PROJECT IDENTIFICATION FORM (PIF)
PROJECT TYPE: Full-sized Project
TYPE OF TRUST FUND:GEF Trust Fund
For more information about GEF, visit TheGEF.org
PART I: PROJECT INFORMATION
Project Title:
Country(ies):
GEF Agency(ies):
Other Executing Partner(s):
GEF Focal Area (s):
Name of parent program (if
applicable):
 For SFM/REDD+
 For SGP
Nationally Appropriate Mitigation Actions for Low-carbon Urban Development
Kazakhstan
GEF Project ID:1
5059
UNDP
(select) (select)
GEF Agency Project ID:
4670
National Agency for Construction
Submission Date:
April 1, 2013
and Housing&Communal Affairs
(Lead Agency), Ministry of
Ministry of Environment Protection,
City Administrations (Akimats)
Climate Change
Project Duration (Months)
60
N/a
Agency Fee ($):
563,350 (9.5%, excluding
Agency Fee for PPG)
A. INDICATIVE FOCAL AREA STRATEGY FRAMEWORK2:
Trust Fund
Focal Area Objectives
CCM-4 (select)
CCM-6 (select)
GEFTF
GEFTF
Total Project Cost
B.
Indicative
Grant Amount
($)
4,940,000
990,000
5,930,000
Indicative Cofinancing
($)
56,320,000
3,680,000
60,000,000
INDICATIVE PROJECT FRAMEWORK
Project Objective: To support the government of Kazakhstan in the development and implementation of National
Appropriate Mitigation Actions (NAMAs) in urban sector to achieve voluntary national GHG emission reduction target
Trust
Indicative
Indicative
Grant
Expected Outputs
Fund
Grant
Cofinancin
3
Project Component
Type
Expected Outcomes
Amount ($)
g
($)
Urban GHG
TA
Enabling policy and
1.1 Urban GHG
GEFTF
400,000
460,000
Inventories, Abatement
analytical framework
Inventories and
Potential, and Targets
for identification and
baseline in 15 cities
implementation of
1.2 Abatement
urban mitigation
potential and cost
actions (urban
curves for 15 cities
NAMAs) in place in 15 (including for pilot
main cities
district in Astana to be
implemented under
Component 4)
1.3.Priority urban
NAMAs identified,
fact-sheets prepared
and discussed with
main stakeholders
1.4. Urban GHG
reduction targets
established and
1
2
Project ID number will be assigned by GEFSEC.
Refer to the reference attached on the Focal Area Results Framework when completing Table A.
3
TA includes capacity building, and research and development.
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GEF-5 PIF Template-December 27, 2012
officially adopted
1.5 National quality
assurance system and
data-base for urban
inventories and
NAMAs set up
Component 2:
Institutional
framework for urban
NAMAs
TA
Public-private
partnerships for
implementation of
urban NAMAs
established
2.1. 15 Municipal
Management
Companies (MMCs)
established based on
PPP model
2.2. Business plans
developed and adopted
2.3. Portfolio of
bankable emission
reduction projects
developed based on
priority urban NAMAs
2.4. Public contracts
signed/tariffs
negotiated and adopted
GEFTF
700,000
3,000,000
Component 3:
Financial framework
for urban NAMAs
Inv
New and additional
financing leveraged for
urban NAMAs
3.1. Fund for Urban
Modernization
capitalized
3.2 Portfolio of
bankable emission
reduction projects
financed and
implemented
3.3. Funding terms and
eligibility criteria
difined and adopted
3.4. Fund Management
and Administration
structure established
and staff trained
3.5. Fund's operations
independently
evaluated at least twice
during project cycle
3.6. Funding
diversification strategy
and mechanisms to
leverage additional
financing from public,
private and
international sources of
funding developed
GEFTF
3,000,000
40,700,000
GEFTF
300,000
300,000
4.1. Complex
modernization
program for district
“Prigorodnoye” of
Astana designed with a
view of achieving 50%
GEFTF
700,000
11,000,000
TA
Component 4:
Implementation of
pilot urban NAMAs
Inv
Urban emission in pilot
district reduced by 50%
as compared to BAU or
by 187,500 tCO2
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GEF-5 PIF Template-December 27, 2012
reduction in district
GHG emissions below
baseline (co-financed)
4.2. Modernization
program implemented
(BAU requirements co-financed), including
additional emission
reduction measures to
reach 50% target (GEF
financed)
Component 5:
Monitoring,
verification and
knowledge
management
TA
GHG emission
reduction impact of
implemented urban
NAMAs is
systematically
monitored and verified
All Kazakh cities and
towns are aware of and
have access to
information and
guidance on urban
NAMAs
5.1. Developed
national MRV
guideline and standard
methodologies for
urban NAMAs
5.2. Rules and
procedures allowing
for certification of
emission reduction
credits from urban
NAMAs and their
import into domestic
ETS adopted and
enforced
5.3. Monitoring plan
and data collection
protocols developed
and implemented for
pilot credited NAMAs
5.4. National data-base
and registry for urban
GHG emission and
NAMA is set up and
operation at MEP
5.5. Emission
reduction purchase
agreement signed
between domestic
entities under ETS and
municipalities
5.6. Local staff
assigned and trained in
implementing MRV
systems
5.7. Analyzed,
published and
disseminated lessons
learned from the
implementation of
the pilot urban
NAMAs and MRVs
5.8. On-line
knowledge platform
and city-to-city
exchange scheme.
GEFTF
550,000
3,000,000
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GEF-5 PIF Template-December 27, 2012
Subtotal
Project Management Cost (PMC)4
Total Project Cost
4
GEFTF
5,650,000
280,000
5,930,000
58,460,000
1,540,000
60,000,000
To be calculated as percent of subtotal.
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GEF-5 PIF Template-December 27, 2012
C.
INDICATIVE CO-FINANCING FOR THE PROJECT BY SOURCE AND BY NAME IF AVAILABLE, ($)
Sources of Cofinancing
National Government
National Government
National Government
National Government
GEF Agency
Other Multilateral Agencies
Private Sector
Bilateral Agencies
Total Cofinancing
D.
Type of
Trust Fund
UNDP
GEFTF
Total Grant Resources
1
2
USAID
INDICATIVE TRUST FUND
GEF
Agency
Name of Cofinancier
Agency for Construction, Housing
and Communal Affairs
Agency for Construction, Housing
and Communal Affairs
Ministry of Environmental
Protection
National Modernization Program
UNDP
Eurasian Development Bank
Municipal Management Companies
Type of Cofinancing
In-kind
Amount ($)
1,840,000
Cash
12,200,000
Grant
2,400,000
Cash
Grant
Soft Loan
Equity
15,000,000
1,060,000
25,000,000
1,500,000
Grant
1,000,000
60,000,000
RESOURCES ($) REQUESTED BY AGENCY, FOCAL AREA AND COUNTRY1
Focal Area
Climate Change
Country
Name/Global
Kazakhstan
Grant
Amount
($) (a)
5,930,000
5,930,000
Agency Fee
($) (b)2
Total ($)
c=a+b
563,350
563,350
6,493,350
6,493,350
In case of a single focal area, single country, single GEF Agency project, and single trust fund project, no need to provide information for
this table. PMC amount from Table B should be included proportionately to the focal area amount in this table.
Indicate fees related to this project.
E.
PROJECT PREPARATION GRANT (PPG)5
Please check on the appropriate box for PPG as needed for the project according to the GEF Project Grant:
Amount
Agency Fee
Requested ($)
for PPG ($)6
 No PPG required.
___-- 0--________
_ --0--_______
 (upto) $50k for projects up to & including $1 million
___
________ ___
_____
 (upto)$100k for projects up to & including $3 million ___________
___________
 (upto)$150k for projects up to & including $6 million ___150,000________ ___14,250_____
 (upto)$200k for projects up to & including $10 million ___
________ ___
_____
 (upto)$300k for projects above $10 million
___
________ ___
_____
PPG AMOUNT REQUESTED BY AGENCY(IES), FOCAL AREA(S) AND COUNTRY(IES) FOR MFA AND/OR MTF
ROJECT ONLY: N/A
5
6
On an exceptional basis, PPG amount may differ upon detailed discussion and justification with the GEFSEC.
