As policymakers across the region gear up their efforts in responding to climate change, they will need to confront their institutional challenges and constraints; understand the range of domestic financing available to them; consider the merits of adaptation projects for building long-term resilience in terms of energy, food and water security; recognize and appreciate the opportunities for co-benefits; become familiar with recent innovations; and learn from the experience of climate change efforts around the globe. Both governmental and private sector institutions have roles and responsibilities in climate finance, and both face constraints on their ability to act. Selected shortcomings include: y
Understaffing and limited institutional capacity of agencies responsible for climate change issues
y
Incomplete implementation of regulations and strategies and weak coordination between levels of government
y
Lack of state budget allocations for climate-related measures and loose links between domestic and international investments to climate objectives
y
Fiscal incentives, domestic investments or stimulus packages to carbon-intensive projects, particularly coal-based technologies
y
Limited monitoring, reporting and verification (MRV) on climate actions
Private businesses willing to support government initiatives on climate mitigation and adaptation through participation or funding may express reservations related to the transparency or raise concerns about the effectiveness of projects. But corporate and environmental social responsibility — including climate change considerations — appears to be gaining traction in Central Asia. The concept of a green economy — already fully
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embraced by Kazakhstan as the country’s way forward — appeals throughout the region. In their official reporting on efforts to reduce emissions and adapting to climate change, the countries of Central Asia limit their assessments to the financing they receive from the global climate funds. This approach overlooks substantial amounts of other climate-relevant funding, starting with the co-financing of these global climate fund projects. Other missing pieces are projects that have no international climate funds support and domestic financing for a range of climate-relevant projects. Expanding reporting to include diverse sources of funding will help the countries present a more comprehensive picture of their own and international efforts. When the countries develop a better understanding of climate change financing through better monitoring and reporting, they may see opportunities to rethink their subsidies and incentives, create more climate and socioeconomic co-benefits through intentional design, and in the wake of the pandemic, they may find ways to incorporate climate intentions into economic recovery packages. They may also recognize the significant potential of the private sector to support climate actions and devise ways to balance plans for investments in coal and cement and other emitting industries with plans for clean energy. On the strength of climate finance assessment, the governments will be able to demonstrate to potential investors that they understand their own particular situation, and will be able to imagine and propose co-financing of large international climate fund projects. By knowing weak points for mobilizing climate investment, governments should be able to bridge the gaps, in a similar fashion as they do it for improving the investment climate and ease of doing business.
