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    Uzbekistan World

    High cost of inaction: Why climate investment is an economic imperative

    High cost of inaction: Why climate investment is an economic imperative

    Investing in climate mitigation and adaptation is not just an environmental necessity—it is an economic imperative. A recent report by the Boston Consulting Group (BCG), Cambridge Judge Business School, and the University of Cambridge’s climaTraces Lab highlights the severe economic consequences of failing to act on climate change.

    Photo: Investing in climate action is an economic necessity
    Source: Daryo

     

    If global temperatures rise by 3°C by 2100, cumulative economic output could shrink by 15% to 34%. In contrast, allocating just 1% to 2% of GDP toward mitigation and adaptation efforts could limit warming to 2°C, significantly reducing economic losses to just 2% to 4%. This gap in potential losses—equivalent to 11% to 27% of global GDP—underscores the high cost of inaction, which could amount to three times global healthcare spending or eight times the amount required to eradicate extreme poverty by the end of the century.

    The transition to a low-carbon economy could reshape global employment. The report estimates that by 2030, 14mn new jobs will be created in the energy sector, alongside an additional 16mn positions in construction, efficiency upgrades, and emerging industries like hydrogen production. However, this shift will also displace around 5mn jobs in fossil fuel-dependent industries. Ensuring a "just transition" will require comprehensive support measures, including reskilling programs, economic diversification, and policy initiatives to assist affected workers and communities.

    Photo: Green energy transition could create 30mn jobs by 2030
    Source: Daryo

     

    Mitigation efforts, such as transitioning to renewable energy and reducing emissions, offer a return on investment of up to 14 times the initial cost. Adaptation strategies, including infrastructure improvements and disaster preparedness, are crucial for minimizing immediate climate damages. However, the challenge lies in timing—60% of necessary investments must be made by 2050, yet 95% of the economic damage from climate inaction will materialize after that point.

    “The economic case for climate action is clear, yet not broadly known and understood,” said Annika Zawadzki, managing director and partner at BCG. “Investment in both mitigation and adaptation could bring a return of around tenfold by 2100.”
    Photo: Investments in Mitigation Avoid Economic Damages and Future Adaptation Costs
    Source: BCG

     

    Despite the strong financial rationale, climate investments remain uneven across nations. The report identifies five key priorities to accelerate climate action:

    • Reframing the cost debate by shifting the focus to the net economic benefits of early investment.
    • Creating transparency on the economic risks of inaction.
    • Strengthening national climate policies to drive faster adaptation and mitigation efforts.
    • Reinforcing international cooperation to ensure equitable climate action.
    • Advancing research to refine estimates of climate-related economic impacts.
    Photo: The country targets 40% renewable electricity by 2030
    Source: Daryo

     

    Uzbekistan’s Green Transition and Climate Action

    Uzbekistan faces significant environmental and climate challenges due to rapid population growth, urbanization, and high energy intensity. Climate change exacerbates water shortages, land degradation, and extreme weather risks, particularly affecting vulnerable rural populations. The government recognizes the need to balance economic growth with sustainability and is taking steps to reduce carbon emissions, transition to green energy, and improve resource efficiency.

    To support these efforts, UNDP’s Environment and Climate Action Cluster is assisting Uzbekistan in expanding its Nationally Determined Contribution (NDC) by mobilizing financial resources from global institutions. This includes working with the UN, Multilateral Development Banks, and the private sector to facilitate investments that help the country move towards carbon neutrality.

    Another key focus is developing gender-sensitive climate adaptation plans, particularly for health, agriculture, water, emergencies, and housing sectors in the most environmentally degraded regions. With support from the Green Climate Fund, these initiatives aim to ensure both adaptation and mitigation responses to climate change.

    Photo: President Mirziyoyev's decree prioritizes climate adaptation
    Source: Daryo

     

    UNDP is also supporting the implementation of Uzbekistan’s Strategy for Transition to a Green Economy by 2030. This involves promoting renewable energy, enhancing resource efficiency, and improving crop yields while preventing land degradation. Additionally, investments in low-cost, energy-efficient rural housing are being facilitated through blended financing with the Islamic and Asian Development Banks to increase access to clean and affordable energy.

    Biodiversity conservation and sustainable ecosystem management are also priorities. Efforts align with the 2019-2028 National Strategy on Biodiversity Conservation to protect natural resources, preserve mountain ecosystems, wetlands, and deserts, and restore degraded lands in the Aral Sea region.

    The organization is addressing inefficient agricultural practices in the Aral Sea region, which threaten rural livelihoods. Collaborating with the EU and the Ministry of Agriculture, the initiative integrates the economic value of water into national policies, explores market-based incentives, and contributes to an inclusive transition to a green economy.

    To strengthen climate resilience, national partners such as Emergency Situations, Uzhydromet, and regional authorities are working to implement the Sendai Framework for Disaster Risk Reduction. This includes establishing gender-sensitive early-warning systems for climate-induced hazards.

    Photo: Uzbekistan is expanding renewable energy and cutting emissions
    Source: Daryo

     

    Uzbekistan Expands Green Investment Efforts

    Uzbekistan is transitioning to a green economy by reducing greenhouse gas emissions, expanding renewable energy, and improving resource efficiency. State-Owned Financial Institutions (SOFIs) and State-Owned Enterprises (SOEs) play a role, with SOFIs providing 70% of loans and state funds like UFRD investing 10% of GDP in green projects. The Ministry of Economy and Finance (MEF) is driving this process by setting green investment targets and improving transparency.

    Key institutions are involved in green finance, including EDC, which plans to allocate 35% of funding to green projects by 2026, and BDB, which is integrating sustainability into its operations. UzMRC is preparing to issue green bonds, while SOEs like Uzkimyosanoat and Issiqlik Elektr Stansiyalari are adopting cleaner technologies and reducing emissions. The Uzbekistan Direct Investment Fund (UzDIF) and the Fund for State Support for Agriculture (FSSA) are working to attract green investments and support agriculture.

    For Uzbekistan’s green transition to continue, a central coordination platform is needed to align resources, attract private capital, and integrate climate finance into regulations. With clear strategies and institutional support, SOFIs and SOEs can drive growth and expand green investments.

    Photo: The government is promoting eco-friendly industrial zones
    Source: Daryo

     

    On February 7, 2025, President Shavkat Mirziyoyev signed a decree to advance Uzbekistan’s environmental sustainability. The decree prioritizes ecological protection, green energy expansion, and climate change adaptation. Key initiatives include increasing greenery in neighborhoods, promoting an eco-friendly lifestyle, and ensuring sustainable financing for green economy projects.

    The program emphasizes renewable energy, with targets to generate 40% of electricity from renewable sources and cut carbon emissions using modern energy-saving technologies. Planned projects include 4.5 GW of solar and wind power plants, 785 MW of photovoltaic panels, and a 225 MW hydroelectric station. Green electricity tariffs will be introduced from April 1.

    Economically, Uzbekistan aims for 6% annual GDP growth, a $200bn economy by 2030, and a controlled inflation rate of 5%. The decree also mandates ESG reporting for major enterprises and the development of eco-friendly industrial zones in Samarkand and Fergana. By 2030, green investment components will rise to 55%.

    The reforms align with the Kyoto Protocol and Paris Agreement, reinforcing Uzbekistan’s commitment to sustainable development and economic competitiveness.

     

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    26 March, 12:34   Comments (0)   1230
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