Sustainable infrastructure for low-carbon development in Central Asia and the Caucasus : hotspot analysis and needs assessment

274 Pages·2019·7.944 MB·English

by  Alin Horj, Douglas Herrick, Andrei Smirnov, Virginie Marchal

Green Finance and Investment G
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Sustainable Infrastructure for Low‑Carbon n
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Development in Central Asia and the Caucasus a Sustainable Infrastructure
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HOTSPOT ANALYSIS AND NEEDS ASSESSMENT a
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This report analyses planned infrastructure projects, decision‑making frameworks related to infrastructure v
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development and strategic planning documents in eight countries in Central Asia and the Caucasus: Azerbaijan, s Development in Central Asia
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Georgia, Kazakhstan, the Kyrgyz Republic, Mongolia, Tajikistan, Turkmenistan and Uzbekistan. It compares
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current investment flows with countries’ national development objectives to identify misalignments and provides n
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policy‑makers with recommendations to improve the integration of climate change and other environmental
concerns into infrastucture development decision‑making processes. The report presents a comprehensive
overview of infrastructure investment, primarily in the transport and energy sectors, throughout the region
HOTSPOT ANALYSIS AND NEEDS ASSESSMENT
and identifies the risks and opportunities emerging from current investment patterns.
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ISBN 978‑92‑64‑64520‑2
9HSTCQE*gefcac+

Green Finance and Investment
Sustainable Infrastructure
for Low‑Carbon
Development in Central Asia
and the Caucasus
HOTSPOT ANALYSIS AND NEEDS ASSESSMENT
This document, as well as any data and map included herein, are without prejudice to the status of or sovereignty over
any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.
The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of
such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in
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Note by Turkey
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Northern Cyprus (TRNC). Until a lasting and equitable solution is found within the context of the United Nations, Turkey
shall preserve its position concerning the “Cyprus issue”.
Note by all the European Union Member States of the OECD and the European Union
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information in this document relates to the area under the effective control of the Government of the Republic of Cyprus.
Please cite this publication as:
OECD (2019), Sustainable Infrastructure for Low-Carbon Development in Central Asia and the Caucasus: Hotspot Analysis and
Needs Assessment, Green Finance and Investment, OECD Publishing, Paris, https://doi.org/10.1787/d1aa6ae9-en.
ISBN 978-92-64-64520-2 (print)
ISBN 978-92-64-62834-2 (pdf)
Green Finance and Investment
ISSN 2409-0336 (print)
ISSN 2409-0344 (online)
Photo credits: Cover © mika48/Shutterstock.com.
Corrigenda to publications may be found on line at: www.oecd.org/about/publishing/corrigenda.htm.
© OECD 2019
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FOREWORD  3

Foreword
This project is part of the International Climate Initiative (IKI). The Federal Ministry
for the Environment, Nature Conservation and Nuclear Safety (BMU) supports this
initiative on the basis of a decision adopted by the German Bundestag.
This report has been compiled within the GIZ program “Capacity Development for
climate policy in the countries of South East, Eastern Europe, the South Caucasus and
Central Asia, Phase III”
As a service provider with worldwide operations in the fields of international
cooperation for sustainable development and international education work, GIZ works
together with its partners to develop effective solutions that offer people better prospects
and sustainably improve their living conditions. GIZ is a public-benefit federal
enterprise and supports the German Government and a host of public and private sector
clients in a wide variety of areas, including economic development and employment
promotion, energy and the environment, and peace and security.
This report was prepared under the supervision of Kumi Kitamori and Virginie Marchal.
The lead authors were Douglas Herrick, Alin Horj, Virginie Marchal and Andrei
Smirnov. The report was prepared for publication by Lupita Johanson.
The report was presented at the 2019 Annual Meeting of the GREEN Action Task Force
and benefited from comments from the members of the GREEN Action Task Force, the
OECD’s Environment Directorate and Global Relations Secretariat under the Office of
the Secretary General, GIZ, the Development Bank of Kazakhstan, the State Agency on
Environmental Protection and Forestry of the Kyrgyz Republic, the Ministry of
Economic Development and Trade of the Republic of Tajikistan, the Interstate
Commission on Sustainable Development of Central Asia and the Ministry of Economy
and Industry of the Republic of Uzbekistan.

