I.                    CONTEXT OF THE ASSIGNMENT

Uzbekistan faces a critical juncture. Rapid economic growth, fueled by construction and industrial activity, has undeniable benefits. However, this progress comes at a cost – rising environmental pressures and declining air quality. To ensure long-term sustainability and transition to a green economy, reforms in green building and green urbanization are essential.

Backed primarily by government's various industrial and social programs, construction works have been growing rapidly, with an average annual increase of over 13% between 2010 and 2019. This growth accelerated further in 2019, with a significant increase of 22% compared to the previous year. Large-scale construction programs in various sectors – schools, hospitals, infrastructure, industrial, manufacturing, and residential – have undeniably contributed to economic growth. However, these programs have also led to a rise in emissions.

The construction materials industry, which includes the production of cement, ceramics, glasses, and others, is the second-largest industrial consumer of natural gas after the chemical and petrochemical industry. This industry burns a significant amount of fossil fuels, contributing to greenhouse gas emissions. In 2019 alone, the industry consumed nearly 1.2 billion oil equivalent units. Cement production itself saw a sharp increase of 14% year-on-year in 2019, adding nearly 1.2 million tons of CO2 emissions, bringing the total to 9.7 million tons in 2019 (UNECE, 2020).

The housing sector has also significantly contributed to worsening urban air quality. On average, over 12 million square meters of new residential buildings were constructed annually between 2010 and 2019. This rapid development was particularly concentrated in the capital city, Tashkent, where an average of over 1.6 million square meters of new housing were built each year. Recognizing the energy inefficiency of the existing housing stock, the government is taking steps to address the situation. However, construction practices in Uzbekistan still rely on sub-standard technologies and processes. Additionally, construction sites lack specific regulations to prevent pollution. Furthermore, international sustainability standards, such as LEED (Leadership in Energy and Environmental Design) or Building Research Establishment Environmental Assessment Method (BREEAM), are not currently implemented in Uzbekistan (UNECE, 2020).

As shown in the table 1, residential and commercial/public services represent the largest share in energy consumption, even surpassing the industrial sector. The key driver for this high consumption is space heating demand. In 2022, the residential sector consumed 9,422 toe of natural gas out of the total 21,409 toe available for final consumption. Similarly, the population consumed 1,502 toe of electricity out of the available 4,181 toe. In total, residential and commercial/public services (which can be considered together as household and public/commercial building energy demand) consume almost 48% of the total final energy supply – 16.8 million toe out of 34.8 million toe.

 Table. Total final consumption by sectors, 2018-2022 (in thousand toe)

Source: Statistics Agency

There is significant potential for reducing energy consumption across the buildings sector. Demonstration pilots by the United Nations Development Program, supported by the Global Environment Facility, found that implementing standard energy efficiency measures, including building envelope measures, heating and cooling systems, water heating, pumps/fans, and lighting, will have cost-effective normative energy savings potential in schools and hospitals ranging from 35 to 45 percent.

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Figure. Total CO2 emissions by settlement type in Uzbekistan, 1970–2015

Source: Crippa et al. 2021.

As shown in the figure, urban centers account for 37 percent of national carbon emissions. Urban emissions will continue to rise along with urbanization rates unless mitigation actions are taken. While the overall decarbonization strategy hinges on national policies, local mitigation measures can also be implemented through coordinated municipal activities. These measures include supporting urban planning that promotes compact, transit-oriented urban growth, investing in multimodal infrastructure (public transit, walking, cycling, and electric vehicles), and enacting regulations and providing incentives for greater energy efficiency of buildings and industries, and improving solid waste management (WB, 2023).

Another concern requiring immediate action from the Government of Uzbekistan is the lack of a comprehensive vision for urban development. This makes cities less livable and vulnerable to climate change and natural disasters. Municipal governments, often overwhelmed with daily tasks like water and electricity supply and waste disposal, tend to operate departmentally rather than strategically. Therefore, additional support is needed to assist them adopt a more integrative and cross-sectoral approach for achieving green and resilient urbanization.

Since 2018, the Republic of Uzbekistan is a party of the Paris Climate Agreement (UNFCCC), binding treaty for reaching GHG neutral by 2050. Uzbekistan issued its NDC in 2021,

In this regard, recognizing the importance of green buildings and green urbanization for achieving environmental and economic goals, the Ministry of Economy and Finance (MEF) seeks to engage experts in these areas. This engagement aims to scope and prioritize key reforms, allowing the MEF to effectively integrate green building and green urbanization practices into its policies and programs, as well as effectively mobilize investment.

II.                  TECHNICAL ASSISTANCE CONTEXT

To support the efforts of Uzbekistan on green transition, a wider green economy public policy loan program was designed and financed by the AFD. This five-year program (2022-26) consists in: (i) an in-depth policy dialogue on the formulation, implementation and evaluation of the Green Growth Strategic Framework (GGSF), (ii) a series of three concessional budget support loans disbursed upon completion of pre-agreed reform targets and (iii) a technical cooperation project funded by dedicated grants.

Thus, the Technical Assistance entrusted to Expertise France is implemented in the framework of the larger Green Economy Technical Assistance Program (GETAP) financed by the European Union that covers the remaining years of implementation of the Green Economy Public Policy Loan Program (2023-26) and will support national authorities in delivering on key milestones of the GGSF. In addition, it is a logical extension of a previous TA carried out by Expertise France and funded by AFD’s own resources. Expertise France’s part of the GETAP comprises the following components:

·                    Institutional support to the MEF on GGSF operationalization and coordination, including support to the Centre for Green Economy Projects;

·                    Implementation of the MRV system;

·                    Green Public Investment;

·                    Green Budget;

·                    Fossil fuel subsidies phasing out;

·                    Environmental taxation;

·                    Sustainable Public Procurement;

·                    Sustainable governance of SOE.