PPG fee percentage follows the percentage of the GEF Project Grant amount requested.
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GEF-5 PIF Template-December 27, 2012
PART II: PROJECT JUSTIFICATION7
PROJECT OVERVIEW
A.1. Project Description. Briefly describe the project, including ; 1) the global environmental problems,
root causes and barriers that need to be addressed; 2) the baseline scenario and any associated baseline
projects, 3) the proposed alternative scenario, with a brief description of expected outcomes and
components of the project, 4) incremental cost reasoning and expected contributions from the baseline ,
the GEFTF, LDCF/SCCF and co-financing; 5) global environmental benefits (GEFTF, NPIF) and
adaptation benefits (LDCF/SCCF); 6) innovativeness, sustainability and potential for scaling up
1) The global environmental problems, root causes and barriers that need to be addressed
Kazakhstan ratified UNFCCC in 1995 as non-Annex I party and already in 1999 committed to join
industrialized nations in their effort to limit GHG emissions and accept a binding and quantified emission
limitation of 100% over a 1992 baseline. Further, in 2010 Kazakhstan announced and communicated to
the Parties its additional voluntary commitments to reduce GHG emissions by 15% by 2020 and by
25% by 2050. As part of its national efforts to meet voluntary GHG emission reduction obligation, the
Government of Kazakhstan introduced as of January 2013 the domestic emission trading scheme (ETS).
Under ETS, all industrial entities with annual emissions above 20,000 tCO2 will be subject to mandatory
emission reduction targets, which they can meet either by implementing mitigation measures internally or by
buying the respective amount of emission reduction certificates domestically or internationally. Because of
the substantial internal demand that it will create, ETS is seen as a major opportunity to stimulate investment
in cost-effective emission reduction actions nation-wide. However, many small-scale, but cumulatively
significant opportunities for urban emission reductions will remain outside of ETS scope and won’t be able
to benefit from the demand that it will create.
With this project, the Government of Kazakhstan is requesting GEF support to help identify, develop and
leverage financing for Nationally Appropriate Mitigation Actions (NAMAs) in its urban sector. Urban GHG
emission reductions are prioritized in this proposal because a) it is the sector with significant and costeffective abatement potential; b) it is the only sector not explicitly covered by domestic ETS; and c) it is the
sector where reduction of GHG emissions will directly result in tangible socio-economic and local
environmental benefits.
Urban Development and GHG Emissions:
Kazakhstan is becoming increasingly urbanised, with the urban population projected to reach 66% of the
total by 2030. Kazakhstanis migrate from villages and smaller towns to the largest cities in search of higher
incomes, better employment prospects and modern lifestyles. The population of the capital Astana grew by
49.1% between 2004 and 2009, reaching 690,000. It is expected to reach 1.7 million by 2030. Almaty, the
capital city until 1998, remains the country's most populous city, at 1.3 million in 2009. Shymkent,
Kazakhstan's third-largest city and an important oil refining and industry centre grew by 35.6% in 20042009. Karaghanda, the country's fourth largest city thrived during Soviet times as a coal mining centre but
has lost much of its economic importance, nevertheless the growth continues by about 5.4% in 2004-2009.
The challenges most Kazakhstani cities increasingly face are those related to decaying and outmoded
urban infrastructure, deteriorated communal housing, urban blight, and urban poverty. Specifically,
ensuring maintenance and communal services for multifamily housing remain a key priority for all cities.
Multifamily apartment blocks account for 157.2 mln m2 or 60% of the housing stock; one of three or 50 mln
m2 is in need of capital renovation, while 3.8 mln m2 is in emergency state and has to be demolished.
Regardless of technical conditions, over 70% of multifamily apartment buildings have very low thermal
performance (especially buildings constructed in 1950 -1980s): thermal losses account for up to 50% of heat
7
Part II should not be longer than 5 pages.
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GEF-5 PIF Template-December 27, 2012
consumption. Urban engineering systems, power, heat, water supply and sanitation, are in equally alarming
state: depreciation of communal infrastructure is at the level of 60-65% leading to high losses and
inefficiencies. Technical losses are estimated to be 16% in power distribution, 20% in heat supply, and
up to 60% in water supply.
Urban GHG emissions: Kazakhstan is by far the largest GHG emitter in Central Asia with annual
emissions of 243 Mt CO2e in 2005 and has one of the world’s highest GHG emissions per capita, 14.8
tCO2/cap. In Kazakhstan, as elsewhere, urban residents have a disproportionately bigger impact on the
country GHG emissions than rural population because of their higher consumption level and more GHGintensive lifestyle and infrastructure. This trend is best illustrated via the dynamics of GHG emissions from
municipal waste sector: it is the only one in national GHG inventory which did not experience the decline in
emissions throughout 1990s and have grown nearly two fold between 1992 and 2005. Likewise, GHG
emissions from municipal heat supply facilities and transport have been steadily rising since early 2000s. In
the baseline scenario, urban GHG emissions will continue growing and will account for over 60% of the
country carbon footprint by 2030.
2) Baseline scenario and associated baseline projects
Strategies, Policies and Programs for Low-Carbon Urban Development
In recent years, the Government of Kazakhstan has put increasing attention to promoting energy and
resources saving and climate change mitigation across all economic sectors. The most relevant national
policies and programs are summarized below with a particular emphasis on urban sector.
Law on energy saving and energy efficiency (EE Law) adopted in January 2012 is the first comprehensive
national policy action targeting energy efficiency in all sectors of Kazakhstani economy. The Law puts a
special emphasis on promoting energy efficiency in the urban environment. It mandates city authorities to
incorporate energy efficiency measures in the urban development plans, as well as to undertake regular
energy audits and ensure implementation of energy saving measures in all municipally-owned and operated
buildings and facilities. The Law also authorizes city managers to monitor municipal energy consumption
and its compliance with established norms and standards. It also mandates introduction of energy
management system in the enterprises and facilities with annual energy use in access of 1,500 toe, such as
the district heating plants.
Law on Renewable Energy Sources (RES Law): adopted in 2009, it is another important element of the
national climate change mitigation policy in Kazakhstan. The Law has a number of provisions specifically
aimed at promoting use of RES in cities and their integration in urban development plans and strategies.
First, the Law requires that the urban development plans takes into consideration the use of RES resources
for power and heat supply and specifically calls for development of programs aimed at RES-based
electrification of remote urban settlements where centralized grid supply is not economically feasible. Also,
according to the Law local authorities are responsible for approval the construction of RES plants with
overall capacity below 25MW and RES-based district heating facilities.
Strategy for Sustainable Urban Development of the Capital City of Astana till 2030 is the first urban
development plan, which fully embraces the concept of “sustainability”. It has a major focus on energy and
resource saving and contains a number of sustainability targets that Astana aspires to reach by 2030, such as
the reduction of waste volumes by 80%, water consumption by 50%, and increased energy efficiency and
use of renewable energy for heat supply to reduce energy-related GHG emissions by 1.2 MtCO2/yr.
National Modernization Program (NMP): In order to address the challenges with urban infrastructure
described above, the Government of Kazakhstan adopted the National Program for Modernization of
Residential and Communal Sector for 2011-2020. The first stage of Program implementation in 20112016 envisages allocation of 1,6 bln US$ (237 bln KZT) from the national budget and additional 43 mln
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GEF-5 PIF Template-December 27, 2012
US$ from the regional budgets. Provision of 640 mln US$ has already been confirmed in the tri-annual state
budget for 2011-2013 approved by the Parliament and the President. Program goals are to a) decrease the
share of buildings in need of capital renovation from current 32% down to 22% by 2015 and b)
upgrade/refurbish 24,400 km of communal networks (heat and hot water supply, electricity, and gas) to
minimize resource losses in the system. All envisaged investments in building retrofit and infrastructure
upgrade under NMP will comply with energy efficiency regulations and standards as mandated by the new
EE Law.
