1. Setting the scene for a green public investment programme

This chapter provides a brief overview of the main environmental issues facing Kyrgyzstan’s energy and transport sectors, to set the scene for the proposed Clean Public Transport Programme. It reviews the key policy documents and international environmental agreements to which the country is committed in order to adopt a greener development path, and outlines the structure of this report.

    

1.1. What are the main air pollution and climate change challenges?1

Kyrgyzstan’s greenhouse gas (GHG) emissions are relatively low. This can largely be explained by the prevalence of hydroelectric power plants (HPPs), which provide about 90% of the country’s total electricity generation. However, climate change impacts are expected to decrease water flows from the 2030s onwards, consequently reducing the potential of hydroelectric power. As a result, given an annual gross domestic product (GDP) growth of 4%, the electricity demand of Kyrgyzstan’s economy will be much higher than can be met by hydropower.

Around 95% of Kyrgyzstan’s carbon dioxide (CO₂) emissions stem from the energy sector, while 63% of methane emissions are attributed largely to agriculture. Nevertheless, Kyrgyzstan has significant potential for unconventional and renewable energy sources – especially solar, hydropower and geothermal energy and biogas (though conditions are inadequate for expanding wind power2) (GoK, 2016[1]). However, since the late 1990s the shares of energy generated by hydropower stations and by burning of fossil fuels have hardly changed (90% vs. 10%, +/-5 percentage points, see Section 6.1.4).

In 2012, Kyrgyzstan’s GHG emissions equalled 13.8 million tCO₂e (tonnes of carbon dioxide equivalent), amounting to 0.026% of global GHG emissions (whereas the country accounted for 0.079% of the world population in 2012). Between 1990 and 2012, Kyrgyzstan’s GHG emissions fell by 58.6% in total (67.5% per capita), energy use per capita declined by 56.8%, and renewable electricity output (as a share of total output) increased by 30 percentage points. Despite this progress, CO₂ intensity (CO₂ emitted per energy use) slightly increased (by 8.7%) in the same period, and the energy intensity of the economy (GDP per energy use) was only 51.7% of the world average in 2012 (3.89 – constant 2011 purchasing power parity international dollar per kg of oil equivalent – compared to the world average of 7.53).3

Kyrgyzstan is one of the most vulnerable countries to climate change, especially in terms of water resources, health, agriculture, and climate emergency situations. In 2017, Kyrgyzstan ranked 52^nd overall on the Germanwatch Global Climate Risk Index (CRI), but came 11^th for the number of fatalities per 100 000 inhabitants (Eckstein and et al., 2019[2]). Climate change also negatively influences human health through the increase in number of days with abnormally high temperatures (which will mainly affect elderly people, those suffering from cardiovascular diseases, as well as the poorest part of population – 70% of whom are women in Kyrgyzstan). Preventive adaptation measures are outlined in Priorities for Adaptation to Climate Change in the Kyrgyz Republic till 2017 (updated to 2020), and aim to minimise threats to ecosystems, human health, economic development, property and infrastructure (GoK, 2013[3]).

The transport sector is responsible for 28% of Kyrgyzstan’s GHG emissions, and in cities like Bishkek, for 75% of air pollutants. Most public transport vehicles are old and in need of replacement: of the country’s entire public transport fleet (about 6 240 vehicles in 2017), about 54% are 15 years or older. Therefore, more than half the fleet is beyond its useful life. In the minibus fleet (5 370 vehicles), the situation is even worse – around 89% of the fleet is over 10 years old. Buses and minibuses mostly run on diesel, while diesel engines typically meet only Euro IV/4 standards or lower. Structural and technical features – i.e. the importance of road transport for the country combined with an inadequate network of technical inspection centres – also make vehicle transport an important contributor to air pollution in Kyrgyzstan.

Kyrgyzstan continues to lag behind advanced countries in the development of modern emission norms for both passenger cars as well as heavy-duty truck and bus engines. Since 2013, post-Soviet GOST4 standards have been applicable to member states of the Eurasian Economic Union (EAEU). In 2014, the Eurasian Economic Commission (EEC) increased standards to Euro 5. These are set to come into effect in Kyrgyzstan in 2019, but only for fuels – not vehicle engines (vehicle emission requirements and the associated fuels do not necessarily align).5

1.2. What steps have already been taken?

To date, the Kyrgyz Republic has signed and ratified 13 international environmental conventions. It ratified the United Nations Framework Convention on Climate Change (UNFCCC) in January 2000 and the Kyoto Protocol in January 2003. In November 2006, Kyrgyzstan signed – together with Tajikistan and Turkmenistan – the Framework Convention on Environmental Protection for Sustainable Development in Central Asia. Most recently, in September 2016, Kyrgyzstan signed the Paris Agreement on Climate Change which was adopted at the 21^st Conference of the Parties (COP21) in Paris in December 2015 (Box 1.1).

