Nowadays, climate change caused by growth of greenhouse gas emissions is a global threat. Many countries, including Kazakhstan, have assumed national commitments to restraint climate change within the Paris Climate Agreement, according to which low-carbon development will become the principal model of the economy.

Kazakhstan is actively taking actions to transit to “green economy”, with the priorities to upgrade infrastructure and improve environmental quality through efficient ways of climate change mitigation.

Currently, Kazakh urban settlements are among the most greenhouse gas-intensive municipalities in the world. Due to the depreciation of the housing stock and utility infrastructure in urban areas about 60 per cent of all CO2 emissions are accounted for the heat and electric power supply.

That is why Kazakhstan has identified “urban economy”, including district heating systems, systems of waste collection and disposal, buildings and transportation, as a priority to tackle the climatic change. Measures to improve the energy efficiency of outdated infrastructure, as well as the introduction of renewable energy sources, can reduce annual greenhouse gas emissions by 20-30 million tons of CO2 per year, which is accounted for 30 per cent of the total CO2 emissions reduction in the country.

However, it becomes obvious that the solution to this problem is impossible only through the efforts of the state. Private sector which forms the basis of the national economy plays an important role in such initiatives. At the same time, it is impossible to force the business environment to change its approaches to activities and switch to “green” technologies only by administrative (coercive) measures: ratification of the Paris Agreement and adoption of relevant rules and standards are the basis for important changes, but in practice, to get things moving, it is necessary to stimulate SMEs to invest in low-carbon ventures.

Special financial instruments to support small and medium-sized businesses for implementing low-carbon investment projects in urban infrastructure have been developed and tested in Kazakhstan within joint initiatives by UNDP, the Ministry of Industry and Infrastructure Development and the JSC “DAMU” Entrepreneurship Development Fund”.

Key support tools include subsidy assistance and loans underwriting for improving the profitability and reduction of the green projects payback period. The technical support is also provided to project concerned parties – the facility owners, business companies, banks, local executive authorities and communities for the successful preparation and implementation of energy service projects within the framework of the implementation of above actions.

For example, a guarantee in size of 50 per cent was provided to receive financing from the bank and a subsidy in amount of 10 per cent as part of a pilot project to upgrade lighting in the administrative and technological complex “Transport Tower”. This project allowed to save energy in the amount of 508 thousand kW*h per year and to redistribute the released energy to other urban infrastructure due to extra-budgetary investments in upgrading, provided with future energy savings.

Modernization of heat supply systems in 9 schools in the city of Shieli of Kyzylorda region is another example of subsidizing private investments for a low-carbon project. Modernization of boiler houses with the replacement of fuel with natural gas allowed not only to reduce greenhouse gas emissions by 3.2 thousand tons of CO2, but also to save 62.3 million KZT during the purchase of fuel.

Drastic measures to introduce energy efficiency and introduce renewable energy sources in the children's recreation center “Parus” in Zerenda village of Akmola region, where the principles of heating, lighting and heating water for the needs of vacationers have been changed, that allowed to save up to 75 per cent on electric power supply, as well as to reduce the cost of stay at the camp for 30 per cent.

The active participation of residents in the implementation of the project in Temirtau on testing the facility of co-financing of measures for increasing the energy efficiency of a standard multi-family residential house was an important result of the pilot project. The Council of the house from among the owners of apartments has become a key link in monitoring the implementation of complex thermal modernization of the house by a private energy service company (ESCO). A subsidy in the amount of 10 per cent from UNDP made it possible to bring the return on the project for the modernization of heating and hot water supply of this building up to 2 years, while reducing heat consumption by 8.2 per cent. Together with other interventions to upgrade the building, implemented through GEF-UNDP grant, the pilot results in 30 per cent of energy saving.

The previously tested standard solutions for energy saving in cities have allowed testing the trade in reduced units of greenhouse gas emissions from energy efficiency projects. For this purpose, five previously modernized local boiler houses in schools of Pavlodar region were selected for which verification of reduced greenhouse gas emissions was made. The verified emissions are planned to be sold in 2020 on the domestic market. The sale proceeds will be used as a partial compensation of the investment costs of the implementing partner.

Currently, by the aid of the implemented financial instruments, more than 100 green projects have been supported in Kazakhstan, and the results of 37 implemented initiatives have shown that each KZT of UNDP financial support attracts 6 KZT investments from the private sector and saves utility costs up to 40 per cent, allowing businesses to get economic benefits being environmentally responsible. This mechanism, tested by UNDP, is proposed to form the basis of the incentive measures reflected in the new version of the Law of the Republic of Kazakhstan “On energy conservation and energy efficiency”. This will allow the formation of a special program to support energy conservation by the state, as well as attract funds from international financial organizations. Only in this way we will be able to quickly modernize the infrastructure, and energy conservation will become a reality, bringing tangible benefits to the population and the country as a whole.