SUSTAINABLE INFRASTRUCTURE FOR LOW-CARBON DEVELOPMENT IN CENTRAL ASIA AND THE CAUCASUS © OECD 2019

TABLE OF CONTENTS  5

Table of Contents
Foreword ....................................................................................................................................... 3
Reader’s Guide ........................................................................................................................... 11
Executive Summary ................................................................................................................... 15
Chapter 1. Overview .................................................................................................................. 19
1.1 The infrastructure gap in Central Asia and the Caucasus ................................................... 20
1.2 The investment environment .............................................................................................. 30
1.3 Overview of current infrastructure projects, planned and under construction ................... 33
Notes ......................................................................................................................................... 37
References ................................................................................................................................ 37
Chapter 2. Investment in sustainable infrastructure in Azerbaijan ..................................... 41
Overview .................................................................................................................................. 42
2.1 State of play: economy, investment and climate change in Azerbaijan ............................. 43
2.2 Azerbaijan’s infrastructure needs and current plans ........................................................... 49
2.3 Strengths and weaknesses of existing institutional set-up for sustainable infrastructure
planning .................................................................................................................................... 62
References ................................................................................................................................ 65
Chapter 3. Georgia’s sustainable infrastructure investments ............................................... 71
Overview .................................................................................................................................. 72
3.1 State of play: economy, investment and climate change in Georgia .................................. 73
3.2 Georgia’s infrastructure needs and current plans ............................................................... 79
3.3 Strengths and weaknesses of existing institutional set-up for sustainable infrastructure
planning .................................................................................................................................... 90
Notes ......................................................................................................................................... 95
References ................................................................................................................................ 95
Chapter 4. Trends in Kazakhstan’s sustainable infrastructure investments ..................... 101
Overview ................................................................................................................................ 102
4.1 State of play: economy, investment and climate change in Kazakhstan .......................... 103
4.2 Kazakhstan’s infrastructure needs and current plans ....................................................... 108
4.3 Strengths and weaknesses of existing institutional set-up for sustainable infrastructure
planning .................................................................................................................................. 121
Notes ....................................................................................................................................... 124
References .............................................................................................................................. 124
Chapter 5. Investment in sustainable infrastructure in the Kyrgyz Republic ................... 127
Overview ................................................................................................................................ 128
5.1. State of play: economy, investment and climate change in the Kyrgyz Republic .......... 129
5.2. Kyrgyz Republic’s infrastructure needs and current plans .............................................. 135
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6  TABLE OF CONTENTS

5.3. Strengths and weaknesses of existing institutional set-up for sustainable infrastructure
planning .................................................................................................................................. 141
References .............................................................................................................................. 145
Chapter 6. Mongolia’s sustainable infrastructure investments ........................................... 149
Overview ................................................................................................................................ 150
6.1. State of play: economy, investment and climate change in Mongolia ............................ 151
6.2. Mongolia’s infrastructure needs and current plans.......................................................... 158
6.3. Strengths and weaknesses of existing institutional set-up for sustainable infrastructure
planning .................................................................................................................................. 170
References .............................................................................................................................. 175
Chapter 7. Trends in Tajikistan’s sustainable infrastructure investments ........................ 179
Overview ................................................................................................................................ 180
7.1. State of play: economy, investment and climate change in Tajikistan ............................ 181
7.2. Tajikistan’s infrastructure needs and current plans ......................................................... 187
7.3. Strengths and weaknesses of existing institutional set-up for sustainable infrastructure
planning .................................................................................................................................. 199
Notes ....................................................................................................................................... 203
References .............................................................................................................................. 203
Chapter 8. Investment in sustainable infrastructure in Turkmenistan .............................. 207
Overview ................................................................................................................................ 208
8.1. State of play: economy, investment and climate change in Turkmenistan ...................... 209
8.2. Turkmenistan’s infrastructure needs and current plans ................................................... 214
8.3. Strengths and weaknesses of existing institutional set-up for sustainable infrastructure
planning .................................................................................................................................. 221
Notes ....................................................................................................................................... 224
References .............................................................................................................................. 224
Chapter 9. Uzbekistan’s sustainable infrastructure investments ........................................ 229
Overview ................................................................................................................................ 230
9.1. State of play: economy, investment and climate change in Uzbekistan .......................... 231
9.2. Uzbekistan’s infrastructure needs and current plans ....................................................... 238
9.3. Strengths and weaknesses of existing institutional set-up for sustainable infrastructure
planning .................................................................................................................................. 251
Notes ....................................................................................................................................... 254
References .............................................................................................................................. 254
Annex A. Overview of selected sustainable infrastructure standards and norms ............. 261
1. The need for sustainable infrastructure definitions, standards and tools ............................ 261
2. Navigating the multitude of principles, standards and norms ............................................ 263
References .............................................................................................................................. 271