Through the above-mentioned national and local policies and strategies the Government of Kazakhstan is
demonstrating its commitment to implement national and local mitigation measures in the context of lowcarbon urban development. Apart from the policy actions, the Government of Kazakhstan has committed a
substantial amount of its budget resources to directly support investment in low-carbon urban infrastructure
via National Modernization Program (NMP) and other Government-led initiative described above. For the
purpose of proposed GEF project, the following combination of activities will constitute a baseline project.
Baseline project
In the baseline project, the Government of Kazakhstan will establish sectoral GHG emission reduction
targets, including for urban sector (Component 1). It will support the establishment of Municipal
Management Companies (MMCs) to bring in private investment and expertise in the urban sector
management (Component 2). It will set up National Fund for Urban Modernization to provide revolving
loans to MMCs for investment in upgrade and modernization of urban infrastructure (Component 3). In
partnership with UNDP the Government will implement comprehensive modernization of one of Astana’s
districts under Component 4. And finally, it will establish domestic ETS scheme and thus create domestic
demand and financing for cost-effective emission reduction (Component 5).
Component 1: National GHG Inventory, Abatement Potential and Emission Reduction Target
Under BAU, the Government of Kazakhstan will undertake regular (annual) inventory of GHG emissions to
track the achievement of national emission reduction target. There are no plans to undertake urban
inventories and set-up city-wide targets under BAU. Further, the Government has initiated the development
of National Green Growth Strategy. The goal of the Strategy is to identify priority sectors for economic
growth and GHG emission reduction. For each priority sector an assessment of sectoral abatement potential
will be conducted (with assistance from UNDP), GHG reduction targets set-up and relevant national
authorities assigned to monitor and report on strategy implementation and achievement of sectoral emission
reduction targets. The initial draft of the Strategy presented to the Government in November 2012 identified
urban sector as one among seven priority areas for economic growth and GHG emission reduction. The
Ministry of Environmental Protection (MEP) is the main governmental body in charge of Green Growth
Strategy, whereas the Agency for Construction and Housing&Communal Affairs (ACHCA) is assigned as
the lead agency for greening activities and emission reduction in the urban sector.
Table 1: Baseline activities and financing for Component 1
Source
Relevant Activity
Ministry of
Development of National Green Growth
Environmental
Strategy, including for Urban Sector
Protection
UNDP
Assessment of potential for GHG emission
reduction in urban sector (nation-wide)
Amount, US$
400,000
60,000
Component 2: Institutional framework for private investment in low-carbon urban development
Under BAU, the Government is actively promoting private sector engagement in the management of urban
infrastructure. The goal is to increase private investment in the sector from current 15% up to 50%. Public8
GEF-5 PIF Template-December 27, 2012
Private Partnerships (PPPs) are seen as the main mechanism to bring in private actors in urban sector
management.
Under National Modernization Program, the Government will support establishment of Municipal
Management Companies (MMCs) on a PPP basis. MMCs are seen as the main vechicle for implementation
of National Modernization Program. First such company, “Astana-Kyzmet” has already been set-up in the
capital city of Astana with 50% private sector participation. The plan is to have MMCs established in all key
cities across Kazakhstan, i.e. 10-15 companies by 2015. Their primary objective is to implement priority
urban modernization projects and thus ensure adequate management, upgrade and maintenance of municipal
infrastructure and provision of quality and reliable services to urban residents (such as waste management,
building management, heat and hot water supply, public lighting, etc).
The Government via the Agency for Construction and Housing&Communal Affairs (ACHCA) will provide
technical assistance to MMCs, such as for business planning, training of MMC staff, development and
signature of public service contracts with municipal authorities, preparation of bankable investment projects.
MMCs will adopt ESCO model for implementation of energy efficiency measures under Energy
Performance Contract (EPC) with residents and/or public authorities. Such model has already been
successfully piloted in Astana, where Astana-Kyzmet has implemented energy efficiency retrofit of a 9-floor
residential building based on EPC signed with Association of building’s Apartment Owners.
Table 2: Baseline for Component 2
Source
Relevant Activity
ACHCA
Establishment and capacity building of
MMCs
Private Sector/MMCs
Establishment of MMCs
Amount, US$
1,500,000
1,500,000
Component 3: Financial framework for private investment in low-carbon urban development
Under National Program for Modernization of Residential and Communal Sector The Government allocates
1,6 bln US$ in 2011-2016 for urban modernization projects, including specific low-carbon measures, suchas
energy efficiency in residential buildings. The Program envisages both direct public investment in
infrastructure upgrade, as well as a revolving financing scheme for residents (via Association of Apartment
Owners (AAOs) and private sector (MMCs). To operationalize the scheme, the Government is establishing a
National Fund for Urban Modernization, which will operate on a revolving basis and will provide interestfree loans to MMCs and Associations of Apartment Owners (AAOs) for implementation of priority urban
infrastructure upgrade projects, jointly defined by MMCs, residents and municipalities. Categorization of
priority projects is provided in the Table 2 above. Initial capitalization of the Fund will come from the
Government (via NMP), but the target is to secure at least 50% of fund’s resources from extra-budgetary
sources. The Government as requested UNDP-GEF support with designing and implementing the revolving
scheme, including the strategy on funding diversification. Also, during PIF development stage Eurasian
Development Bank (EADB) expressed interest to join these efforts and establish a dedicated credit line for
municipal energy efficiency and renewable energy projects with initial allocation of US$ 25 million.
Table 3: Baseline for Component 3
Source
Relevant Activity
ACHCA
Establishment of National Fund for Urban
Modernization
National Modernization Initial capitalization of the Fund
Program
EADB
Loan program for energy efficiency and
renewable energy in urban sector
Amount, US$
1,300,000
15,000,000
25,000,000
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GEF-5 PIF Template-December 27, 2012
Component 4: Pilot investment in urban mitigation actions
The Government with UNDP support will develop and implement a pilot urban modernization project in one
of Astana’s sub-urban district (“Prigorodnoye”). The objective of this pilot is to demonstrate a
comprehensive approach to modernization and management of urban areas and provision of sustainable and
reliable public services to city’s residents. The district is a home to 2,500 people, it is connected to national
power grid and central heat and hot water supply system. District infrastructure (heat and hot water supply
network, sanitation, public and residential buildings) dates back to 35-40 years ago and is in need of urgent
renovation and upgrade. UNDP will develop technical design for modernization program, work out
appropriate institutional framework (involving MMC and Association of Apartment Owners), and structure
financing for program implementation. The Government and UNDP have committed US$ 11 million for
program design and initial stage of implementation in 2013-2014. Specifically, the modernization of
Prigorodnoye district might feature (the exact list of technical measures will be identified based on
feasibility study):









Establishment of new/co-generation-based district-level heat and hot water supply system;
Modernize the district heating system by switching from group sub-stations to building-level substations,
Installation of advance heat control system (or cascade heating system);
Extend the technological innovations in the city’s water pumping system by replacing old material
and introducing state-of-the art systems and sub-systems
LED-based public lighting systems
Energy efficient retrofit of public and residential buildings
New waste collection and recycling facility
District-level energy management and dispatch center for heat and power
Greening public areas.
Table 4: Baseline for Component 4
Source
Relevant Activity
ACHCA
Implementation of prioritized urban mitigation
actions in pilot district “Prigorodnoye”
UNDP
Technical design of and institutional capacity
building for pilot project implementation
Amount, US$
10,000,000
1,000,000
Component 5: Domestic Emission Trading Scheme
Under baseline, the Government introduces domestic Emission Trading Scheme (ETS) covering over
128,000 enterprises with annual emissions above 20,000 tCO2. It will also establish national MRV and
registry system with assistance from bilateral donors, German Government and potentially USAID. Urban
sector will not be be explcitly covered by ETS with the exception of few largest district heating plans (in
Astana and Almaty) and thus will neither be subject of a manadtory cap, nor be able to benefit from trading
and demand for emission reductions. However, national MRV and registry system are essential for
implementation of “credited Urban NAMAs” and thus are part of the baseline project.
