Uzbekistan is making strides toward a green economy, but further advancement requires collaboration between the government, state-owned financial institutions (SOFIs), state-owned enterprises (SOEs), and the private sector. The World Bank's report, "Prime Picks for a Green Pivot: Uzbekistan State Funds for Climate Action," explores how public funds can back projects aligned with environmental goals and attract private investment.
The country has pledged to reduce greenhouse gas emissions, expand renewable energy, improve efficiency in energy and water use, and enhance urban green spaces. These initiatives aim to accelerate Uzbekistan's shift to market principles and build resilience for future growth.
SOFIs play a crucial role in this transition by providing about 70% of loans across the economy. State investment funds like the Uzbekistan Fund for Reconstruction and Development (UFRD) plan to invest in sectors amounting to roughly 10% of GDP in 2024. SOEs are key players in sectors such as energy, industry, agriculture, and transportation.
The Ministry of Economy and Finance (MEF) can leverage its position as a shareholder in many SOFIs and SOEs to set green investment targets and ensure transparency. This would encourage sustainable projects.
The World Bank recommends establishing "green investment champions" among SOFIs and SOEs that prioritize green technologies. Three institutions identified as potential leaders include the Entrepreneurship Development Company (EDC), Business Development Bank (BDB), and Uzbekistan Mortgage Refinancing Company (UzMRC). EDC is financing solar energy projects with a goal of allocating 35% of its funding to green initiatives by 2026. BDB is setting climate finance targets while UzMRC plans to issue green bonds.
Other SOEs like Uzkimyosanoat in chemicals and Issiqlik Elektr Stansiyalari in power generation are exploring emission reduction strategies. Their leadership could motivate private companies to adopt similar practices.
Additionally, the Uzbekistan Direct Investment Fund (UzDIF) can attract foreign investors interested in climate-resilient projects across various sectors. The Fund for State Support for Agriculture (FSSA) can promote climate resilience by incorporating green criteria into its financing.
With strategic leadership, policies, and targeted actions from state funds, Uzbekistan can advance its green economy efforts effectively while attracting private capital.
This report was produced with support from the Whole of Economy Program of the Climate Support Facility administered by the World Bank.