, and
monitoring, reporting, and verification system. A foundation for identifying and targeting green policy and
verification regulatory measures should be established, along with robust monitoring of
green criteria (to prevent greenwashing or policy inconsistency, for instance).
Energy pricing Complete energy sector subsidy reforms. It would be important for the
government to adhere to the commitment of tariff reforms to achieve full
cost recovery for gas and electricity by 2026, while protecting the vulnerable
population.
Buildings/Energy Efficiency Accelerate the implementation of energy efficiency programs in buildings.

Energy efficiency measures require a scale-up from the current levels and
increase to a coverage of close to 0.8 percent of existing building stock annually.
Heat pumps are a critical and mature decarbonization technology that could be
supported in the short term. Bulk procurement of efficient technologies could
be rolled out in the near term to improve efficiency and reduce emissions in
buildings and industry sectors.
Power sector/natural gas Continue to scale up competitive and private driven renewable energy
generation. Adhere to the commitment of no new coal development, while
limiting natural gas to domestic use, prioritizing power and industry sectors.
With natural gas production expected to peak in 2023 and then decline, limited
natural gas should be reserved for domestic use, driven by economy and
efficiency consideration, and prioritized for power and industry sectors. Systems
should be developed that will enable the country to cope with increasingly
limited gas availability in future winters (emergency response protocol).
Natural gas Reduce losses, fugitive emissions, venting, and incomplete gas flaring.
Measurement campaigns and detailed studies are needed to identify strategies
and action plans to reduce fugitive emissions, venting, incomplete gas flaring,
and gas losses.
68
Priority area Recommended action
Green urban development Focus on green urban development. Recognizing cities as engines of growth,
Uzbekistan has set sustainable urbanization as a priority agenda. Compact
development and systematic green development should be adopted as the
main drivers of reform while applying biodiversity planning, green master plans,
urban mobility plans, and efficient delivery of public transport.
Water resources and Increase the efficiency of water use in irrigation. To promote efficient use of
irrigation management water resources and adapt to increasing water scarcity, it will be important
to promote the adoption of water- and energy-efficient technologies, in
combination with complementary measures and climate-aligned agriculture
policies.
Climate-smart agriculture Strengthen incentives for investments in climate-smart agriculture. From

and land policy a climate perspective, it is important to strengthen land tenure security,
allow farmers to choose what to cultivate on their land, and promote land
conservation investments and other investments in climate-smart agriculture.
As planned by the government, that will require enhancement of land tenure
security, improvements in land leasing arrangements, and reform of the crop
placement system.
Landscape restoration Prioritize investments in adaptation and landscape restoration. Investments

in adaptation and landscape restoration need to be prioritized based on the
potential for adoption of climate-smart technologies, the speed of investment
recovery, and socioeconomic factors. The highest potential for such investments
is in eastern Uzbekistan. Alternative investments need to be considered in
other areas, to attain regional development and social objectives.
Foundational skills Develop foundational skills and upskill workers to better integrate workers
into a green economy. Many of the skills required to enable a green transition
are foundational, helping people interpret new situations, adapt their thinking,
collect information, and make decisions under uncertainty. For that reason,
the quality of formal education is a critical contributor to green skills. The
government is committed to upgrading formal education curricula.
Social protection Make the social protection system more adaptive to enable crisis
preparedness, faster crisis response, and greater resilience among people.
Develop a framework of adaptive social protection, including policy goals,
institutional arrangements, data, program adjustments, and financing for
emergency response. Social assistance and insurance delivery systems should
allow to identify climate-vulnerable households, allow automatic enrolment
for fast post-shock support response; operational processes to guide the
implementation of crisis response need to be developed and adopted; active
labor market policies—notably professional skills training and public works—
should be adapted to support workers that are vulnerable to job losses due to
the green transition; and integrate them into the green economy.
Subnational governance of Increase the responsibilities of the municipal government. Empower