Table 5: Baseline for Component 5
Source
Relevant Activity
MEP
Establishment of ETS
Bilateral donors
Capacity building for ETS, MRV and registry
Amount, US$
2,000,000
1,000,000
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All in all, under the baseline, the Government of Kazakhstan is committed to finance and implement a
number of large-scale investment programs aimed at renewal and upgrade of urban environment, housing
and infrastructure with a strong focus on increasing energy efficiency, minimizing energy losses, promoting
renewable energy and other low-carbon measures in cities. However, the Government also realizes that
although substantial its own budget resources, as well as the available human and institutional capacities are
not sufficient to fully address vast potential for resources saving and GHG emission reduction in the entire
urban sector and to move Kazakhstani cities on a sustainable and low-emission development trajectory.
Proposed UNDP-GEF project will support the Government in developing and implementing most
appropriate urban mitigation measures and leveraging additional financing for their implementation.
3) Proposed alternative scenario and 4) incremental cost reasoning
GEF-financed alternative: Urban NAMAs
At COP 17, in Durban, the Parties recognized “the need for support for enabling activities to assist
developing country Parties in the identification and preparation of nationally appropriate mitigation actions
for submission to the registry, and support for their implementation”. (Report of the Ad Hoc Working Group
on Long-term Cooperative Action under the Convention - Draft decision [-/CP.17]). In this context, the
Government of Kazakhstan is requesting support for the definition, design, and implementation of NAMAs
in urban sector with the objective of achieving the country’s GHG emission reduction voluntary target.
The project will be the first effort in Kazakhstan to adopt a comprehensive approach to reduce cities’ GHG
emissions. It will contribute to the achievement of national mitigation target under UNFCCC, i.e. to achieve
15% reduction in national GHG emissions compared to the 1990 baseline or 50 million tons CO2eq by
2020. Implementation of prioritized cost-effective urban mitigation actions will make for about 10%
of the targeted emission reductions, which would avoid the emission of approximately 5 million tons
CO2eq (indirect top-down estimates).
Urban NAMA: definition
Internationally accepted definition of NAMA does not exist for, as agreed upon in Copenhagen Accord and
Bali Action Plan, each country will identify and implement nationally appropriate mitigation actions
defined based on its specific national circumstances and capabilities. In Kazakhstan, urban NAMAs are
defined as the appropriate municipal institutional and financial framework and investment, which
will enable Kazakh cities to set-up, reach and monitor their city-wide emission reduction targets, as
part of national commitment to reduce Kazakhstan’s emission by 15% below 1990 emissions. Sectoral scope
of eligible urban NAMAs is defined in Table 6; it will exclude any installation or GHG emitters with
emissions over 20,000 tCO2e/year which is already covered under domestic ETS. The project will support
development of 15 urban NAMAs (Components 1) and facilitate their financing as follows: 13 NAMAs
through the National Fund for Urban Modernization (Component 3), one NAMA in Astana (investment
under Component4) and one credited NAMA (Component 5).
Table 6: Urban sectors and interventions for urban NAMAs
Urban Sector and SubDescription of urban mitigation measures
Sector
Sub-sector 1: Urban Heat Supply & Demand
Modernization, upgrade and construction of new heat supply
 Heat Supply
systems and distribution networks
Thermal modernization and energy efficient retrofits of
 Heat Demand
residential and public buildings
Energy management system in public and residential
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GEF-5 PIF Template-December 27, 2012
buildings, including on-line energy monitoring and dispatch
Sub-sector 2: Urban Power Supply & Demand
Decentralize RES-based power system (wind, solar)
 Power Supply
Upgrade of street lighting systems
 Power Demand
Sub-sector 3: Waste
Improvement of waste collection and recycling practices
management
Modernization of existing and construction of new landfills
and waste water management facilities
Sub-sector 4: Transport
Greening public space, organization of parking and pedestrian
and urban space
zones, NMT lines
In line with the above definition, the GEF proposal has been structured as follows:
Component 1 will enable cities to undertake their urban GHG inventories, assess abatement potential and
establish relevant city-wide emission reduction targets
Component 2 will put in place enabling institutional framework for implementation urban mitigation
actions based on public-private partnership model
Component 3 will establish revolving financing scheme under the National Fund for Urban Modernization
to provide start-up financing for selected urban NAMAs
Component 4 will identify and finance pilot urban mitigation actions in one of Astana’s district
Component 5 will establish monitoring, reporting and verification (MRV) system to track the
achievement of urban emission reduction targets and link urban NAMAs with domestic ETS
Component 1: Urban GHG Inventories, Abatement Potential, and Emission Reduction Targets
The first “readiness” phase of the project will support preparation of urban GHG inventories and baseline
scenarios, assessment of abatement potential and costs, and adoption of city-wide GHG reduction targets in
15 main cities. As a result, local authorities will be able to articulate their climate-related priorities and
goals, estimate financial resources required to meet them, as well as to identify and prioritize investment
projects where GHG emissions can be achieved most cost-effectively and where opportunities therefore
exist to leverage private capital and financing via domestic ETS. Assessments of the required financing
needs will allow policy-makers to match their priorities with available resources, as well as to plan how to
deploy those resources most effectively.
The project will directly support “readiness” activities in 15 largest Kazakhstani cities covering at least 70%
of its urban population and GHG emissions, while additional technical and methodological support will be
offered to all other cities and towns wishing to engage with the project on a demand basis. Under this
component, technical training and methodological support will be provided to 15 municipalities, as well as
assistance with data collection, processing and analysis. The two key decision making tools that the project
will adopt are a) urban GHG inventories and sectoral baselines, and b) abatement cost-curves for the cities
and for their main GHG emitting sectors (energy supply, transport, buildings and waste).
Based on the analysis and finding of sectoral baselines and abatement potential, city-wide GHG emission
targets will be proposed and adopted by regional authorities. City-wide targets will be consistent with
national target and sector target, as defined in the National Green Growth Strategy. Based on the result of
abatement potential study and consistent with established GHG targets, priority emission reduction projects
(investment-grade) will be identified, their cost established, discussed and proposed for implementation. A
series of stakeholder consultation will be organized at this stage to solicit inputs from civil society and cities’
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GEF-5 PIF Template-December 27, 2012
residents and align prioritized investment with local socio-economic development priorities.
Apart from city authorities, the Ministry of Environmental Protection (MEP), Agency for Construction and
Housing and Communal Affairs (ACHCA), Kazakhstan Scientific and Reseach Institute for Ecology and
Climate Research “KAZNIEK” will be closely involved in implementation of the “readiness” phase. The
Ministry and KAZNIEK are in charge of national GHG accounting, including set-up of ETS and its
infrustructure; they will ensure quality of urban inventories and NAMAs, consistency of city targets with
national commitments, and will collect and assemble the data in a national data-base.
As discussed above, baseline activities for Component 1 only cover national-level inventory and national
and sectoral traget setting. There are no plans under BAU to conduct city-level assessment and adopt citywide targets, and therefore the proposed set of activities under component 1 is fully additional. With GEF
support the following baseline activities will be enhanced to deliver additional GHG emission reductions:
Baseline
National and sectoral inventories and
GHG emission targets
GEF-supported alternative
City-wide GHG emission targets and inventories for 15
main cities
Component 2: Institutional framework for urban NAMAs
The enormous capital requirements for large-scale modernization and GHG emission reduction in
Kazakhstan’s urban sector make it clear that success in meeting this challenge will hinge in large part on the
capacity of the city authorities to unleash commercial sector capital. Apart from investment, private sector
can bring essential expertise, capacities and technologies, which are critical for accelerating the pace of
emission reduction in Kazakhstani cities. However, the current level of commercial investment in lowcarbon urban infrastructure is almost negligible: private companies provide only 15% of the baseline
financing in district heating, waste and water management, public transport, and even those few entities have
poor financial standing and lack motivation and incentives to improve efficiency of their operations and
inject additional capital in low-carbon activities.
