Moody's: Central Asia and Caucasus need reform, investment to become clean energy hub

To maintain financial sustainability, Central Asian and Caucasus countries need to share the burden of decarbonization investments with the private sector and international development partners, Report informs referring to the international rating agency Moody's. 

"According to the ADB, Central Asia and Caucasus countries require approximately $120 billion in investment by 2030 to meet decarbonization targets, which is equivalent to around 14% of GDP.4 Countries in the region will need to direct most of this investment toward power generation, particularly non-hydropower renewables, alongside energy efficiency improvements and transmission infrastructure.

All countries in the region have announced targets to reduce greenhouse gas emissions by either 2030 or 2050, although the scope and ambition of these targets vary. Kazakhstan, the region's highest emitter, has committed to reduce greenhouse gas emissions by 15% (unconditional) and 25% (conditional) compared with 1990 levels by 2030.  

According to Emissions Database for Global Atmospheric Research data for 2023, Kazakhstan's emissions per capita stood at 15.99 tons of carbon dioxide equivalent, significantly higher than other countries such as Azerbaijan (6.17 tons), Uzbekistan (6.14 tons), Georgia (5.13 tons) and the Kyrgyz Republic (3.11 tons). Most countries in the region are pursuing absolute emissions reduction targets, with the exception of Uzbekistan, which has an intensity-based target to reduce emissions by 35% per unit of GDP by 2030, compared with 2010 levels. This differs from countries like Armenia, which aims to reduce emissions by 40% below 1990 levels by 2030. Azerbaijan is the only country in the region to set a 2050 target, committing to a 40% reduction from 1990 levels, conditional on international support," reads the update.  

"Currently, governments shoulder the bulk of investment to meet decarbonization targets, with debt instruments comprising about 50%. To preserve fiscal strength, sharing the financing burden with the private sector and development partners is essential. Green and sustainable bonds offer significant potential to support energy infrastructure but are underutilized in the region.

 Structural reforms aimed at improving economic efficiency and institutional capacity will help attract financing and transform the region into a clean energy hub. Governance indicators have improved across many countries in the region, as reflected in our institutional strength scores and the World Bank's governance indicators. Our sovereign ratings have also improved in Azerbaijan (Baa3 from Ba1), Kazakhstan (Baa1 from Baa2) and Uzbekistan (Ba3 from B1) over recent years, highlighting reform progress," Moody's noted.