Uzbekistan has broken new ground by becoming the first nation to receive a financial reward from the World Bank for lowering carbon emissions in the form of carbon credits.
This innovative project, known as the Innovative Carbon Resource Application for Energy Transition (iCRAFT), aims to empower Uzbekistan in its pursuit of energy efficiency, eliminating energy subsidies, and adopting cleaner energy sources.
The World Bank‘s Transformative Carbon Asset Facility (TCAF) acknowledged Uzbekistan’s success in cutting 500,000 tons of carbon emissions under the iCRAFT project by awarding them a $7.5 million grant. Independent verification confirmed these emission reductions.
A portion of the project funds will be directed towards assisting vulnerable households impacted by changes in energy pricing structures, according to the Uzbek government’s commitment.
These funds will also contribute to the country’s broader objectives of environmental sustainability and energy sector reform, maximizing the benefits of the iCRAFT project.
The spearheads of Uzbekistan’s energy sector reform, which is driving energy conservation and carbon reduction, are the Ministry of Economy and Finance and the Ministry of Energy.
The iCRAFT Project is investing in the development of essential infrastructure, systems, processes, and standard documents.
This will equip Uzbekistan to launch similar initiatives in the future with backing from other development partners and private investors.
The Project is playing a key role in establishing a monitoring, reporting, and verification (MRV) system that aligns with Article 6 of the Paris Agreement, an international pact that strives to limit global temperature rise by reducing global greenhouse gas emissions.
It’s also pioneering a climate finance transaction to support Uzbekistan’s clean energy transition and its Nationally Determined Contribution (NDC) targets under the Paris Agreement.
The Agency for Strategic Reforms, the Ministry of Investment, Industry, and Trade, and the Agency for Hydrometeorological Services (Uzhydromet) are all providing ongoing support for the Project.
This initial payment represents the first of several anticipated under the Emissions Reduction Payment Agreement (ERPA) established between the Uzbek government and the World Bank as part of the iCRAFT Project.
This agreement has the potential to provide Uzbekistan with up to $20 million in grants for verified emission reductions or carbon credits generated through its energy subsidy reforms.
Uzbekistan has set a target of reducing 60 million tons of CO2 through the Project. iCRAFT is expected to purchase around 2.5 million tons of CO2, with Uzbekistan retaining the option to sell the remaining carbon credits on international carbon markets, leveraging the systems and processes established by the iCRAFT Project.
source: carbonherald.com