Component 2 will build upon and further strengthen institutional framework for private investment in urban
sector, which the Government is putting in place under BAU, namely the establishment and capacity
building of Municipal Management Companies (MMCs). By doing so it will put in place institutional model
required for implementation of prioritized investment project in urban NAMAs, defined under Component 1.
Specifically, additional assistance will be provided to MMCs to identify cost-effective low-carbon solutions
in buildings and public infrastructure, develop and implement investment projects based on ESCO model,
including structuring EPCs, business planning and project-level MRV system. Assistance will also be
provided for the development and adoption of clear, predictable and transparent rules, procedures and public
contracts for MMCs when it concerns energy efficiency and renewable energy projects. All in all, on top of
institutional and technical support the Government will provide to MMCs under BAU, incremental GEFfunded activities will specifically target capacity building of MMCs to develop and implement bankable
emission reduction projects in the areas of urban infrastructure they’re responsible for.
Baseline
Establishment and capacity building of
MMCs (general management and
operational effectiveness)
Business planning and development of
investment portfolio
GEF-supported alternative
Capacity building of MMCs to identify and implement lowcarbon projects
Preparation of bankable emission reduction projects
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GEF-5 PIF Template-December 27, 2012
Component 3: Financial framework for urban NAMAs
In the BAU, public sources will be the largest, but still insufficient source of financing for urban mitigation
actions. ETS will only cover major industrial emitters, while external financing from national and
international banks, including MDBs, will only be available for large mitigation projects in largest cities,
Astana and Almaty. Smaller and financially weaker local governments and MMCs have difficulty obtaining
long-term financing because the amount they can afford to borrow is too small to attract capital market
investors, and their individual credit ratings is below investment grade. Also, most MMCs have little or no
experience preparing projects for financing and require both financial and technical assistance throughout
the process. Urban NAMAs will not be able to benefit neither from financial demand from ETS actors, nor
access affordable credit resources from MDBs.
The alternative under Component 3 will build upon plans to set up National Fund for Urban Modernization
(NFUM). Under baseline, the NFUM will provide financing for all types of urban development projects.
There is no provisions to provide financing for low-carbon projects per se. GEF financing will be utilized to
partially cover additional costs of low-carbon urban infrastructure projects via revolving loan scheme.
Reflows will be dependent on the type of financing requirement of the individual projects. In addition to
GEF funding, EADB and National Fund will provide additional direct financing for PPP window of US$41
million. The loans to be offered to PPPs will cover up to 50% of the project cost and thus will leverage PPP
co-financing of another US$50-100 million. In this respect, the catalytic impact of additional GEF support
will be that it will establish, for the first time in Kazakhstan, a dedicated funding window for low-carbon
urban investment projects implemented by PPPs and thus unlock substantial private sector investment in the
sector.
GEF, EADB and additional NFUM resources will be used to create a separate funding window within the
Fund to provide revolving loans to MMCs and other private sector entities for implementation of small-scale
investment projects as defined in urban NAMAs (for a representative example see Table 2). Project pipeline, selection criteria and funding terms will be defined jointly by the Government, EADB and UNDP.
Also, tripartite committee comprising ACHCA, UNDP and EADB will be set-up to review application and
decide on project eligibility and funding allocation. Standard EADB due diligence procedures will be
applied to assess financial risks and viability; UNDP and ACHCA will jointly be responsible for technical
and socio-economic due diligence and oversight.
Table 2: Example of small-scale emission reduction project in a typical residential building
Activity description
CAPEX, OPEX,
Energy saving GHG emission Pay-back
US$
US$
(% to BAU)
reductions,
tCO2
(year/lifecycle)
Modernization of building25,000
800
60%
150/1,500
9 years
level heat supply sub-station
Baseline
Establishment and capitalization of the
Fund for Urban Modernization
GEF-supported alternative
Additional funding window within the Fund
specifically for emission reduction projects
prioritized in urban NAMAs
Component 4: Implementation of urban NAMAs
There is no experience in Kazakhstan, nor globally with NAMA implementation. To ground test proposed
approach, the project will focus on one district in the capital city of Astana. The district “Prigorodnoye”
described in the baseline Component 4 provides a good basis for such demonstration.
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GEF-5 PIF Template-December 27, 2012
GEF funds (US$ 0.7 mln) will complement UNDP-ACHCA baseline project (US$ 11 mln) and will be used
to invest in additional emission reduction measures, which go beyond the baseline requirement of national
modernization program (NMP). The exact list of additional measures will be defined based on abatement
cost curve for Prigorodnoye to be developed under Component 1 as part of urban NAMA design. For
example, under NMP, it is mandatory to equip all residential buildings with heat meters and automated heat
substations, however full thermal modernization is not required and is yet not commercially viable
investment for tenants or MMCs to invest on their own. Similarly, installation of decentralized renewable
energy systems (such as solar rooftops or solar water heating) is not mandated under NMP, but can
significant reduce district’s carbon footprint for its primary energy source is the coal-based thermal and
power plant. The target is to reduce district emissions by additional 50% below baseline or by 18,750
tCO2/year, an equivalent of 187,500 tCO2 over investment lifetime8. The Government is fully committed to
provide additional funding (above baseline) for demo-project to make sure the ambitious 50% target is met.
The demonstration impact of GEF investment in “Prigorodnoye” district will be further amplified by the fact
that Astana will host Global Expo 2017 under the theme “Energy for the Future”. The district is ideally
located (in the vicinity of Astana International Airport and exhibition center for EXPO) to serve as a
demonstration platform for sustainable and low-carbon urban solutions in Kazakhstan and globally.
Baseline
Complex modernization of district
“Prigorodonoye” in the capital of Astana
GEF-supported alternative
Implementation of additional measures to reduce
district emissions by 50% below baseline
requirements under NMP
Component 5: MRV and National Registry for Urban NAMAs
Under baseline project, the Government is setting up an MRV for industrial users covered under ETS. The
project will complement it with MRV for urban sector so that Kazakhstan has ONE MRV system in place,
which covers both. This way it avoids duplication and ensure consistency in MRV requirements across
sectors. MRV systems will be designed to suit the different types of NAMAs (e.g. unilateral NAMA,
supported NAMA and credited NAMA).
The MEP, as the governing body in Kazakhstan for climate change, is in charge of setting a national registry
mechanism for mitigation actions. A specific section of the registry will be for urban NAMAs. National
guidelines and methodologies will be designed to ensure consistency and uniformity in the design of urban
NAMAs and their MRVs, as well as compliance with internationally accepted standards and domestic MRV
systems for market-based mechanisms. The latter is essential for adopting credited NAMA approach for
those mitigation projects which are not yet covered by domestic ETS, but offer high absolute abatement
potential and could be scaled-up through market mechanisms at the national level. The MEP has also been
appointed as the Designated National Authority for NAMA submission to global registry. Once individual
urban NAMAs are developed and approved, the MEP will officially submit them to the global registry,
whereas GEF and UNDP will complement this submission with information on resources and
implementation, respectively.
To explore the possibility of linking urban NAMAs and ETS, the development of one credited urban NAMA
will be supported under this component. On the demand side, the project will work closely with domestic
entities covered by ETS to understand their needs for and the willingness to pay for emission reduction. On
the supply side, it will work with its partner municipalities to help define and operationalize the concept of
credited urban NAMAs, establish their MRV, and facilitate the signature of carbon credit purchase
8
Baseline and project emission reductions were estimated following top-down approach, i.e. by using urban per
capita emissions for Kazakhstan, i.e. 15tCO2/cap/year and number of residents in the pilot district (2,500). Bottom
up estimates will be obtained at PPG stage where baseline data on pilot district will be collected and analysed.
15
GEF-5 PIF Template-December 27, 2012
agreements with interested domestic entities. Required rules and regulations for “linking” credits from urban
NAMAs and ETS will also be worked out and adopted by MEP to operationalize the scheme. On-the-job
training will be provided to municipal staff and MEP on MRV requirements and procedures. The project
will also facilitate capture and exchange of knowledge, lessons learnt and best practices on urban GHG
accounting, MRVs and NAMAs via on-line knowledge platform and other exchange schemes.
