BAKU, Azerbaijan, Feb. 1
By Klavdiya Romakayeva - Trend:
The EBRD (European Bank for Reconstruction and Development) and Uzbek government will sign a memorandum of understanding (MOU) on February 1 on long-term collaboration toward achieving carbon neutrality by 2050, Trend reports citing Nikkei Asia.
According to the information, the MOU is to act as an open promise by both parties to push forward with Uzbekistan's strategy to convert its energy sector to gradually decarbonize its sources.
Even though no specific financial target was spelled out, the EBRD is to help finance and provide technical support, such as by developing large-scale renewable power plants, introducing a modern electricity grid, rejuvenating gas generation capabilities and retiring old thermal electric facilities.
With the EBRD's support, Uzbekistan's Energy Ministry in May 2020 declared a low carbon energy strategy. The country decided to emphasize the development of power sources with low-carbon emissions, including solar, hydro, wind and nuclear. It was noted that Central Asia currently has no nuclear plants.
Also, Uzbekistan set a target of reducing its reliance on thermal-power electricity generation to 50 percent by 2030. It currently relies on thermal sources for more than 80 percent of its energy needs.
According to a report jointly published last January by JICA (Japan International Cooperation Agency) and by Tokyo Electric Power Services, Uzbekistan relies heavily on thermal power plants, most of which were commissioned during the Soviet era and some of which have been in operation since the mid-1950s.
It is noted that as these plants' average efficiency is about 30 percent, replacing them has been a policy imperative. A shift to non-carbon sources seems to be a logical decision, given the global trend.
EBRD's first vice president Jurgen Rigterink told that the decarbonization project in Uzbekistan is supported by the Japanese government, the bank's second largest shareholder.
Upon a request from the EBRD, the Japanese government has committed to drawing up a road map that would take the Central Asian nation to a low carbon future.
As a stated policy, Tokyo focuses its bilateral economic assistance to Uzbekistan mainly on renewal and development of economic infrastructure, with emphasis in the area of transportation and energy.
Besides Uzbekistan's 9 percent ownership and participation in various projects, the EBRD also taps Japanese investors to fund its investments. Earlier the bank issued a green transition bond with a value of 280 million Australian dollars (US$168 million), fully subscribed by Japan Post Insurance. The proceeds of the 10-year bond, which carries a coupon of 1.2 percent, will be used to finance decarbonization and other projects.
The EBRD has been focusing its efforts on Uzbekistan and has invested over 2 billion euros ($2.42 billion) in 92 projects. One of its emphasis is energy, a sector in which it has 11 projects with total value of around $1 billion, all at different stages of development, according to the bank's official website.
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