Box 1.1. Kyrgyzstan’s greenhouse gas emissions targets

The Paris Agreement requires all Parties to put forward their best efforts to reduce greenhouse gas emissions through their nationally determined contributions (NDCs), and to strengthen these efforts in the years ahead. Kyrgyzstan’s NDC identifies both “conditional” (those that depend on sufficient international support) and “unconditional” targets for mitigation and adaptation.

The country’s unconditional mitigation target is to reduce GHG emissions in the range of 11.5-13.8% compared to business as usual (BAU) by 2030, and 12.7-15.7% below BAU by 2050. The conditional target is to reduce GHG emissions in the range of 29.0-30.9% below BAU by 2030, and from 35.1-36.8% below BAU by 2050, subject to international support available to the country (including low-cost financial resources, technology transfer and technical co-operation). See Section 7.5 for more details.

Source: (GoK, 2015[4]) Intended Nationally Determined Contribution – Submission of the Kyrgyz Republic, Government of Kyrgyzstan, Bishkek, https://www4.unfccc.int/sites/submissions/INDC/Published%20Documents/Kyrgyzstan/1/Kyrgyzstan%20INDC%20_ENG_%20final.pdf.

The Climate Change Co-ordination Commission, headed by the First Vice Prime Minister of the Kyrgyz Republic, co-ordinates all the activities in Kyrgyzstan related to climate change to meet the country’s commitments under the UNFCCC. The commission is composed of all the heads of key ministries and divisions, and representatives of the civil, academic and business sectors.

Although Kyrgyzstan accessed the 1979 Convention on Long-range Transboundary Air Pollution (LRTAP Convention) in May 2000, until recently, air pollution in the country had received much less attention than other environmental issues, including climate. According to data from the National Statistical Committee of the Kyrgyz Republic (NSC), stationary sources alone are responsible for releasing around 50 000 tonnes of harmful substances into the air annually (NSC, 2016[5]). Urban transport, however, outweighs stationary sources – based on data from the State Agency for Environmental Protection and Forestry (SAEPF), the annual total pollutant emissions into the atmosphere from Bishkek amount to 240 000 tonnes, of which 180 000 tonnes are from motor vehicles (Levina, 2018[6]). More importantly, over half of all air pollutants fall (literally) on the city of Bishkek (situated between mountains).

To address these challenges, national legislation and strategic documents on environmental policy and climate change have been improved. Amendments have been introduced to the Kyrgyz Republic’s laws on environmental protection, atmospheric air (both adopted 1999 and last amended 2016), renewable energy sources (adopted 2008, last amended 2012), public health (adopted 2009, amended 2014), the forest code (adopted 1999, last amended 2014) and the water code (adopted 2005). Networks have also been established to bring together groups working on climate change (e.g. the Climate Network of the Kyrgyz Republic, set up in 2009).

Prior to participating in the United Nations Conference on Sustainable Development (or RIO+20) in 2012, Kyrgyzstan developed Priorities of the Green Economy in the Kyrgyz Republic. These were to be facilitated by attracting foreign and domestic “green” investments aimed at promoting new technologies to improve the energy and resource efficiencies of both production and consumption and to reduce emissions and pollution. This led to the establishment of the National Council for Sustainable Development under the President of the Kyrgyz Republic.

Since 2013, priorities for an effective energy policy had been reflected in the National Sustainable Development Strategy 2013-2017. The strategy also focused on energy efficiency and introducing renewable energy sources – including solar energy, wind, water, geothermal sources and biofuel – as key environmental priorities. Green technologies were to be promoted through the introduction of new financial tools such as green taxes, customs duties, green procurement and green investments (GoK, 2013[7]). To implement the strategy, Kyrgyzstan adopted the Programme on Transition to Sustainable Development 2013-2017 and its associated Five-Year Plan “of Creation” – 2017 (GoK, 2013[8]).

In 2018, the National Council for Sustainable Development adopted a new National Development Strategy 2018-2040 (“Zhany Doorgo – kyrk kadam”). One of the government’s medium-term priority areas to 2023 is to improve the population’s living conditions, including better (regional) infrastructure as well a safe environment conducive to human health. In the transport sector, the strategy foresees a gradual transition to environmentally friendly modes of transport through the use of electric vehicles and electrification of railways (GoK, 2018[9]). The quality of public transport services is also addressed by the Development Programme 2018-2022 “Unity. Trust. Creation” (GoK, 2018[10]). One of the objectives of the Road Transport Development Strategy 2012-2015 was to improve the technical condition of motor vehicles based on the experience of other countries, and to limit the operation of those whose emissions of harmful pollutants exceed the established standards (GoK, 2012[11]).

