Overview

The region of Europe and Central Asia has a rich and diverse energy potential, but it also faces many energy challenges. The region consumes 10 percent of the world's energy, but most of it comes from fossil fuels. This causes high greenhouse gas emissions, air pollution, and energy waste. 

UNDP is helping countries in the region to switch to a low-carbon development model, based on renewable energy sources, energy efficiency, and smart grids. UNDP's Climate Promise is the world's largest offer of support for countries to enhance their pledges (NDCs) under the Paris Agreement. UNDP is helping 118 countries globally, including all 18 programme countries and territories in our region, to be more ambitious in reducing emissions, increasing resilience, and protecting nature.

Our goals

As the UN agency working on sustainable development, UNDP has a mandate of supporting countries as they move towards low carbon development paths, more sustainable use of natural resources and resilience to climate change and disasters. UNDP supports countries to:

• Develop sustainable and renewable energy solutions;
• Improve energy efficiency and reduce energy intensity;
• Modernize and diversify energy infrastructure and markets;
• Enhance energy access and affordability for all.

In depth

The region of Europe and Central Asia has a lot of potential for renewable energy development, such as solar, wind, hydro, geothermal, and biomass. However, there are many barriers to using this potential, such as lack of good policies and regulations, limited financing options, weak institutional capacities, and low public awareness.

Many of the energy challenges in Europe and Central Asia are related to the region’s specific climatic, economic, environmental and political characteristics. Europe and Central Asia is blessed with almost universal household electrification (99.4 percent). However, the ageing energy supply infrastructure, a lack of supply diversification and increasing tariffs expose more and more people to power cuts and high electricity and gas bills, in addition to contributing significantly to climate change.

Although the region has tremendous untapped potential for almost all forms of sustainable energy, so far renewable energy sources (other than hydropower) account for only 1.38 percent of the energy supply. In recent years, however, the region has shown a positive trend in adopting sustainable energy technologies and installing solar PV and wind power plants.  UNDP helps to de-risk investments in sustainable energy, while expanding employment and livelihood opportunities as energy services progressively develop. For instance, in 2019- 2020, within the UNDP/OFID project more than 40 solar driers were sold out through 20% grant funding to low-income residents including cooperatives of disabled people and women-led small businesses in Kyrgyzstan.

Access to energy

All people deserve access to clean and affordable energy. For instance, even if most of the population in the Europe and Central Asia region has access to electricity, there are still some areas where people living off the grid or with intermittent energy supply, or not able to afford fuel can affect every aspect of a household’s daily life.

At the policy level, energy sector reforms are needed to end decades of subsidized tariffs and distorted prices, and to free up money for investing in infrastructure upgrades. But fossil fuel subsidies deter investments in energy efficiency and renewable energy.

Thus, UNDP supports comprehensive energy sector transformation programmes by:

• Accelerating the adoption of clean technologies
• Encouraging local banks to invest in renewable energy and energy efficiency
• Improving policy, legal and regulatory frameworks
• Raising awareness among governments and businesses; and
• Piloting tailored technical solutions (small hydro, solar or wind energy/ and biogas) for each context.

For example, in Armenia, UNDP worked on the Green Climate Fund to increase energy efficiency and reduce costs and CO2 emissions across the country. In Kazakhstan, state-funded programmes have scaled up UNDP’s pilot investments in developing the wind energy sector. In Kyrgyzstan and Tajikistan, more than 16,000 households have been supported with green energy access, shifting towards on-grid and off-grid renewable solutions.

Energy efficiency

Energy efficiency is essential to both addressing current energy challenges and reducing carbon emissions. Yet the Europe and Central Asia region is one of the most energy inefficient regions in the world.

The building sector remains the biggest consumer of energy and electricity, with space and water heating dominating energy consumption. The need for sustainable heating is a challenge unique to this cold region. Energy-efficient construction and retrofitting heating networks have the highest potential for energy savings. With efficient appliances, electronics, and equipment becoming cheaper, this objective is within reach.

UNDP works to increase investments in energy efficiency in the region. Energy efficiency investments are more cost effective but their disaggregated, small-scale nature make them more difficult to finance.

To help make investments more attractive, UNDP is:

• Developing standardized methodologies for making energy efficiency projects identifiable, replicable, and bankable
• Establishing monitoring, reporting and verification procedures to scale up projects and make them commercially attractive.

Renewable energy

Up to 96 percent of the total primary energy supply in the Europe and Central Asia region came from fossil fuels (coal, oil and natural gas), 16 percent higher than the global average. Although there is excellent potential for solar, wind, biomass, small hydropower and geothermal energy, most of these resources remain untapped.

Although some countries in the region have begun to expand their renewable energy sources, several existing barriers are preventing investments from reaching their full potential. High initial investment costs and lack of competitiveness remain major limitations to scaling up renewable energy use and engaging the private sector.

With Official Development Assistance (ODA) having to be supplemented by other funding sources, the private sector will be needed to drive new investments in renewable energy.

Attracting private investors will depend on whether adequate laws and policies are in place and investments viable. That’s why more detailed information about potential opportunities, risks and returns needs to be made available for them.

For instance, UNDP supported:

• The Government of Kazakhstan to adopt a national concept for transitioning to a green economy, with clear indications that renewable energy sector development is one of country priorities.
• The development of a small hydro power sector to ensure Tajikistan’s energy security.