climate action subnational governments, including mahallas and regional Uzhydromet offices,
to support appropriate local climate policy design and implementation. This
would entail more clearly defining roles, responsibilities, and accountabilities
of subnational administrations across tiers of territorial administration, aligned
with their fiscal and administrative capabilities, and increasing resources for
local climate development action.
69
7.2 Medium-term climate actions
This CCDR proposes a set of medium-term actions to tackle the more challenging and longer-term
reform needs across sectors that are most critical to advancing decarbonization and climate adaptation
objectives. The priority recommendations include strengthening institutional arrangements and coordination
mechanisms for climate change policies and investments at the central and subnational levels, instituting
national implementation planning (such as through the Long-term Strategy on climate change), and tightening
regulation (including the adoption of legally binding national climate targets).
Objective and policy area Recommended action

Decarbonization
Energy sector Accelerate the market transition through a new wave of reforms. Form
an independent energy regulator, establish tariff-setting mechanisms,
commercialize NEGU, and develop institutions to support a wholesale energy
market.
Power sector Continue decommissioning old and inefficient thermal plants, expand the
use of renewables, and strengthen energy system infrastructure. Build on
earlier successes and continue to scale up renewable energy and decommission
old thermal power plants. Upgrade transmission infrastructure to enable large-
scale penetration of renewable energy and ensure reliable energy supply,
enhancement of regional interconnectivity, and increased electricity trade.
Buildings, sustainable Promote new energy efficiency programs, strengthen standards, and deploy
heating, and industry innovative financing mechanisms. Increase the scope of energy efficiency
programs to residential buildings and scale up construction of low-carbon
housing and settlements through policies and regulations for low-carbon
housing, dedicated funding to support building retrofitting, and investments in
Uzbekistan’s district heating systems. Establish minimum energy performance
standards for industry and for all types of energy-using equipment to achieve
efficiency gains and support energy security objectives.
Transport Define targets, standards, and incentives for the transport sector, including
standards for fuel economy, electrification targets, and the provision of
incentives to promote a shift from internal combustion engines to eVs. By
2030, consumers will require incentives to adopt eVs or retrofit older vehicles,
especially with the gradual phase out of compressed natural gas in the
transport sector.
Methane emission Implement waste management strategy. To reduce methane emissions,
reduction through improved waste collection systems need to minimize open dumping and uncontrolled
waste management landfilling, manage GHG emissions from landfills, and divert organic waste
from landfills. Establish regulatory and institutional frameworks to facilitate
compliance, accountability, and efficient enforcement.
Methane emissions Decarbonize agriculture through climate-smart livestock management to
reduction in livestock reduce methane emissions. Strengthen the implementation and monitoring
mechanisms for commitments on climate change in the strategy of agricultural
development; develop a system to monitor progress on farmers’ adoption of
the Uzbekistan Code of Good Agricultural and Environmental Practices.
Air quality Develop an integrated air quality management program for improving air
quality while reducing GHG emissions and increasing adaptation. This triple
objective must be informed by an analysis of tradeoffs and synergies between
air quality management, adaptation strategies, and decarbonization options,
and integrated solutions should be identified for achieving all three objectives,
when possible.
70
Adaptation: water, agriculture, forests, and land nexus
Water Promote regulatory reforms to improve management of service delivery

and increase water-use efficiency. Implement government plans to transfer
irrigation and drainage network management to voluntary associations of
agricultural producers and other water consumers, private companies, or
agricultural clusters. Reduce reliance on taxes and transfers to finance
delivery of water services and instead increase direct cost recovery from
water users. Implement recent plans to introduce flexible water allocation
mechanisms, formalize a system for exchanging water entitlements, modernize
infrastructure, and improve the water accounting system.
Agriculture Optimize livestock management. Accelerate efforts to increase livestock