Baseline
ETS covering large emitters, national
registry and MRV
GEF-supported alternative
Registry and MRVs for urban NAMAs
Rules and regulations providing for “linking” credited
urban NAMAs and domestic ETS
Signed ERPA between ETS entities and municipalities
5) Global environmental benefits:
GHG
Project
emission
Component
reductions
Direct
Component 4:
GEF direct
investment in
pilot urban
NAMA
tCO2
(cumulative)
Comments
Assumptions
187,500
GEF
attributable
GHG
emission
reductions
Urban per capita emissions: 15 tCO2
Number of residents: 2,500
Emission reduction target: 50%
Investment lifecycle: 10 years
Direct
postproject
Component 3:
GEF financing
for capitalization
of revolving fund
2,200,000
GEF
attributable
GHG
emission
reductions
Cost-effectiveness threshold for
investment: 20US$/tCO2
Capitalization target for revolving
fund: 44 mln US$
Investment lifecycle: 10 years
Indirect
(topdown)
Components 1
and 5: NAMA
design and MRV,
including GEF
indirect support
to design one
credited NAMA
and facilitate the
sakes of emission
reduction from
one out of 15
NAMAs
4,650,000
The amount
of GHG
emissions
from one
credited
NAMA will
be
subtracted
from the
total
indirect
impact, i.e.
cca 7% of
the total
estimated
impact
-10% of the national voluntary
emission reduction target of 50 MtCO2
by 2020
-7% or 350,000 tCO2 will be attributed
to credited NAMA and is deducted to
avoid double counting
TOTAL
7,037,500
6) Innovativeness, sustainability and potential for scaling up:


Innovativeness: the project is the first attempt globally to pilot-test the concept of urban NAMAs
and leverage carbon finance for urban emission reduction projects
The strategy to ensure sustainability of project results and in particular of the National Fund for
Urban Modernization is based on the following:
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GEF-5 PIF Template-December 27, 2012
The Government of Kazakhstan is fully committed to support Fund’s capitalization till 2020
(the end of National Modernization Program) at which point the Fund is expected to
generate sufficient reflows for its continued operations
o The project will support the development of Fund’s diversification strategy and mechanisms
to leverage additional financing from public, private and international sources of funding,
such as Green Climate Fund or carbon markets.
The project has vast potential for scaling-up not only in Kazakhstan, but also in other country and
regions with similar urbanization and GHG emission patterns. If successful, urban NAMA can
become a powerful tool for city-wide GHG emission reduction. In Kazakhstan alone, there are over
100 cities and towns where the approach can be scaled-up.
o

A.2. Stakeholders. Identify key stakeholders (including civil society organizations, indigenous people,
gender groups, and others as relevant) and describe how they will be engaged in project preparation:
Public sector
National Agency for Construction and Housing &Communal Affairs (ACHCA) is the central executive
authority in the field of architecture, urban planning and construction, housing relations, municipal
services. In line with its mandate, ACHCA will be the leading executing agency for this project. It also
oversees municipal waste management, water supply and sanitation, power distribution (0,4 kV),
municipal gas and heat supply (except for thermal power station with capacity 100 Gcal/hour and more).
The Agency has established the Center for Utilities Modernization and Development as the principal body
in charge of the implementation of National Modernization Program (NMP) and the designated entity for
operation and management of the National Fund for Urban Modernization. The Agency and its Center will
therefore play critical role in directing NMP funding to priority climate change mitigation actions in cities
and to ensuring that the public funding can serve to catalyze investment from the private sector.
Ministry of Environmental Protection (MEP) is the governing body and policy maker for climate change
management at the national level. It oversees the preparation of national GHG inventory and is
responsible for introduction of ETS, elaboration of nationally appropriate mitigation actions, the
establishment and monitoring of national emission reduction targets. It also provides methodological
guidelines for GHG emission accounting by private and public sector. MEP will have a key role in the
establishment of criteria for the definition of urban mitigation actions, the development of the national
registry and MRV methodologies, and ensuring quality of city inventories, MRV and NAMAs. MEP will
be the main governmental agency responsible for implementation of Components 1 and 5.
Local authorities (akimats) will be key partners in project implementation, they will be directly involved
in all project activities, i.e. identification, development, implementation, and monitoring of urban
mitigation actions in partnership with relevant national authorities, private sector and civil society.
Private sector will be an important partner and beneficiary of the project. To leverage maximum private
sector participation, the project will partner with the National Chamber for Communal Affairs and
Housing, the entity which represents over 200 urban enterprises, such as heat and water supply companies,
ESCOs, management companies, etc. The project will also directly engage with largest industrial entities
covered under ETS to understand the scope of their demand for and facilitate the supply of cost-effective
emission reduction from urban NAMAs.
NGOs and community-based organizations
Climate Change Coordination Center (C4) is the main Kazakhstani NGO which is involved in a number
of advocacy, capacity buildings and analytical projects, such as national GHG inventory, provision of
training on climate mitigation for public and private entities, and has been instrumental in developing and
promoting important legal and regulatory changes on climate change, energy efficiency and renewable
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GEF-5 PIF Template-December 27, 2012
energy. The project will leverage Center’s expertise for local capacity building, abatement cost assessment
and other technical training activities at local level.
Central Asian Regional Environmental Center (CAREC) is the prominent regional NGOs actively
engaged in climate change awareness and advocacy across Central Asia. CAREC’s role in the project will
be to support PR and communication about urban mitigation actions among urban residents and nationwide.
Associations of apartment owners, women groups and other local NGOs will be closely involved in and
consulted during identification and design of urban NAMAs. They will also benefit from the training and
knowledge management activities supported by the project.
Financial sector
The project involves an innovative partnership with the Eurasian Development Bank (EADB). EADB will
bring substantial (US$ 25 mln) financial contribution for NAMA financial framework. Also, EADB, as an
international financial organization with a long history of operation in Kazakhstan and other transition
economies, will bring in its unique expertise with assessing and structuring financing for energy and
infrastructure projects. EADB’s strategy from 2010 lists municipal infrastructure and energy efficiency
projects among its key priorities in the region and Kazakhstan specifically. The proposed partnership is
mutually beneficial for the Government, UNDP-GEF and the Bank as it builds on each partner’s strong
comparative advantages in political, technical and financial areas, such combination is critical for the
catalytic impact of the project to be achieved.
A.3 Risk. Indicate risks, including climate change, potential social and environmental risks that might
prevent the project objectives from being achieved, and, if possible, propose measures that address these
risks to be further developed during the project design (table format acceptable):
Potential risks associated with the project, along with proposed mitigation measures, are summarized in a table
below:
Risks
Political risk of
Kazakhstan
withdrawing its
commitment under
UNFCCC
Lack of private sector
interest and
motivation to invest
in urban mitigation
actions
Rating
Low
High
Mitigation measures
Kazakhstan has consistently demonstrated its high-level political
commitment to climate change mitigation starting from its
voluntary decision to join Annex I in 1999, accepting binding
emission stabilization targets and later on in 2010 by taking
additional voluntary commitment to reduce GHG emission by
15% below 1992 baseline.
The project will build on this and will generate additional
political support and commitments to reduce emissions among
the Kazakhstani cities. A high level political involvement from
regional and cities’ authorities will be ensured throughout the
implementation of the project to secure their continuous
involvement and buy-in.
