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Accelerating Adoption of Climate Technologies

in Kyrgyzstan’s Agrifood Sector

City Hotel, Bishkek2nd November 2018

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Agenda

8.30 COFFEE AND REGISTRATION

9.00 OPENING REMARKS Maksat Tashbolotov, State Secretary, Ministry of Agriculture, Food Industry and Melioration (MAFIM) Askarbek Sagynbaev, Head, Division on Introduction of Advanced Technologies, MAFIM Dorjee Kinlay, FAO Representative Jyldyz Galieva, Senior Banker, Deputy Head of Bishkek RO, EBRDD

Video “Tackling climate change with the EBRD’s FINTECC programme”

9.35 SESSION 1 Country priorities and key study results Moderator: Dinara Rakhmanova, FAO

UNFCCC Implementation in the Kyrgyz Republic Askarbek Sagynbaev, Head, Division on Introduction of Advanced Technologies, MAFIM

Priorities for climate change mitigation and adaptation in Kyrgyzstan Aizada Kiiazova, Leading Specialist, Ecology Strategy and Policy Department, SAEPF

Financing mechanisms and technical support for technology adoption: lessons from the EBRD experience; Nurgul Esenamanova, Climate Resilience Investments, EBRD

Accelerating adoption of climate technologies in the agrifood sector — key results from the FAO/EBRD study; Nuno Santos, Economist, FAO

11.00 COFFEE BREAK

11.15 SESSION 2 Technology sessions — barriers and opportunities Moderator: Nuno Santos, FAO

Part 1 — Crop farming technologies Presentation: Mar Polo, Economist FAO Panel members: Askarbek Sagynbaev, MAFIM Manas Samatov, Janart Group Adilet Jumabekov, farmer Akylbek Baiysov, Ayil Bank

Part 2 — Livestock technologies Presentation: Mar Polo, Economist FAO Panel members: Malik Bekenov, MAFIM Aydin Jumadilov, Toro Slaughterhouse Salamat Atabaev, Pasture Committee

�Part�3�—�Renewable�and�energy�efficient�technologies Presentation: Sulaiman Berdikeev, FAO Panel members: Nurzat Abdrasulova, UNISON Group (KyrSEFF Advisor) Nurlan Kadyrkulov, Eco-Agro Tatiana Vedeneva, Center for Development of Renewable Sources of Energy Aleksey Vedenev, Fluid

13:30 SUMMARY OF KEY MESSAGES Nuno Santos, Economist, FAO

13:45 CLOSING REMARKS Askarbek Sagynbaev, Head, Division on Introduction of Advanced Technologies, MAFIM

14:00 LUNCH

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Agrifood systems are increasingly under pressure to adapt to a changing climate while simultaneously reducing their environmental footprint.

Agrifood systems play an important role in greenhouse gas emissions (GHG) and are therefore increasingly under pressure to improve energy efficiency. The sector is also directly exposed to climate change because of its dependence on environmental resources. It is thus urgent to increase the sector’s resilience through targeted investments that address key vulnerabilities in a country and/or regional context. Accelerating the adoption of climate technologies is an essential step towards addressing these challenges.

With this in mind, the European Bank for Reconstruction and Development (EBRD) and the Food and Agriculture Organi-zation of the United Nations (FAO) will hold the workshop on “Accelerating adoption of climate technologies” in Bishkek, Kyrgyz Republic, to discuss the opportunities and challenges in fostering deployment of modern agrifood technologies. Specifically, the workshop in Bishkek will be an excellent opportunity to discuss:

• key trends in the adoption of climate technologies in the Kyrgyz Republic’s agrifood sector;

• challenges and opportunities for private sector investments in modern agrifood technologies;

• possible areas for public support and cooperation with donors and international financial institutions to accelerate technology deployment;

• strategic alliances and ways to strengthen collaboration among stakeholders to achieve the UN Sustainable Development Goals by 2030;

• experiences and suggestions to overcome constraints and encourage an enabling environment for private investments.

Introduction

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Methodology to assess climate technologies

Background

• The EBRD and FAO recognize that addressing climate change mitigation and adaptation challenges in the agrifood sector will require radical changes in food production systems. Greater adoption of climate technologies is a core element of this transition towards more sustainable food systems;

• In this context EBRD and FAO, within the Finance and Tech- nology Transfer Centre for Climate Change (FINTECC) program, have engaged to develop a practical tool to inform policy makers and to orient public and private institutions interested in investments that foster the greening of the agrifood sector.

