Uzbekistan's Climate Transition: Development, Resilience, and Green Growth

In this episode of Deep Dive Central Asia, we analyze the World Bank Group's Country Climate and Development Report on Uzbekistan. We explore how Uzbekistan’s ambitious development goals are intertwined with its climate challenges, and what this means for investors.

Key Takeaways:

• A Growing Economy at Risk: Uzbekistan's economy, already Central Asia's most populous, is projected to grow to more than 50 million people by 2050. However, without climate action, the economy could be 10% smaller by 2050. Air pollution alone costs the country 6.5% of its GDP annually.
• Decarbonization as Opportunity: The energy sector is responsible for 74% of the country's GHG emissions. The report’s Net Zero 2060 scenario shows a pathway to decarbonization where domestic renewables could provide 70% of the energy supply by 2060. This transition requires a massive investment of $341 billion, with the private sector expected to play a major role.
• High-Return Adaptation: Climate adaptation measures, particularly in water and agriculture, offer a "triple dividend," with benefits estimated to be two to three times higher than the costs. Modernizing irrigation and drainage systems is a key investment area, with needs estimated at $6 billion through 2030.
• Pivotal Role of the Private Sector: Uzbekistan's private sector is pivotal to this transition. The report indicates a strong latent demand for green investments, with nearly 90% of firms having already made some form of green investment by 2019.
• Navigating the Risks: We discuss critical risks for investors, including the plan to remove energy subsidies, which accounted for 6.6% of GDP in 2020. We also highlight the banking sector's growing exposure to transition risk, as 40-50% of bank lending was in high-emission sectors by the end of 2022.

Listen to the full episode for a deep dive into the numbers and a detailed analysis of the opportunities and challenges.