Tables
Table 1.1. Estimated Infrastructure Needs by Region, 2016-2030 (USD billion in 2015 prices) 20
Table 1.2. Selected infrastructure indicators in Central Asia and the Caucasus .......................... 25
Table 1.3. Regional Transport Corridors in Central Asia ............................................................ 28
Table 1.4. Selected economic indicators in Central Asia and the Caucasus ................................ 31
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TABLE OF CONTENTS  7

Table 2.1. Key indicators on Azerbaijan’s economy ................................................................... 43
Table 2.2. Hotspot projects in the transport sector in Azerbaijan ................................................ 55
Table 2.3. Hotspot projects in the energy sector in Azerbaijan ................................................... 58
Table 2.4. Hotspot industry projects in Azerbaijan...................................................................... 61
Table 2.5. Main strategic documents in force .............................................................................. 63
Table 2.6. Other relevant documents ........................................................................................... 65
Table 3.1. Key indicators on Georgia’s economy ........................................................................ 73
Table 3.2. Hotspot projects in the transport sector in Georgia ..................................................... 84
Table 3.3. Hotspot projects in the energy sector in Georgia – under construction ...................... 88
Table 3.4. Main strategic documents in force .............................................................................. 92
Table 3.5. Other relevant documents ........................................................................................... 94
Table 4.1. Key indicators on Kazakhstan’s economy ................................................................ 103
Table 4.2. Hotspot projects in the transport sector in Kazakhstan ............................................. 113
Table 4.3. Hotspot projects in the energy sector in Kazakhstan ................................................ 116
Table 4.4. Hotspot projects in the industry and mining sector in Kazakhstan ........................... 119
Table 4.5. Main strategic documents in force ............................................................................ 123
Table 4.6. Other relevant documents ......................................................................................... 124
Table 5.1. Key indicators on the Kyrgyz Republic’s economy ................................................. 129
Table 5.2. Hotspot projects in the transport sector in the Kyrgyz Republic .............................. 138
Table 5.3. Hotspot projects in the energy sector in the Kyrgyz Republic .................................. 140
Table 5.4. Main strategic documents in force ............................................................................ 144
Table 5.5. Other relevant documents ......................................................................................... 145
Table 6.1. Key indicators on Mongolia’s economy ................................................................... 151
Table 6.2. Hotspot projects in the transport sector in Mongolia ................................................ 162
Table 6.3. Hotspot projects in the energy sector in Mongolia ................................................... 166
Table 6.4. Hotspot projects in the industry and mining sector in Mongolia .............................. 168
Table 6.5. Main strategic documents in force ............................................................................ 172
Table 6.6. Other relevant documents ......................................................................................... 175
Table 7.1. Key indicators on Tajikistan’s economy ................................................................... 181
Table 7.2. Hotspot projects in the transport sector in Tajikistan ............................................... 190
Table 7.3. Hotspot projects in the energy sector in Tajikistan ................................................... 194
Table 7.4. Hotspot projects in the industry and mining sectors in Tajikistan ............................ 197
Table 7.5. Main strategic documents in force ............................................................................ 201
Table 7.6. Other relevant documents ......................................................................................... 203
Table 8.1. Key indicators on Turkmenistan’s economy ............................................................ 209
Table 8.2. Hotspot projects in the transport sector in Turkmenistan ......................................... 217
Table 8.3. Hotspot projects in the energy sector in Turkmenistan ............................................. 219
Table 8.4. Hotspot projects in the industry sector in Turkmenistan .......................................... 220
Table 8.5. Main strategic documents in force ............................................................................ 222
Table 8.6. Other relevant documents ......................................................................................... 224
Table 9.1. Key indicators on Uzbekistan’s economy ................................................................. 231
Table 9.2. Hotspot projects in the transport sector in Uzbekistan ............................................. 242
Table 9.3. Hotspot projects in the energy sector in Uzbekistan ................................................. 246
Table 9.4. Hotspot projects in the industry sector in Uzbekistan ............................................... 249
Table 9.5. Main strategic documents in force ............................................................................ 253
Table 9.6. Other relevant documents ......................................................................................... 254