Objective and key elements

• Develop a prioritised list of climate technologies that contribute to climate change mitigation (reduction of greenhouse gas emissions) and climate change adaptation (enhancement of climate change resilience);

• The methodology comprises 5-steps and uses a Multi- Criteria Analysis (MCA) to assess of climate technologies from various perspectives. It draws on a wealth of existing data sources including FAOSTAT, World Bank Development Indicators, UNSD, INDC, National Communica-tions to the UNFCCC, and studies and interviews with local stakeholders;

• The methodology is usually implemented by a core, dedicated team and incorporates stakeholder consultations in the various stages;

• The methodology builds on other conceptual frameworks and tools that contribute to the assessment of mitigation and adaptation benefits, i.e. EX-Ante Carbon balance Tool (Ex-ACT); FAO’s Water, Energy and Food Nexus, Global Live-stock Environmental Assessment Model (GLEAM) and the EBRD’s Green Economy Transition approach (GET);

• A first pilot study was carried out in Morocco in 2015-16 and results are detailed in the respective FAO/EBRD publica-tion: Morocco. Adoption of Climate Technologies in the Agrifood Sector;

• During 2017 and 2018, the methodology was applied in the Kyrgyz Republic and Kazakhstan.

Summary of the 5 steps

Objectives and criteria: Steps 2 to 4

ANALYSIS OF EMISSIONS AND VULNERABILITIES

STEP 2 STEP 3 STEP 4

TECHNOLOGIES EVALUATED AND SCORED

LIST OF PRIORITISED TECHNOLOGIES

Contribute to increased adaptation to climate change and to GHG emissions reduction in the agrifood sector

Identify drivers to support adoption

Identify technologies with significant potential for mitigation and adaptation

Adaptation priorities and mapping GHG emissions

Assessing technical and financial feasibility

Technical�and�financial To identify the most technically efficient and supported technology and to maximise the returns to individual investors.

Performance compared to best practice

Potential to reduce annual GHG emissions

Policy reform requirements

Maturity of technical support services

Contribution to adaptation

Current technology adoption rate

Mitigation costs

Trends in gap between uptake and potential

Negative externalities

Financial returns Positive externalities

OB

JEC

TIV

ES

CR

ITE

RIA

Economic and Environmental To maximise net economic benefits

Institutional To pursue technologies with the lowest reform threshold

Ranking and conclusions

Evaluating economy- wide impacts and sustainability

Evaluating support policies and barriers

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Challenges

Key�findings�from�analysis�of�emissions

• Agriculture emissions account for around 30 percent of total emissions in the country currently;

• Considerable growth in agriculture sector emissions in last 15 years both in absolute terms and in value intensity: growth of 1 ton of CO2eq per USD 1,000 of Agriculture GDP since 2002;

• Agriculture emissions increased by 1,528 thousand tCO2eq between 2000 and 2016 or 52 percent; by 2016 agriculture accounted for 4,748 thousand tCO2eq in emissions;

• 95 percent of the increase in emissions over the past 15 years has been due to livestock and, in particular, an increase in livestock numbers.

Main vulnerabilities of the agriculture sector

• Possible shortages in water resources due to changes in surface water flows as most rivers are fed by glaciers and/or snow melt. Surface water flow expected to increase by 10 percent to 55 km3/year in the period 2020-2025 and then decrease by about 40 percent until 2100. As a result, water supply to agriculture is at risk;

• Depletion of water resources and temperature increases leading to increase in arid and semi-arid areas from 15 percent in 2000 to 23-50 percent in 2100. Areas and productivity of highland pastures may be significantly reduced;

• Increase in frequency and intensity of extreme climate events. More frequent heat stress and droughts, especially at low altitudes in summer months, will lead to reduced water avail- ability for livestock and additional pressure on pastures. Increased mudslides, flash floods and river floods limiting pastures accessibility. Negative impact of increased droughts on crop yields;

• High expected economic losses in absence of timely adaptation in agriculture estimated at USD 85 million per year by 2100 (in 2018 prices) according to the country’s Intended Nationally Determined Contribution (INDC);

Source: FAOSTAT and World Bank, 2016

Agriculture emissions relative to agriculture GDP tCO2eq/1000 USD (constant 2010), 2016

Emissions from agriculture activities thousand tCO2eq 2000-2016

Source: FAOSTAT, 2018

0

500

1,000

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Thou

sand

tCO2e

q

Emissionsfromagricultureactivities,thousandtCO2eq2000-2016

SyntheticFertilizersRiceCultivationOrganicsoilsManureManagementManureleftonPastureManureappliedtoSoilsEntericFermentationCultivationofOrganicSoilsCropResiduesBurning- SavannaBurning- Cropresidues

Synthetic fertilizersRice cultivationOrganic soilsManure managementManure left on pastureManure applied to soilsEnteric fermentationCultivation of organic soilsCrop residuesBurning—savannaBurning—crop residues