The risk is indeed high, but so is also the interest and motivation
of the Government to remove barriers to private sector
participation and investment in climate mitigation, as
demonstrated by its decision to introduce ETS. To mitigate this
risk the project will:
- Engage with domestic entities covered under ETS to
understand their potential demand for emission reduction and
the cost-effectiveness threshold, as well as facilitate design of
mechanisms to link NAMAs with ETS (Component 5)
- Conduct rigorous economic assessment of urban mitigation
measures to identify and demonstrate their profitability and
cost-effectiveness, as well as engage private sector
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GEF-5 PIF Template-December 27, 2012
Low capacity of city
authorities to
implement required
regulatory changes
Moderate
Lack of political will
and insufficient
capacities to
implement ETS
Moderate
Climate Change
impacts
Moderate
Combination of two
innovative
approaches and
instruments, such as
PPPs and carbon
finance, in one project
makes project design
more complex and its
implementation
inherently risky
Moderate
representatives early on in consultation about potential
mitigation actions in cities and solicit their views and
perspectives regarding their feasibility (Component 1)
- Support establishment and capacity building of PPPs
(Component 2)
This is a moderate risk, which can be effectively mitigated by
adopting the following approach to capacity building activities:
- Instead of organizing stand-alone training and workshop, the
project will support learning-by-doing activities for the
municipal staff, such as preparation of GHG inventories,
identification and formulation of urban mitigation actions,
designing pilot public-private partnership schemes;
- Supporting cross-cities collaboration, exchanges and
networking so that municipal staff can learn from each other
and be inspired by successful examples in Kazakhstan .
The Government of Kazakhstan is fully committed to implement
ETS: the scheme will be launched in January 2013 in “pilot”
mode and since 2014 full-fledged implementation will begin. The
plan has been officially approved and announced nationally and
globally, including at COP18 in Doha. However, capacities of
MEP and among domestic entities are insufficient to put in place
and enforce robust MRV system for domestic trading, this might
prevent full-fledged implementation of ETS. To mitigate this
risk, the Government has requested technical assistance from
bilateral partners, such a German Government and potentially
USAID (under negotiation). Component 5 of the proposed
project will also help mitigate this risk by strengthening
capacities at MEP, private sector and municipalities to implement
credited urban NAMAs and link them with ETS.
Climate change is predicted to have adverse impacts on
Kazakhstan with most severe consequences for the cities coming
from intensified water shortages and raising summer temperature.
These risks pose additional challenges to low-carbon urban
development because of the increased energy needs for water
supply/cooling in cities. The project will work closely with
adaptation teams and experts in the Ministry of Environmental
Protection and KAZNIEK to help city authorities identify such
risks and integrate appropriate response measures in the proposed
mitigation actions.
Realizing complexity of the issues the project will deal with, it
puts only marginal importance on carbon finance and its role in
financing urban NAMAs, i.e. only one out of fifteen envisaged
NAMA will aim at piloting carbon crediting approach. Only a
small portion of GEF resources under Component 5 will be used
to facilitate this transaction, thus limiting GEF’s exposure and
risks. On the other side, if successful, credited urban NAMA, can
become a viable instrument for financing mitigation activities in
urban sector and has therefore large potential for replication in
Kazakhstan and other urbanized developing and emerging
economies. Finally, both national partners, MENR and
ACHCHA have expressed strong support and demand for such
scheme: their political commitment is also an important factor in
mitigating implementation risks.
A.4. Coordination. Outline the coordination with other relevant GEF financed and other initiatives:
The purpose of coordination with key baseline initiative and national investment programs Project Board will
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GEF-5 PIF Template-December 27, 2012
be set up. The Board will be co-chaired by UNDP and ACHCA and will consist of nominees from key
partners and stakeholders such as MEP, Chamber for Housing and Communal Affairs, EADB, Akimats (the
list to be confirmed at PPG stage). The role of the Board will be to ensure appropriate coordination between
project partners and their on-going initiatives, such as the following
1) UNDP climate change portfolio in Kazakhstan:
Joint UNDP-MEP project on integrating climate change in sustainable development planning and
development of national green growth strategy. Promoting low-carbon urban development is seen by the
Government of Kazakhstan as an important element of the national green growth strategy. As such, this
UNDP-MEP project has an important role to play in terms of linking urban NAMA development process
with the national strategy and making sure that identified actions, as well as required policy and regulatory
changes and institutional modesls are incorporated in the National Green Growth Strategy and other relevant
policy documents (e.g. provisions to operationalize the ETS).
UNDP- GEF Enabling Activity: This on-going project is supporting preparation of national GHG inventory
and National Communication to UNFCCC. The project implemented by KAZNIEK will be an important
source of baseline data, analysis, as well as technical skills and knowledge for development of urban
inventories, NAMAs and MRVs.
UNDP-GEF “Removing Barriers to Energy Efficiency in Municiapal Heat and Hot Water Supply”: The
project is in its final year of implementation, its results and lessons learnt are essential for the success of the
proposed project. First, it facilitated the development and adoption of the revised Law on Energy Saving,
including specific provisions to stimulate energy efficiency in municipal heating sector, such as differentiated
heat tariff, ESCO modality and EE requirements for district-heating systems. It has also supported the
establishment of the first and only private ESCO company in Kazakhstan, which is now acting as the main
implementing partner and the source of private co-financing for the publicly-funded NMP. The project also
successfully piloted tripartite partnership agreements between the municipalities, private sector and
association of apartment owners for financing and implementation of EE retrofit projects in residential sector.
UNDP-GEF “Energy-Efficient Design and Construction of Residential Buildings”: This on-going project
which supports the introduction and enforcement of EE building codes and works with publicly funded
construction programs to integrate energy efficiency consideration in the design of new residential buildings.
Bearing in mind that improvement of energy efficiency in building stock offers large and cost-effective GHG
emission reduction opportunities in urban sector, this UNDP-GEF project will provide essential analytical
data and hands-on experience for the design of prospective NAMAs in urban building sector.
UNDP-GEF “City of Almaty Sustainable Transport (CAST)” project is focused on promoting sustainable
urban transport in Kazakhstan’s largest city, Almaty. Project experience with GHG accounting and
monitoring system for urban transport, as well as with the design and implementation of pilot sustainable
urban transport solutions and their respective MRVs, will be essential for developing urban NAMAs in
transport sector in Almaty and other Kazakhstani cities.
UNDP-GEF “Promoting of Energy Efficient Lighting”: this on-going project is working with the Ministry of
Industry and Energy to set up comprehensive policy framework for phasing-out inefficient lighting in
Kazakhstan, as well as to develop and implement advanced EE solutions for public lighting, such as LED, in
cooperation with the municipality of Almaty. As in the case of CAST, this project will provide important
baseline data, GHG accounting tools and methodologies, as well as technical knowledge from pilot projects
for the design, costing and implementation of urban NAMAs in lighting sector.
All in all, the three on-going GEF-supported sectoral projects in building, transport and lighting sector will
provide important inputs for the scaling up urban mitigation actions under proposed project, as follows:
- enabling national policies and regulations in building, transport and lighting sectors;
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GEF-5 PIF Template-December 27, 2012
- baseline data and methodology for sectoral GHG accounting, monitoring and reporting; and
- analysis and lessons learnt from pilot projects in terms of cost-effectiveness of the proposed low-carbon
technologies and appropriate business and financing models for their implementation.
2) Other partners and donors:
German Government/ICI-funded project “Integrated approached to development of climate friendly
economies in Central Asia” (2.9 mln Euro): The project aims at supporting Central Asian countries,
including Kazakhstan, in developing a comprehensive policy framework for mitigating climate change and
assisting them in re-orienting their economic development in a low-carbon, climate-friendly way. Project is
being implemented by the German company, DIW econ, in partnership with CAREC and Climate Change
Coordination Center and specifically in Kazakhstan is focused on assisting the Government in introducing
ETS and providing recommendations and analysis for the development of national green growth strategy.
The project is expected to be completed in 2013 and will lay important foundation for the proposed UNDPGEF initiative, both in the form of operational ETS, as well as via its analytical activities to identify and
justify key greening opportunities for Kazakhstan economy.
Description of the consistency of the project with:
B.1 National strategies and plans or reports and assessments under relevant conventions, if applicable,
i.e. NAPAS, NAPs, NBSAPs, national communications, TNAs, NCSAs, NIPs, PRSPs, NPFE,
Biennial Update Reports, etc.:
The project is consistent with Kazakhstan’s 2nd National Communications to the UNFCCC (2009). The
National Communication (NC) identifies urban sectors (district heating, buildings, waste and transport)
as the priority areas for national climate change mitigation actions. According to NC, these areas have
a potential to reduce annual GHG emissions by 20-30MtCO2/yr that is almost 30% of the cumulative
GHG abatement potential for Kazakhstan.
