Authors: Tommaso Bassetti (Independent expert), Zulfira Zikrina (Independent expert), and Francisco Martes Porto Macedo (CCFLA).

Decarbonizing buildings is the number one opportunity to achieve the Nationally Determined Contributions (NDCs) in Central Asia. With the region facing the dual challenges of rapid urbanization and the escalating impacts of climate change, the need for sustainable solutions has never been more pressing. Buildings are not only significant contributors to greenhouse gas emissions but also serve as vital nodes for energy consumption.

From a mitigation perspective, public and residential buildings account for up to 70-80% of city-wide emissions in Kazakhstan, Uzbekistan, and Kyrgyzstan. In the first two countries, buildings are responsible for about 50% of total final energy use. Regarding adaptation, needs have never been higher, with climate impacts escalating. Most recently, the April 2024 flooding in Kazakhstan proved the heaviest in 80 years, displacing at least 120,000 people. Every year, natural disasters affect the lives of almost 3 million people regionally, resulting in about USD 10 billion in damages.

As a response, CCFLA, the only multi-level and multi-stakeholder coalition committed to increasing urban climate finance, launched the CCFLA Central Asia Hub. The Central Asia Hub seeks to accelerate the decarbonization of buildings in the region, particularly Kazakhstan and Uzbekistan. Green and net zero carbon buildings offer an opportunity for a dual climate response, supporting mitigation and adaptation goals. The CCFLA Central Asia Hub recently examined key challenges and developed specific recommendations to speed up projects aimed at decarbonizing buildings in the region in its report “CCFLA Central Asia Hub: Scaling up project preparation and finance for net zero carbon buildings in Kazakhstan and Uzbekistan“.

Residential buildings constructed during the Soviet era consume Central Asia’s highest proportion of energy. These account for nearly 40% of energy use in Uzbekistan. Buildings face significant energy losses due to various issues, such as poor thermal insulation and the old infrastructure network. In Kazakhstan, buildings face 36% heat losses and an average of 200 technical failures per 100km of heating network every year. Half of the country’s 6,200km heating network requires replacement.

Kazakhstan and Uzbekistan have stressed the need for action on energy efficiency and renewable energy in buildings in their NDCs. Kazakhstan aims to achieve climate neutrality by 2060 and sees buildings as a priority area to meet this goal. Uzbekistan’s government seeks to improve the economy’s energy efficiency by 50% by 2030.

So, what’s holding back progress? A major obstacle lies in the subsidy scheme for residential buildings, which undercuts investment. Governments in the region have long subsidized up to 50% of energy costs. Beyond shaping energy consumption habits, these subsidies negatively influence projects’ feasibility and financial viability. While public buildings do not benefit from the same scheme, the policy framework discourages energy-saving and renovations. Public buildings’ budgets are calculated based on floor space (by square meter) rather than consumption.

In this framework, it is no surprise that the awareness of green and net zero carbon buildings and their co-benefits among public officials and citizens remains limited. Renewable energy generation and energy efficiency measures would lower people’s energy bills if subsidies were rolled in or tailored to vulnerable groups. They would also improve thermal comfort and create property price uplifts for owners. Resilient design, including passive heating and cooling technologies, reinforced structures, and elevated foundations, could also unlock adaptation benefits to cope with extreme weather events.

Another key challenge is data. The energy consumption of buildings is not systematically collected or analyzed by critical stakeholders. Enterprises supplying these services hold this information, and local administrations often disregard it in decision-making.

The lack of necessary capacities is another crucial factor hindering project progress and investment. For instance, Uzbekistan faces a structural shortage of essential technical skills, including urban planners, housing managers, project engineers, architects, designers, energy auditors, and technical supervisors for building projects. Additionally, in most cities across the region, local governments lack the capacity to identify and prepare projects suitable for investment at the scale required.

The untapped potential for project pipeline collaboration between institutions is an additional challenge to realizing investment projects. Early-stage project preparation entities often face challenges in advancing project concepts and connecting them to financing, whereas later-stage actors may struggle to identify project pipelines. Furthermore, many of these institutions have only recently initiated project preparation support activities in the region, offering a significant opportunity for collaboration.

Another critical challenge is the limitation of dedicated and operational financial instruments tailored to green and net zero carbon buildings. Instruments such as sovereign and municipal bonds, fiscal instruments, and innovative business models like energy service companies are needed to support projects. Adding workable financing options would also increase confidence among project preparation stakeholders who commit significant funding to project preparation.

Focused efforts are needed to help realize Central Asia’s NDC opportunity through building decarbonization. To this end, we lay out six recommendations to fast-track action now:

1. Raise awareness of green and net zero carbon buildings’ potential in the region by enhancing existing campaigns and training, leveraging diverse organizations and communication channels.
2. Provide technical assistance to cities for data collection and analysis in the buildings sector, training relevant actors including ministries, local governments, and NGOs.
3. Mainstream green and net zero carbon building approaches in legal frameworks and processes, incorporating realistic targets and budget mechanisms and fostering collaboration between national and local governments.
4. Increase project preparation support to governments and agencies, aiding in project development from conception to financial closure, and disseminate information on available support and case studies.
5. Enhance collaboration among stakeholders providing project preparation support in the same countries, exploring joint project pipeline synergies and coordinating efforts through donor platforms and partnerships.
6. Support scaling up financing mechanisms for green and net zero carbon buildings, developing innovative financial instruments such as sovereign bonds and blended financing, and training local governments to leverage procurement powers for financing.