productivity through improvements in animal health, management, and
breeding programs, combined with measures to control the growth of the
livestock herd and a reorientation toward lower-emitting species like fowl.
Forestry and land Promote sustainable land restoration. Identify adaptation priorities spatially
management for the maximization of ecosystem services and deployment of climate-smart
and resilient livestock husbandry, soil management, and agricultural practices
associated with increasing vegetation. Incentivize climate-smart technologies
adoption with access to green finance to achieve economic efficiency for
high, climate-resilient, and inclusive agricultural growth and restore degraded
productive lands.
People
Skills for a green transition Make skill development a cornerstone of adaptation and the green
transition. Improve the quality of the basic and secondary education systems
to ensure the acquisition of foundational skills and partnerships with industry.
Support new vocational education and training and higher education programs
delivering skills for a green economy.
Skills for health sector Prepare medical workers to respond to climate-induced diseases. Enhance
curriculums for the training of medical workers on managing waterborne and
vector-borne and respiratory diseases to provide adequate response to the
climate risks in health sector in Uzbekistan.
R&D and innovation policy Develop human capital to support the adoption of technologies and enable
the creation of local solutions through R&D. Enhance partnerships between
industry, research institutions, and universities to support particular niche
technologies related to climate change and green transition. Increase the level
and the efficiency of investment in agriculture science, extension services, and
innovation.
Health sector Implement an integrated ‘One Health’ approach throughout the public health
preparedness system for adequate preparedness, detection, and response to the climate-
induced health threats, especially an increased risk of communicable
diseases. The ‘One Health’ approach represents a collaborative and
multisectoral framework, that allows health systems to provide adequate
prevention and response to the health threats shared by people, animals, and
the environment.
71
Climate awareness Build public awareness of climate change to support a sustained green
transition. Disseminate information about climate change and the threats it
poses to individual well-being, households, and communities can be a catalyst
for behavioral change.
Financing and enabling environment

Green financial regulation Develop systems to manage financial sector risk. The central bank could
develop a regulatory framework that incorporates a climate risk strategy
that considers climate-related and environmental risks and that discloses
banks’ exposures to these risks; develop green and sustainability dashboards
and publish systemwide analyses. A taxonomy along with sustainability
reporting standards (GHG accounting standards) and appropriate institutional
arrangements would be needed to properly disclose and monitor green
investments and their green impact.
Green financial products Develop financial markets and new products. Implement foundational reforms
to improve the financial sector’s capacity to raise financing, including deposit
insurance law and bank restructuring law. Support is needed to encourage
development of the insurance market, including disaster risk insurance. Green
financial support programs are needed (such as national developmental
financial institution, state-owned commercial banks, and Uzbekistan fund for
reconstruction and development).
Disaster risk and climate Develop a financing framework to manage climate risk and fund only critical
adaptation financing needs. A financing framework is needed that covers major sources of funds
framework (from the public sector, development assistance, carbon markets, and private
finance) and identifies public expenditure requirements that cannot be met by
the private sector. This should be complemented by fiscal risk analysis that
includes medium- to longer-term climate risks and risks arising from climate-
induced and climate-exacerbated natural disasters and which is embedded in
a broader fiscal framework.
Market-based incentives Develop market-based incentives, such as a carbon tax. To ensure a private
sector-led transition, private actors need to initiate change in response to
market incentives. This calls for carbon pricing measures such as a carbon tax
that can be implemented upstream and that can generate a revenue stream to
support public finances.
International trade Reduce barriers to international trade in goods, services, and intellectual
property. To access green markets abroad and the quality inputs needed
for higher value-added/low-carbon activities at home, Uzbekistan needs
an effective and comprehensive trade framework. joining the world trade
organization is an important step, as is the associated alignment of procedures
and minimization of the burdens of tariffs and other regulatory and practical
constraints to trade.
Improve public expenditure Improve public expenditure management and increase its efficiency to
management create fiscal space for financing some of the costs of the green transition. A
strong consolidation strategy to move toward fiscal balance will be important
to create space for the transition.
Public investment Mainstream climate concerns into public investment decisions. This entails
management incorporating climate criteria into public investment management appraisal
and selection and integrating climate change risks into infrastructure
regulation and land zoning. Climate objectives need to be incorporated into
core infrastructure governance and asset management.
72
Climate data, governance, and coordination across sectors
Institutional arrangement Streamline institutional responsibilities for climate action. There are gaps
and capacity and overlaps between the institutional arrangements for the green economy
and the climate functions of the Ministry of Ecology, Environmental Protection
and Climate Change. Finalizing the national climate change strategy and
establishing a unified regulatory framework under a national climate change
law would strengthen the legal basis for climate change policy and action.
Climate data infrastructure Improve data infrastructure. Transparent, integrated, and smoothly functioning
climate data infrastructure is needed at the national and subnational levels.
Capacity building and training are also needed in measurement, evaluation,
hydrological modeling, and statistical analysis for decisions in managing risk
and vulnerability. Some of the support could be targeted to the Statistics
Agency and Uzhydromet.
Climate action Empower mahallas, the lowest tier of territorial organization in Uzbekistan,
to promote local climate action. Government capacity building for mahalla
specialists on climate change risks and strategies for mitigation, combined
with devolving financing to mahallas, can enable mahallas to raise awareness
of climate change in the community, develop local climate actions plans, and
implement local initiatives that strengthen community resilience and capacity
for adaptation.
73
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FDI Foreign Direct Investment United Nations Framework

