CAREC Institute Holds Discussions on CAREC Green Economic Recovery

30 May 2023

Beijing Greenovation Institute for Public Welfare Development, with the support of the Asia Foundation, in collaboration with the CAREC Institute organized a workshop entitled “Charting a Pathway towards a Green, Climate-Resilient Economy Recovery in Asia in Post-COVID-19 Era” on May 30, 2023. The event brought together representatives from governmental think tanks, academia, multilateral development financial institutions and civil society organizations to discuss common areas for future cooperation among CAREC countries to accelerate the region’s energy transition and green economic recovery. Participants also learned about China’s experience in air pollution control, energy transition and green finance development.

Mr. Kabir Jurazoda, Director of the CAREC Institute, spoke about the challenges of climate change for regional development in his opening remarks. The CAREC region is one of the world’s most vulnerable regions to climate change, with higher seasonal and geographic fluctuations in temperature and precipitation. The Director noted that the CAREC Institute is devoting considerable attention and effort to climate change research, especially for post-pandemic recovery. In 2022, the CAREC Program and the CAREC Institute worked together on the Post- Pandemic Framework for a Green, Sustainable and Inclusive Recovery, which was endorsed at the 21st CAREC Ministerial Conference. The framework sets the need for CAREC countries to consider greater efforts to promote regional cooperation initiatives and programs to achieve the Sustainable Development Goals and explore ways to promote green and inclusive economic growth that should include digital transformation, development of relevant infrastructure and innovative financing models, as well as deepening regional economic integration.

Dr. Asif Razzaq, Senior Research Fellow of the CAREC Institute, spoke about the challenges of energy transition in the CAREC region and the use of the Chinese experience. Central Asia and neighboring countries need more energy for their development, but climate change means they must reduce their carbon emissions significantly and accelerate the transition to clean energy. The Energy Outlook for the CAREC region highlights five key points: 1) energy demand in the CAREC region (excluding PRC) will grow by more than 30% by 2030; 2) countries need to upgrade their transmission and distribution infrastructure, which could cost between US$25 billion and US$49 billion excluding China and US$768-901 billion with China; 3) countries must realize the huge potential of wind and solar, which account for only 6% of the installed capacity in the region, with the participation of the private sector; 4) the CAREC region needs energy investment to modernize infrastructure, its energy investment needs are estimated at US$136–339 billion by 2030 (excluding PRC); 5) countries are already taking steps to reduce carbon emissions by increasing the use of renewables and nuclear energy.

Dr. Asif Razzaq suggests that CAREC countries build on China’s experience by developing a long-term strategy along with complementary short-term policies like China’s 14th Five-year Plan. Energy governance framework, along with a specific regulatory framework, is needed to implement the CAREC Energy Strategy 2030. Countries also need to implement a market-based emission control system and create a more favorable investment climate in the region through regional coordination to take advantage of economies of scale. Achieving this region-wide optimization will require regional institutions, such as a regional load dispatch center, to match regional supply and demand in real time. A specially constituted regional counterparty could facilitate and implement the renewable energy procurement and contracting processes and execute emission reduction contracts. This entity can then distribute accruing emission reduction revenues to help subsidize the vulnerable sections of populations across the region.

Deputy Director Two of the CAREC Institute, Dr. Iskandar Abdullaev, spoke on climate change and the development of the energy sector in Central Asia. He noted that the countries of Central Asia had shown much higher rates of temperature rise compared to the world average over the past hundred years, with an increase in the frequency of adverse natural disasters of a wide range. The countries of Central Asia are already experiencing high economic losses in the agricultural sector, and they need to prioritize investment strategies in the future and appropriate mitigation and adaptation mechanisms to reduce environmental impact, and vulnerability of the population, especially, in rural areas. Appropriate adaptation and mitigation mechanisms should improve water use efficiency, support the establishment of early warning systems for climate-related extreme events, and promote the introduction of no-till technologies and crop diversification, afforestation, improved crop management, and regional cooperation is a prerequisite for effective adaptation.

The high reliance on fossils in energy production has a negative impact on the energy security and economic vulnerability of the region, as they occupy large shares in both energy production and foreign trade. Only 4 of the 11 countries in the CAREC region have a high share of hydropower use. CAREC governments recognize the importance of renewable energy and are strengthening energy security by diversifying their energy mix by increasing investment in renewable energy. However, the energy transition is slow due to the abundant availability of fossil fuels, dependence on low marginal cost hydropower, and the need for large investments to upgrade infrastructure. The Central Asian economy is already struggling with energy shortages, aging infrastructure and increasingly inefficient and unreliable energy generation facilities. Adding new capacity at the expense of the huge potential of all types of renewable energy sources will increase reliability and cover the energy demand in the future. Energy-rich countries are increasingly developing new renewable energy sources, gradually developing standard principles and methods, such as deregulating the electricity market and adopting special legislation. However, energy poor countries do not have financial resources and rely mainly on international grants and external financing for their development. “Therefore, the Central Asian countries need more regional collaboration on 1) technical, financial and other forms of coordinated activities aimed at the rehabilitation of existing and construction of new intra- and inter-regional energy facilities and infrastructure; and 2) harmonization of renewable energy policy standards and sharing of best practices in policy development and implementation,” said Dr. Abdullaev.

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