Countries in North and Central Asia are increasingly trying to make their energy sectors greener and more sustainable. With stagnating economic growth and climate change on the horizon, countries are recognizing the need to explore other sources of revenue and energy production. Although aggregated data show that the subregion is on track to achieve Sustainable Development Goal 7 on affordable and clean energy, energy diversity remains low – with up to 91 per cent of the energy mix made up of hydrocarbon sources. Discounting the share of hydropower, renewable energy only accounts for 1 per cent of the energy production in North and Central Asia.
Sustainable and clean energy can be a driver for the subregion to achieve the 2030 Agenda. To better understand how sustainable and clean energy can contribute to the achievement of other sustainable development goals, it is instructive to explore the interlinkages between sustainable and clean energy through visual network graphs of correlation and regression analysis. The two graphs below show the results for the visual network graphs while the insights from the regression analysis are described in the text.
Interlinkages of Goal 7 (at the indicator level) in North and Central Asia
The network graph shows that most of the interlinkages are clustered around indicators 7.2.1 on renewable energy share in the total final energy consumption and 7.3.1 on energy intensity. This implies that these aspects of energy development are the most likely to have synergies or tradeoffs with other aspects of sustainable development. The results suggest that higher volumes of investments and remittances tend to lead to higher shares of renewable energy consumption. Although this is positive, it is also important to keep in mind that improvements towards energy efficiency of existing energy infrastructure is required as well, to improve energy intensity. Another finding was that the large fossil fuel subsidies in North and Central Asia correlate with higher energy intensity.
For the whole subregion, SDG 7 is shown to have a strong correlation with Goal 1: no poverty, Goal 4: quality education, Goal 9: industry, innovation and infrastructure, Goal 13: climate action and Goal 17: partnerships. This established relationship indicates that economists, policymakers and other stakeholders can use the value of Goal 7 to predict the values of other Goals. For example, since clean energy and climate action are negatively correlated, an increase in renewable energy production can lead to a decrease in carbon dioxide emissions. For clean energy and poverty, it is suggested that there is a potential conflict of interest between using water resources for power generation and for provision of clean water and irrigation.
The results are broadly similar when applied to different country groupings for the subregion. Partnerships are particularly important, especially when the subregion is analyzed as a whole, to identify overarching problems and opportunities to tackle them simultaneously. Given the different energy potential and -sources of countries in North and Central Asia, development of energy generation, provision and policy can greatly benefit from regional cooperation and leveraging the comparative advantages of each country.
Interlinkages of Goal 7: Sustainable and clean energy, by country groupings
Based on the analysis on sustainable and clean energy in North and Central Asia and further considerations from the working paper, some key policy considerations have emerged:
- Leverage the interlinkages of sustainable and clean energy to maximize the impact of energy transition strategies.
The analysis highlighted interactions among different targets and indicators. For example, resource-rich countries observed a negative relationship between fossil fuel subsidies and the growth of renewable energy capacity. On the other hand, hydro-power-rich countries face a trade-off between water access, food security and environmental protection on the one side and expansion of dams on the other. Thus, policy needs to further evaluate the development of energy infrastructure and how it affects overall sustainable development. Policy measures need to be holistic to yield better outcomes.
- Prioritize investment and financing to improve energy efficiency alongside renewable energy adoption.
Renewable energy projects in the subregion have attracted increased investment interest. However, for energy transition strategies to be fully effective, significant financing is also needed to speed up energy efficiency improvements from both the supply side and the demand side (for example, efficient electrical appliances, efficient heating and housing insulation).
- Increase renewable energy capacity by exploring alternative sources of renewable energy.
Energy diversification needs to be a priority, and more importantly, diversification to new sources of renewable energy. Currently, the capacity of renewable energy resources such as solar and wind is underutilized in the subregion. As the cost of renewable energy continues to decrease, countries should prioritize new renewable energy infrastructure by developing long-term energy plans in accordance with the Paris agreement and leveraging their natural endowments like wind, solar radiation and water.
- Strengthen regional cooperation for energy trade and transboundary energy infrastructure centred on renewable energy.
Given the similar focus among countries in the subregion to develop sustainable and clean energy, strengthened cooperation to encourage knowledge sharing and standardization of technicalities can better facilitate energy trade, maintenance of transboundary energy infrastructure and technology transfer.