A grant from the World Bank will support the government of Uzbekistan in bringing down greenhouse gas emissions, promoting the efficient use of energy resources, and gaining access to international CO2 markets. The news was reported by World Bank Uzbekistan.
The Innovative Carbon Resource Application for Energy Transition Project for Uzbekistan (iCRAFT) is the World Bank’s first program for “policy crediting”. With a $46.25 million grant, iCRAFT strives to establish motivators for energy subsidy reforms, leading to reduced energy consumption and greenhouse gas emissions. The new program assigns value to, and credit for the adoption and enforcement of policies that foster emission reductions within the energy sector.
The grant, which is the first initiative in Central Asia under the Paris Agreement, will allow Uzbekistan to generate CO2 credits to be sold in international carbon markets.
Uzbekistan is one of the most energy- and emissions-intentive nations globally, even though the country’s total contribution to CO2 emissions is not large. The energy and gas prices in Uzbekistan are low due to high subsidies and thus the revenue from energy is not enough to cover the production and delivery costs.
The country is looking for ways to create incentives for energy efficiency and to promote greater financial sustainability in the financial sector.
“The iCRAFT Project has enormous potential to reduce carbon emissions in Uzbekistan’s energy sector and contribute to the country’s green energy transition,” said Marco Mantovanelli, World Bank Country Manager for Uzbekistan. “It will also invest in developing and testing appropriate infrastructure, systems, and processes, as well as human and institutional capacity to effectively participate in international carbon market transactions under the Paris Agreement.”
From now until 2028, iCRAFT will distribute annual grant funds to incentivize energy subsidy reforms that successfully achieve targeted emissions reductions. Projections indicate that Uzbekistan has the potential to reduce approximately 60 million metric tons of CO2 throughout the lifespan of iCRAFT, with the project compensating for roughly 2-2.5 million metric tons of CO2.
Uzbekistan will sell the remaining emissions reductions in international CO2 markets via the systems and processes that were developed and tested under iCRAFT.