The Republic of Uzbekistan has attracted the second tranche of grant funds in the amount of US $ 7.5 million under the iCraft international project "Innovative Use of Carbon resources for the Energy Transition". The initiative is implemented jointly with the World Bank and aims to develop climate finance mechanisms through reforms in the energy sector.
Compensation for reduced emissions
The current tranche was allocated under the ERPA (Emission Reductions Purchase Agreement), one of the key instruments of the global carbon market. The funds were provided in the form of compensation for the reduction of 500,000 tons of greenhouse gases recorded in Uzbekistan by the end of 2023. The total volume of reductions in the country under the project during this period was 6.328 million tons of CO₂ equivalent.
Funding is provided through the Results-Based Climate Finance model, which allows Uzbekistan not only to attract external grants, but also to integrate into the structure of the global carbon market, using its tools in the national strategy for sustainable development.
The world's first climate policy lending project
The iCraft project is recognized as the world's first climate project implemented on the basis of a political lending approach. This means that a key condition for obtaining funds is to implement comprehensive reforms-primarily in the energy sector, in order to reduce the carbon footprint and improve energy efficiency.
The project aims to facilitate Uzbekistan's transition to a green economy, ensure structural emission reduction, and create institutional and legal frameworks for trading carbon units in international markets.
We have already attracted $ 15 million in grants
Recall that as part of the first tranche in 2024, Uzbekistan also received 7.5 million US dollars, which together gives the amount of external non-returnable support in the amount of 15 million dollars. These funds are used to support reforms, provide technical support, develop accounting and verification mechanisms, and train relevant specialists in the field of climate policy.
Significance for the national strategy
Participation in the iCraft project is in line with Uzbekistan's priorities to achieve carbon neutrality, reduce dependence on fossil fuels, and integrate into international climate initiatives. The implementation of the ERPA agreement also contributes to building a transparent system of accounting for emissions, which is necessary for entering into international trade in greenhouse gas quotas.
Thus, the attraction of the second tranche of grant funds under the iCraft project not only confirms Uzbekistan's commitment to climate commitments, but also demonstrates the successful application of innovative mechanisms for global climate finance at the national policy level.