95% increase in total emissions between 2000-2002 and 2014-2016 owing to livestock

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Kyrgz Republic

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/10

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US

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usa

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tC

O2e

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Central Asia OECD

5,000

4,500

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

0

2000 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16

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• By investing USD 1 billion in climate technologies, an estimated 2.9 million tCO2eq or almost 60 percent of agrifood sector emissions could be reduced;

• Pasture improvement provides the bulk of the mitigation potential with only 3 percent of the total investment;

• Manure management, biogas and conservation agriculture show moderate mitigation potential (16 percent) with 50 percent of total investment;

• Interpreting the results of the multi-criteria analysis with a focus on mitigation indicates that the following technologies have the highest score: pasture improvement, manure management, drip irrigation and improved greenhouses;

• The same analysis with a focus on adaptation suggests that drip irrigation seems most interesting through improvements in water availability (especially in areas with water scarcity) and agricultural production. This is followed by pasture improve-ment and conservation agriculture as they contribute to improved long term soil health, higher yields and aggregate production in drought years.

0 500 1,000 1,500 2,000 2,500

0 50 100 150 200 250 300 350 400

Wind water pumps

Drip irrigation

Solar water pumps

Steam boilers

Fattening units

Biogas (biofertilizer)

Field machinery

Improved greenhouses

Conservation agriculture

Manure management

Biogas

Pasture improvement

ktCO2eq/year

USD million

Mitigation potential, KtCO2eq/yearInvestment required, USD million

SOLAR WATER PUMPSInteresting technology but difficult�to�develop• Competition from cheap and

low-emission electricity (hydro)• Can be interesting in remote areas

and with high-value crops

WIND WATER PUMPSLimited areas in the country and competition from cheap electricity• Very low financial returns and would

need public support measures• Only interesting in areas where access

to water and grid-electricity is limited

WINDWATERPUMPS

MODERATEMARKETPOTENTIALBUTINTERESTINGGREENINGBENEFITS• Highreturns butlimitedareas for adoption given areas under greenhouses• Accessto capital is aconstraint;new greenhouses can stimulate energy consumption

IMPROVEDGREENHOUSES

HIGHMITIGATIONPOTENTIALBUTLIMITEDADOPTION• Solidreturns and GHGreduction perunit• Limitedadoption duetohighlyscatteredfeedstock

GOODPOTENTIALFORFLEETRENOVATION• Moderately good mitigation benefits through diesel savings• Accessto capital and availability of best technology are concerns

EFFICIENTFIELDMACHINERY

LIMITEDAREASINTHECOUNTRYANDCOMPETITIONFROMCHEAPELECTRICITY• Very low financial returns and would need public support measures• Only interesting inareas where access to water and grid-electricity is limited

INTERESTINGTECHNOLOGYBUTDIFFICULTTODEVELOP• Competition from cheap and low emissions electricity (hydro)• Canbe interesting inremoteareas and with highvalue crops

SOLARWATERPUMPS

VERYHIGHTHEORETICALPOTENTIALBUTVERYDIFFICULTTODEVELOP• Competition from cheap and low emissions electricity (hydro)

• Extensivelivestockproduction systems noteasyto modify

BIOGAS

TACKLINGLIVESTOCKPRODUCTIVITYISSUES• Canyield highreturns and support sector modernization

• Difficult to scale up with current sector structure

ONLYAMITIGATIONTECHNOLOGYINSPECIFICSITUATIONS• Solidreturns and highly suitable for highvalue crops

• Limitedcurrent potentialgiven country‘s irrigation network

DRIPIRRIGATION

GREATPOTENTIALFORCARBONSEQUESTRATION• Highpriority for sustainability of livestocksector and low mitigation cost

• Publicinvestments,organizational and technical suppport needed to foster adoption

PASTUREIMPROVEMENT

HIGHPOTENTIALFORMITIGATIONANDALSOFORADAPTATION• Moderatefinancial returns;important for long term soil quality

• Averageproperty structure and lackof knowledge about technology are barriers

CONSERVATIONAGRICULTURE

0

100

Technologytree

VERYGOODMITIGATIONPOTENTIALBUTCOSTLY• Good potentialgiven livestocknumbers and alsoimportant for soil quality• Increased level of awareness oncompost and public support needed

MANUREMANAGEMENT

EFFICIENTFATTENINGUNITS

BIOGAS(BIOFERTILIZER)

EFFICIENTSTEAMBOILERSPROMISINGBUTADOPTIONLINKEDTOAGRIFOODSECTORTRANSITION• Moderatereturns butgood GHG

reduction perunit• Limitedby numbers of food enterprises

WINDWATERPUMPS

MODERATEMARKETPOTENTIALBUTINTERESTINGGREENINGBENEFITS• Highreturns butlimitedareas for adoption given areas under greenhouses• Accessto capital is aconstraint;new greenhouses can stimulate energy consumption