Recommended actions for the Kyrgyz Republic within the framework of the UN Partnership for Action on Green Economy (PAGE) include introducing at the national level processes for implementing economic modelling to guide the transition to a green economy and sustainable development.6 However, the economic situation means the country cannot implement the planned measures with regard to climate change (adaptation and mitigation) or transition to green economy (to be reflected in the upcoming Green Economy Concept) entirely through internal resources.

As the global climate regime is evolving, donors and international financial institutions (IFIs) are already starting to invest significant resources to support non-Annex I Parties. International carbon finance mechanisms, such as the Green Climate Fund (GCF), are known to rely to a great extent on country-based systems for programme and project identification and implementation. Those countries that develop the necessary skills to prepare sound public expenditure programmes and identify a pipeline of cost-effective projects will be more competitive and will stand better chances of benefiting from international support.

In order to be successful, the Ministry of Economy, as a major player in climate change policy in the country, will need to develop the necessary practical skills to prepare economically sound public investment programmes that can compete effectively for support and leverage funds from both budgetary and donor sources. These programmes need to be also integrated into national development strategies and medium-term budgetary processes (such as medium-term expenditure frameworks or MTEFs). In addition, government administrations need to be willing to apply good practices in public expenditure management, such as accountability, transparency and efficiency.

Based on information from previous work by the OECD in this field, Kyrgyzstan has introduced sectoral MTEFs in health, education and agriculture; however, donor funds are not integrated in the MTEFs. Although the Kyrgyz Government has accumulated some experience with MTEF design, the practice needs to be extended to other (environmental) sectors, including actual implementation. The Kyrgyz Government will need to ensure that it puts in place climate-related investment programmes which will identify the most cost-effective projects to be supported with public funds.

1.3. What is this report about?

In 2017, the OECD and Kyrgyzstan joined forces to analyse how a public investment programme could spur the development of cleaner public transport, and reduce air pollution and GHG emissions from public transport in large urban centres in the country. It was agreed that the main focus of the programme would be to support the shift to modern buses powered by clean fuels, such as compressed natural gas (CNG) and liquefied petroleum gas (LPG).

The preparation of the programme (henceforth the “project”) involved four main activity areas and outputs: 1) an initial scoping and analytical stage; 2) development of a programme costing methodology; 3) design of a programme in line with international good practices; and 4) preparation of an analytical report and training. Activity areas 2 and 3 constituted the backbone of the project, which aimed to demonstrate in practice how to use scarce public funds to encourage the private sector to invest in clean and socially important projects.

The programme implementation will require institutional arrangements that ensure transparent and cost-effective decision-making. The report analyses several institutional options. The institutional set-up proposed in this study includes three levels: 1) a programming entity; 2) an implementation unit; and 3) a technical support unit. Their roles and responsibilities are presented in detail in the report.

This report is the culmination of the investment programme preparation process, and presents the results of the scoping analysis. It is organised as follows:

• Chapter 2 presents the CPT Programme, and provides estimates of its costs and expected environmental and socio-economic benefits. The chapter also lays out the financing strategy and optimal co-financing level.

• Chapter 3 presents market analyses for clean technologies and fuels in the bus transport sector in Kyrgyzstan and, on this basis, assesses the viability of the investment programme. The production and import of buses were examined to assess domestic capacity for meeting the need for bus replacements.

• Chapter 4 discusses the institutional arrangements for managing the CPT Programme.

• Chapter 5 presents an overview of the project cycle management (PCM) procedures developed for each project pipeline identified as part of this programme.

• Chapter 6 briefly describes the main demographic, macro-economic and environmental issues in Kyrgyzstan relevant to the transport sector. It also presents an overview of the urban public transport system, level of GHG emissions and air pollution in the main urban centres and the major health risks associated with the main air pollutants.

• Chapter 7 describes the current policy and regulatory framework in the transport sector.

• Annex A presents an overview of clean technologies and fuels in the transport sector, while Annex B explains the use of the OPTIC (Optimising Public Transport Investment Costs) model. Annexes C-E contain sample project application and appraisal forms.

Bibliography

[2] Eckstein, D. and et al. (2019), Global Climate Risk Index 2019: Who Suffers Most From Extreme Weather Events? Weather-related Loss Events in 2017 and 1998 to 2017, Briefing Paper, Germanwatch, Bonn, https://www.germanwatch.org/sites/germanwatch.org/files/Global%20Climate%20Risk%20Index%202019_2.pdf.

[10] GoK (2018), Development Programme of the Kyrgyz Republic for the period 2018-2022, Government of Kyrgyzstan, Bishkek, http://www.un-page.org/files/public/the_development_program_of_the_kyrgyz_republic_for_the_period_2018-2022.pdf.

[9] GoK (2018), National Development Strategy of the Kyrgyz Republic for 2018-2040, Government of Kyrgyzstan, Bishkek, http://donors.kg/images/National_Development_Strategy_of_KR_2018-2040_final_ENG.docx.

