author: Tommaso Bassetti (independent expert), Zulfira Zikrina (independent expert) and Francisco Martes Porto Macedo (CCFLA).
Decarbonizing buildings is Central Asia’s first opportunity to achieve its Nationally Determined Contributions (NDCs). The region faces the twin challenges of rapid urbanization and the escalating impacts of climate change, and the need for sustainable solutions has never been greater. Buildings are not only important contributors to greenhouse gas emissions but also important nodes in energy consumption.
From an emissions reduction perspective, emissions from public and residential buildings in Kazakhstan, Uzbekistan and Kyrgyzstan account for 70-80% of the city's emissions. In the first two countries, buildings account for approximately 50% of total final energy use. As climate impacts continue to escalate, the need for adaptation has never been higher. Most recently, Kazakhstan experienced its worst floods in 80 years in April 2024, displacing at least 120,000 people. Every year, natural disasters affect the lives of nearly 3 million people in the region, causing approximately $10 billion in damage.
In response, CCFLA launched the CCFLA Central Asia Center as the only multi-layered, multi-stakeholder coalition dedicated to increasing urban climate finance. The Central Asia Center works to accelerate the decarbonization of buildings in the region, particularly in Kazakhstan and Uzbekistan. Green and net-zero carbon buildings provide opportunities for dual climate responses to support mitigation and adaptation goals. CCFLA’s Central Asia Center recently examined key challenges in its report and made concrete recommendations to accelerate building decarbonization projects in the region”CCFLA Central Asia Center: Expanding project preparation and financing for net-zero carbon buildings in Kazakhstan and Uzbekistan“.
Residential buildings built during the Soviet period consume the highest proportion of energy in Central Asia. These account for nearly 40% of Uzbek energy use. Buildings face huge energy losses due to issues ranging from poor insulation to outdated infrastructure networks. In Kazakhstan, buildings face an annual heat loss of 36%, and an average of 200 technical failures occur per 100 kilometers of heating pipe networks. Half of the country's 6,200 kilometers of heating network need to be replaced.
Kazakhstan and Uzbekistan highlighted the need for action on energy efficiency in buildings and renewable energy in their Nationally Determined Contributions. Kazakhstan aims to become climate neutral by 2060 and sees construction as a priority area to achieve this goal. The Uzbek government aims to increase the energy efficiency of the economy by 50% by 2030.
So what's holding back progress? A major obstacle is the residential building subsidy scheme, which has undermined investment. Governments in the region have long subsidized up to 50% of energy costs. In addition to shaping energy consumption habits, these subsidies can have a negative impact on the feasibility and financial viability of programs. While public buildings do not benefit from the same scheme, the policy framework discourages energy conservation and retrofits. Budgets for public buildings are calculated based on floor area (square meters) rather than consumption.
Within this framework, it is not surprising that awareness of green and net-zero carbon buildings and their co-benefits remains limited among public officials and citizens. Renewable energy generation and energy efficiency measures will lower people's energy bills if subsidies are targeted or tailored to disadvantaged groups. They will also increase thermal comfort and create housing price appreciation for homeowners. Resilient design, including passive heating and cooling technologies, reinforced structures and elevated foundations, can also unlock adaptive benefits in response to extreme weather events.
Another key challenge is data. Key stakeholders did not systematically collect or analyze the building's energy consumption. The companies that provide these services have this information, but local governments often ignore this information when making decisions.
Lack of necessary capabilities is another key factor hindering project progress and investment. For example, Uzbekistan faces a structural shortage of basic technical skills, including urban planners, housing managers, project engineers, architects, designers, energy auditors, and construction project technical supervisors. Furthermore, in most cities in the region, local governments lack the capacity to identify and prepare projects suitable for the scale of investment required.
The untapped potential for project pipeline collaboration between agencies is another challenge in realizing investment projects. Early stage project preparation entities often face challenges in advancing project concepts and linking them to financing, while later stage players may have difficulty identifying project pipelines. In addition, many of these agencies have only recently initiated program readiness support activities in the region, providing important opportunities for collaboration.
Another key challenge is the constraints on dedicated and operational financial instruments tailored for green and net-zero carbon buildings. Instruments such as sovereign and municipal bonds, fiscal instruments and innovative business models such as energy services companies are needed to support the project. Increasing the availability of viable financing options will also increase the confidence of project preparation stakeholders, who have invested heavily in project preparation.
Concentrated efforts are needed to help realize Central Asia’s Nationally Determined Contribution opportunities by building decarbonization. To this end, we offer six recommendations for immediate and rapid action:
- Raise awareness of the potential of green and net-zero carbon buildings in the region by strengthening existing events and training, using different organizational and communication channels.
- Provide technical assistance to cities on data collection and analysis in the construction field, and train relevant departments, local governments and non-governmental organizations.
- Mainstream green and net-zero carbon building approaches into legal frameworks and processes, incorporate realistic targets and budgeting mechanisms, and promote collaboration between national and local government.
- Increase project preparation support to governments and agencies, assist project development from concept to financial close, and disseminate information about available support and case studies.
- Strengthen collaboration among stakeholders, provide program preparation support in the same country, explore synergies in joint program pipelines, and coordinate efforts through donor platforms and partnerships.
- Support the expansion of financing mechanisms for green and net-zero carbon buildings, develop innovative financial instruments such as sovereign bonds and hybrid financing, and train local governments to use procurement rights for financing.