The proposed project is also fully aligned with the national priorities to strengthen economic and
energy independence of the Republic of Kazakhstan by promoting resources efficient and climate
resilient growth. In particular, the need for sustainable and low-carbon urban development is
highlighted in several strategic documents such as the Development Strategy-2015 and 2030;
Comprehensive Plan for Energy Efficiency, Law on Energy Saving and Energy Efficiency; Industrial
and Innovation Development Strategy until 2015; the Strategy on entering 50 most competitive
economies in the world; and most importantly the recently adopted National Program for
Modernization of Residential and Communal Sector for 2011-2020.
Kazakhstan has completed its National Portfolio Formulation Exercise (NPFE) and communicated its
priorities to the GEF Secretariat back in 2011 (please refer to the letter from Kazakhstan OFP to
GEFSec dated June 2011). The proposed project was identified and included in the list under the title
“Sustainable Cities Program” based on unanimous agreement of all concerned national parties and
GEF Agencies consulted during NPFE.
B.2. GEF focal area and/or fund(s) strategies, eligibility criteria and priorities:
The project is fully consistent with GEF-5 Climate Change Focal Area Strategy which envisages that in
large, medium-income developing countries, such as Kazakhstan, the GEF will support programs and
projects that will bring significant GHG reductions, such as market transformation in the building,
industry, and transport sectors. Specifically, the project will contribute to the achievement of the GEF CC
Objective 6 “Support Enabling Activities under the Convention” and Objective 4 “Promote energy
efficient, low-carbon transport and urban systems” by building human and institutional capacities and
supporting design and implementation of Nationally Appropriate Mitigation Actions (NAMAs) in urban
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sector. It will do so by helping set-up urban GHG emission reduction targets, identify appropriate and
cost-effective mitigation actions and remove barriers to private investment in their implementation,
including from the domestic emission trading scheme (ETS). Because of the substantial internal demand
that it will create, ETS is seen as a major opportunity to stimulate investment in cost-effective emission
reduction actions nation-wide. However, many small-scale, but cumulatively significant opportunities for
urban emission reductions will remain outside of ETS scope and won’t be able to benefit from this
demand. With this project, the Government of Kazakhstan is requesting GEF support to help identify,
develop and leverage financing for Nationally Appropriate Mitigation Actions (NAMAs) in its urban
sector. Urban GHG emission reductions are prioritized in this proposal because a) it is the sector with
significant and cost-effective abatement potential; b) it is the only sector not explicitly covered by
domestic ETS; and c) it is the sector where reduction of GHG emissions will directly result in tangible
socio-economic and local environmental benefits.
GEF resources will not be used to provide direct financing for implementation of a credited NAMA to
avoid double counting. For the same reason, the amount of GHG emission reductions accrued under
credited NAMA will be subtracted from the amount of indirect GHG emission to be associated with GEF
project.
B.3 The GEF Agency’s comparative advantage for implementing this project:
UNDP is one of the leading agencies of the GEF to implement enabling activities and capacity
development activities related to climate change mitigation in Kazakhstan. UNDP has supported
the country in developing its First and Second National Climate Change Communication to the
UNFCCC and is currently supporting the MEP for the preparation of Kazakhstan’s Third National
Climate Change Communication. UNDP is implementing two important initiatives, which serve as
a source of its co-financing for this project, namely development of national Green Growth strategy
(Component 1: 60,000 US$) and urban modernization project for “Prigorodnoye” district of Astana
(Component 4: 1,000,000 US$).
Also, UNDP Kazakhstan has successful experience with facilitating the establishment of revolving
financing schemes. Under the “UNDP-GEF Wetland Conservation Project” it has developed a
Biodiversity Conservation Credit Facility in partnership with the Fund for Financial Support to
Agriculture of Kazakhstan, one of the large joint stock companies providing micro‐crediting
services to small businesses and rural population. Also, UNDP supported the establishment of the
first and only private ESCO company in Kazakhstan, which is now acting as the main
implementing partner and the source of private co-financing for the publicly-funded NMP.
The project is in line with the following UNDAF and CPAP outcomes:
UNDAF Outcome for 2010-2015: Environmental Sustainability. By 2015, communities, national
and local authorities use more effective mechanisms and partnerships that promote environmental
sustainability and enable them to prepare, respond and recover from natural and man-made
disasters.
CPAP Outcome: The Government, industries and civil society take steps to adapt to climate
change and mitigate its impact through energy efficiency measures and climate change adaptation
policies.
CPAP Output: Government and energy consumers are better equipped with knowledge, policies
and pilot cases on energy efficiency in sectors with high carbon dioxide emission levels.
UNDP Country Office will assign eight staff members to be responsible for the overall management
and supervision of the project implementation. In particular, Mr. Kim, Head of Energy and
Environmental (EE) Unit will be responsible for overall supervision and monitoring of project
activities, coordination with national government and other stakeholders. He has over twelve years
of experience in programme and policy development, environment and energy project design and
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GEF-5 PIF Template-December 27, 2012
execution at international, national and local level (as a former Head of GEF SGP), as well as solid
academic background in environmental science. The project will be under the direct supervision of
Ms. Goryunova, Climate Change Portfolio manager, who has MSc in Environmental Policy and
Science from Manchester University and over 5 years of experience in climate change mitigation
and adaptation in Kazakhstan and other countries in Central Asia. She was directly involved in
design and implementation of a number of flagship EE projects in Kazakhstan in the past. In term of
educational background, Ms. Goryunova has a special focus on environmental law and economics,
and has recently undertaken a specialized training on carbon emission trading.
Technical backstopping and implementation support to the project on Procurement, Finance and
Human Resources will be provided by five staff members – Senior Finance Associate (MBA, a
Certified Management Accountant with more than seven years of experience in finance and
management accounting at the international level), Finance Assistant (7 years of professional
experience in Finance and Accounting with UNDP), Procurement Associate (3 year in
procurement), HR associate (more than 5 years of experience in UNDP). These four staff members
are directly supported and supervised by the Operations Manager (7 years of professional
experience in development programme and operations management in UNDP). As this project is
going to touch upon various social issue, including gender, working with local authorities and
private sector, staff from the Governance and Local Development (GLD) Unit will be involved. In
particular, Head of GLD Unit (10 years experience) will be responsible for the overall coordination
of activities of the GLD Unit portfolio with the programme and project staff, as well as provide her
policy advice in her respective area of expertise.
PART III: APPROVAL/ENDORSEMENT BY GEF OPERATIONAL FOCAL POINT(S) AND
GEF AGENCY(IES)
A. RECORD OF ENDORSEMENT OF GEF OPERATIONAL FOCAL POINT (S) ON BEHALF OF THE
GOVERNMENT(S): (Please attach the Operational Focal Point endorsement letter(s) with this
template. For SGP, use this OFP endorsement letter).
NAME
Nurlan Kapparov
POSITION
Minister
GEF Operational Focal
Point
MINISTRY
MINISTRY OF
ENVIRONMENTAL
PROTECTION
DATE (MM/dd/yyyy)
12/13/2012
B. GEF AGENCY(IES) CERTIFICATION
This request has been prepared in accordance with GEF/LDCF/SCCF/NPIF policies and
procedures and meets the GEF/LDCF/SCCF/NPIF criteria for project identification and
preparation.
Agency
Coordinator,
Agency
name
Adriana Dinu
Officer-inCharge
UNDP/GEF
Signature
DATE
(MM/dd/yy
yy)
Project
Contact
Person
April 1,
2013
Marina
Olshanskaya
UNDP-GEF
Regional
Technical
Advisor
Email Address
Telephone
+421-907-840152
marina.olshanskaya
@undp.org
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GEF-5 PIF Template-December 27, 2012