[1] GoK (2016), Third National Communication of the Kyrgyz Republic under the UN Framework Convention on Climate Change, Government of Kyrgyzstan, Bishkek, https://unfccc.int/sites/default/files/resource/NC3_Kyrgyzstan_English_24Jan2017.pdf.

[4] GoK (2015), Intended Nationally Determined Contribution - Submission fo the Kyrgyz Republic, Government of Kyrgyzstan, Bishkek, https://www4.unfccc.int/sites/submissions/INDC/Published%20Documents/Kyrgyzstan/1/Kyrgyzstan%20INDC%20_ENG_%20final.pdf.

[7] GoK (2013), National Sustainable Development Strategy for the Kyrgyz Republic for the period 2013-2017, Government of Kyrgyzstan, Bishkek, https://www.un-page.org/files/public/kyrgyz_national_sustainable_development_strategy.pdf.

[3] GoK (2013), Priorities for Adaptation to Climate Change in the Kyrgyz Republic till 2017 (in Russian), Government of Kyrgyzstan, Bishkek, http://www.ecology.gov.kg/page/view/id/124.

[8] GoK (2013), Programme for the transition of the Kyrgyz Republic to sustainable development for 2013-2017, (in Russian), Government of Kyrgyzstan, Bishkek, http://cbd.minjust.gov.kg/act/view/ru-ru/53067.

[11] GoK (2012), Strategy for Development of Road Transport in the Kyrgyz Republic for 2012-2015 (in Russian), Government of Kyrgyzstan, Bishkek, http://cbd.minjust.gov.kg/act/view/ru-ru/93738?cl=ru-ru.

[6] Levina, M. (2018), “Smog over Kyrgyzstan capital city: causes, effects, and solutions”, The Times of Central Asia, 27 January, http://www.timesca.com/index.php/news/26-opinion-head/19261-smog-over-kyrgyzstan-capital-city-causes-effects-and-solutions (accessed on 30 August 2019).

[5] NSC (2016), Environment in the Kyrgyz Republic, Statistical Compilation 2011-2015, National Statistical Committee of the Kyrgyz Republic, Bishkek, http://stat.kg/media/publicationarchive/8c0e9d22-6bb6-4145-b1d6-8311da33521d.pdf.

Laws and regulations

(listed by most recent publishing date, in Russian)

Presidential Decree No. 221 of 31 October 2018 "On National Development Strategy of the Kyrgyz Republic for 2018-2040", http://stat.kg/ru/ukaz-prezidenta-kyrgyzskoj-respubliki-o-nacionalnoj-strategii-razvitiya-kyrgyzskoj-respubliki-na-2018-2040-gody.

Resolution of Jogorku Kenesh of the Kyrgyz Republic No. 2377-VI of 20 April 2018 "On approval of the Development Programme of the Kyrgyz Republic for the period 2018-2022", http://mineconom.gov.kg/storage/documents/109/15393398945bc07676beab4_pdf.pdf

Government Resolution of Kyrgyz Republic No. 549 of 2 October 2013 "On approval of priority areas for adaptation to climate change in the Kyrgyz Republic until 2017", http://cbd.minjust.gov.kg/act/view/ru-ru/94766?cl=ru-ru.

Government Resolution No. 218 of 30 April 2013, "On approval of the draft Programme for the transition of the Kyrgyz Republic to sustainable development for 2013-2017", http://cbd.minjust.gov.kg/act/view/ru-ru/53066.

Presidential Decree No. 11 of 21 January 2013 "On the National Sustainable Development Strategy of the Kyrgyz Republic for the period 2013-2017", http://cbd.minjust.gov.kg/act/view/ru-ru/61526.

Government Resolution No. 677 of 4 October 2012 "On approval of the Strategy for Development of Road Transport in the Kyrgyz Republic for 2012-2015", http://cbd.minjust.gov.kg/act/view/ru-ru/93738?cl=ru-ru.

Notes

← 1. . This brief review draws on a more detailed analysis presented in Chapter 6.

← 2. . Wind power plants are only economically feasible in areas with a sufficient average annual wind speed and a constant wind direction. In Kyrgyzstan’s mountainous terrain, such conditions can only be found in remote and sparsely populated areas (GoK, 2016[1]).

← 3. . See World Bank (WB) country data on Kyrgyzstan at: https://data.worldbank.org/country/kyrgyz-republic.

← 4. . Russian: ГОСТ = state.

← 5. . Personal communication with the Center for Renewable Energy and Energy Efficiency Development (www.creeed.net).

← 6. . UN PAGE Kyrgyzstan (www.un-page.org). See also: www.kg.undp.org/content/kyrgyzstan/en/home/projects/partnership-for-action-on-green-economy.html.

1. Setting the scene for a green public investment programme