Table A.1. Organisation structure of the Sustainable infrastructure tools navigator ................. 264
Table A.2. Standards listed in the Sustainable Infrastructure Tool Navigator ........................... 265
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Table A.3. Examples of internationally recognised instruments and standards related to
sustainable infrastructure ................................................................................................... 269

Figures
Figure 1. Quality of infrastructure in selected countries of Central Asia and the Caucasus ........ 16
Figure 1.1. Global connectivity ................................................................................................... 22
Figure 1.2. Logistics costs and trade openness ............................................................................ 23
Figure 1.3. The World Bank's Logistic Performance Index, Infrastructure Indicator ................. 24
Figure 1.4. GHG emissions by country, 1990-2012 .................................................................... 26
Figure 1.5. Exporting manufacturing firms in Central Asia and the Caucasus identify
transportation as a major constraint ..................................................................................... 27
Figure 1.6. Map of CAREC Economic Corridors ........................................................................ 29
Figure 1.7. Chinese investments across Central Asia and the Caucasus, by sector ..................... 30
Figure 1.8. Greenfield FDI in Central Asia and the Caucasus by economic activity, 2003-
2017 ..................................................................................................................................... 32
Figure 1.9. Investment projects in Central Asia and the Caucasus, by sector ............................. 33
Figure 1.10. Investment projects planned and under construction in Central Asia and the
Caucasus countries, by sector .............................................................................................. 34
Figure 1.11. Transport projects planned and under construction in Central Asia and the
Caucasus, by sub-sector ....................................................................................................... 35
Figure 1.12. Electricity generation projects by fuel ..................................................................... 36
Figure 2.1. Trade of Azerbaijan ................................................................................................... 45
Figure 2.2. Greenfield FDI in Azerbaijan by economic activity, 2003-2017 .............................. 47
Figure 2.3. FDI in Azerbaijan by source country, 2009-2017 ..................................................... 48
Figure 2.4. GHG emissions and GDP of Azerbaijan, 1990-2017 ................................................ 49
Figure 2.5. Quality of infrastructure in Azerbaijan ...................................................................... 50
Figure 2.6. Investment projects in Azerbaijan, by sector ............................................................. 51
Figure 2.7. Inland transport infrastructure investment in Azerbaijan (2012-2016) ..................... 52
Figure 2.8. Transport projects in Azerbaijan, by sub-sector ........................................................ 54
Figure 2.9. Electricity generation by fuel (GWh, 2016) .............................................................. 56
Figure 2.10. Manufactured product categories by value, 2017 .................................................... 59
Figure 2.11. Industry projects in Azerbaijan, by sub-sector ........................................................ 60
Figure 3.1. Trade of Georgia ........................................................................................................ 75
Figure 3.2. FDI in Georgia by source country, 2006-2017 .......................................................... 76
Figure 3.3. Greenfield FDI in Georgia by economic activity, 2003-2017 ................................... 77
Figure 3.4. GHG emissions and GDP of Georgia, 1990-2017 ..................................................... 78
Figure 3.5. Quality of infrastructure in Georgia .......................................................................... 79
Figure 3.6. Infrastructure projects in Georgia by sector .............................................................. 80
Figure 3.7. Inland transport infrastructure investment in Georgia (2002-2016) .......................... 81
Figure 3.8. Transport projects in Georgia by sub-sector .............................................................. 83
Figure 3.9. Electricity generation by fuel (GWh, 2016) .............................................................. 86
Figure 3.10. Electricity generation projects in Georgia, by fuel .................................................. 87
Figure 3.11. Water projects in Georgia by sub-sector ................................................................. 90
Figure 4.1. Trade of Kazakhstan ................................................................................................ 104
Figure 4.2. FDI in Kazakhstan by source country, 2018 ........................................................... 105
Figure 4.3. Greenfield FDI in Kazakhstan by economic activity, 2003-2017 ........................... 106
Figure 4.4. GHG emissions and GDP of Kazakhstan, 1990-2017 ............................................. 108
Figure 4.5. Quality of infrastructure in Kazakhstan ................................................................... 109
SUSTAINABLE INFRASTRUCTURE FOR LOW-CARBON DEVELOPMENT IN CENTRAL ASIA AND THE CAUCASUS © OECD 2019