In support of the CAREC Energy Strategy 2030, Ms. Bulganmurun Tsevegjav analyzed challenges and opportunities of regional cooperation in promoting low-carbon energy development in CAREC.
After providing international and regional contexts (see Figure 2 for energy inter-linkages in CAREC) and the concept of low-carbon development, she lists key aspects of renewable energy cooperation in the European Union, mentions the regional energy cooperation toolbox of 2016 by Benelux Secretariat, and then groups CAREC countries in five categories: 1) fossil-fuel rich countries (Kazakhstan, Turkmenistan, Uzbekistan, Azerbaijan); 2) hydropower-rich countries (Georgia, Tajikistan and The Kyrgyz Republic); 3) transit countries (Mongolia and Afghanistan) earning valuable transit and transmission fees; 4) Afghanistan and Pakistan with enormous demand and lack of access to reliable power supplies; and 5) the PRC importing oil and natural gas from Kazakhstan, Uzbekistan, and Turkmenistan as an alternative source for energy security.
The analysis encompasses net energy import statistics in CAREC, energy self-sufficiency, greenhouse gas (GHG) emission levels, GHG emission reduction targets and policies, share of renewables in final energy consumption, energy intensity levels, electricity transmission and distribution losses, potential for installed renewable resources country by country, legislative frameworks, ongoing and planned regional infrastructure projects, and many more.
The author notes that an initial step for establishing regional cooperation on renewable energy was the release of the joint communique by Energy Ministers from Central Asia during the Astana Expo in 2017. She also lists numerous multilateral initiatives, among those ADB-supported CAREC Program, the World Bank’s Central Asia Water and Energy Program (CAWEP) and the Central Asia-South Asia Regional Electricity Market (CASAREM), the European Union INOGATE Program, the European Bank of Reconstruction and Development (EBRD) renewable energy investment projects, UNDP’s Europe and the CIS Sustainable Energy for All (SE4ALL), Eurasian Development Bank’s renewable energy investment projects, project by the private sector, etc. majority of which are restricted to individual CAREC countries and focused on electricity trading and electricity market development, e.g. investing in new transmission networks and modernization of existing electricity grids. The paper finds that a notable gap exists in regional cooperation on energy efficiency in terms of governance, investment, dialogue, and regional technology and knowledge transfer.
Among challenges, there are: 1) lack of governance arrangements in electricity trade to set rules, mitigate barriers, provide mechanism for negotiation and dispute resolution, etc.; 2) strong reliance on fossil fuels which delays shift to renewable energy, coupled with limited expertise; and 3) inefficient and aging regional electricity infrastructure.
On the other hand, reduced cost of renewable energy, global investment shift to low-carbon energy, and cost-effectiveness of cooperation in low-carbon development are listed as opportunities which CAREC shall capitalize on.
The paper emphasis the positive role that the PRC can play in the region as an investor and developer of renewable energy resources. In 2011, the PRC produced 63% of the world’s solar panels. Its success in renewables is characterized by setting national targets, strong enforcement mechanisms, low cost, and revenue-driven business model. There are several renewable projects which the PRC implements in CAREC and this portfolio could be scaled up for more extensive knowledge and technology transfer, the author notes: 1) construction of a 200MW wind farm in the Caspian Sea part of Azerbaijan with $510 million financed by China’s Export Import Bank; 2) Pskem hydro powerplant in Uzbekistan (the second largest in the country) with the capacity to produce 900 million kWh of electricity/year, financed by China’s Export-Import Bank.
For more vigorous regional cooperation, the author recommends 1) setting up a governing body which would harmonize legal and regulatory frameworks, and technical standards for power connectivity and trade within CAREC; 2) facilitation of cross-border technology and knowledge transfer coupled with low-carbon research which would reduce investment risk for energy development projects; and 3) ensuring participation of all stakeholders, including private sector, regulatory authorities, transmission operators, development partners, investors, etc. to arrive at pragmatic solutions.