economic model, the expected rapid 8%

Percentage change relative

Climate risks are deeply intertwined

ентное изменение относительно

Reference scenario Net zero 2060 scenario

Agriculture Commercial Residential Agriculture Commercial Residential

Source: World Bank analysis.

By pursuing carbon neutrality, Uzbekistan can strengthen energy security.

Difference in GDP growth from baseline

(annual average percentage change)

Current policies, including the Nationally Determined

Reforming agriculture policies is a FIGURE ES5. CLIMATE ADAPTATION INVESTMENTS IN UZBEKISTAN

Priority area Recommended action in the short term

Subnational Increase the responsibilities of municipal government by empowering

Energy efficiency Accelerate the implementation of existing energy efficiency programs in

Continue the scale-up of competitive and private sector-driven renewable

Climate-smart Strengthen incentives for investments in climate-smart agriculture by

Landscape Prioritize investments in adaptation, forest, and landscape restoration based

1.2. How big is the challenge?

FIGURE 1.1. POPULATION DENSITY AND CLIMATE RISKS IN UZBEKISTAN, 2030

Cities Population Dens., Cities Climate Change Risk Score

livelihoods or facilitate outmigration to other regions.12

The Charvak Reservoir, Tashkent region, Uzbekistan.

2.2. The institutional and regulatory framework for climate change

Subnational governance mechanisms can be progressively strengthened and supported. Subnational

BOX 2.3. CLIMATE ACTIONS WITHIN THE AUTHORITY OF MUNICIPALITIES

strengthens food security. Improving building 120.000.000

А solar power plant.

Reference scenario Net zero 2060 scenario

Source: World Bank analysis.

Under the reference Инерционный

млн тн. CO2 /год

80 More ambitious 3+ GW storage

60 New efficient 13 GW solar +

Power / Cross-Cutting Buildings Industry Transport Agriculture

3.2. How to strengthen energy security and transition away from a

natural gas economy

Капитальный Солнечные и ветровые ЭС: Массовое внедрение Жилые здания: нулевой

(1.5 percent), generating 2023 года

2020 2025 2030 2035 2040 2045 2050 2055 2060

Энергетика / межотраслевые меры Здания Промышленность Транспорт Сельское хозяйство

Source: World Bank analysis.

4000.0 Reference scenario 4000.0 Net zero 2060 scenario

Source: World Bank analysis.

4000.0 Инерционный сценарий 4000.0 Сценарий выхода на нулевой

BOX 3.1. REDUCING ENERGY-RELATED METHANE EMISSIONS IN UZBEKISTAN’S GAS SECTOR

Reference scenario Net zero 2060 scenario

Source: World Bank analysis.

Industry decarbonizes late, shifting to low-carbon technologies, including

fuels continue to dominate in industry. To realize the full impact

Biofuel Coal Gas Biofuel Coal Gas

Source: World Bank analysis, preliminary results.

EVs begin to feature Инерционный

3.3. Costs of the energy transition and investment needs

Residential and commercial