IMPROVEDGREENHOUSES

HIGHMITIGATIONPOTENTIALBUTLIMITEDADOPTION• Solidreturns and GHGreduction perunit• Limitedadoption duetohighlyscatteredfeedstock

GOODPOTENTIALFORFLEETRENOVATION• Moderately good mitigation benefits through diesel savings• Accessto capital and availability of best technology are concerns

EFFICIENTFIELDMACHINERY

LIMITEDAREASINTHECOUNTRYANDCOMPETITIONFROMCHEAPELECTRICITY• Very low financial returns and would need public support measures• Only interesting inareas where access to water and grid-electricity is limited

INTERESTINGTECHNOLOGYBUTDIFFICULTTODEVELOP• Competition from cheap and low emissions electricity (hydro)• Canbe interesting inremoteareas and with highvalue crops

SOLARWATERPUMPS

VERYHIGHTHEORETICALPOTENTIALBUTVERYDIFFICULTTODEVELOP• Competition from cheap and low emissions electricity (hydro)

• Extensivelivestockproduction systems noteasyto modify

BIOGAS

TACKLINGLIVESTOCKPRODUCTIVITYISSUES• Canyield highreturns and support sector modernization

• Difficult to scale up with current sector structure

ONLYAMITIGATIONTECHNOLOGYINSPECIFICSITUATIONS• Solidreturns and highly suitable for highvalue crops

• Limitedcurrent potentialgiven country‘s irrigation network

DRIPIRRIGATION

GREATPOTENTIALFORCARBONSEQUESTRATION• Highpriority for sustainability of livestocksector and low mitigation cost

• Publicinvestments,organizational and technical suppport needed to foster adoption

PASTUREIMPROVEMENT

HIGHPOTENTIALFORMITIGATIONANDALSOFORADAPTATION• Moderatefinancial returns;important for long term soil quality

• Averageproperty structure and lackof knowledge about technology are barriers

CONSERVATIONAGRICULTURE

0

100

Technologytree

VERYGOODMITIGATIONPOTENTIALBUTCOSTLY• Good potentialgiven livestocknumbers and alsoimportant for soil quality• Increased level of awareness oncompost and public support needed

MANUREMANAGEMENT

EFFICIENTFATTENINGUNITS

BIOGAS(BIOFERTILIZER)

EFFICIENTSTEAMBOILERSPROMISINGBUTADOPTIONLINKEDTOAGRIFOODSECTORTRANSITION• Moderatereturns butgood GHG

reduction perunit• Limitedby numbers of food enterprises

0

100

EFFICIENT STEAM BOILERSPromising but adoption linked to agrifood sector transition• Moderate returns but good GHG

reduction per unit• Limited by numbers of food

enterprises

EFFICIENT FIELD MACHINERYGood�potential�for�fleetModerately good mitigation benefits through diesel savings• Access to capital and availability of

best technology are concerns

BIOGAS (BIOFERTILIZER)High mitigation potential but limited adoption• Solid returns and GHG

reduction per unit• Limited adoption due to

highly scattered feedstock

IMPROVED GREENHOUSESModerate market potential but interesting�greening�benefits• High returns but limited areas for

adoption given areas under greenhouses• Access to capital is a constraint; new

greenhouses can stimulate energy consumption

MANURE MANAGEMENTVery good mitigation potential but costly• Good potential given livestock numbers

and also important for soil quality• Increased level of awareness on compost

and public support needed

BIOGASVery high theoretical potential but�very�difficult�to�develop• Competition from cheap and

low-emissions electricity (hydro)• Extensive livestock production

systems not easy to modify

EFFICIENT FATTENING UNITSTackling livestock productivity issues• Can yield high returns and support

sector modernization• Difficult to scale up with current

sector structure

CONSERVATION AGRICULTUREHigh potential for mitigation and also for adaptation• Moderate financial returns; important

for long term soil quality• Average property structure and

lack of knowledge about technology are barriers

DRIP IRRIGATIONOnly a mitigation technology in specific�situations• Solid returns and highly suitable

for high value crops• Limited current potential given

country‘s irrigation network

PASTURE IMPROVEMENTGreat potential for carbon sequestration• High priority for sustainability of

livestock sector and low mitigation cost• Public investments, organizational

and technical suppport needed to foster adoption

Results�of�the�five-step�assessment

Source: Author’s compilation

Source: Author’s calculations

Opportunities

Mitigation potential and investment by technology

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Crop farming technologies (CA, drip irrigation, improved greenhouse, machinery)

• Estimated adoption rates of these technologies in the country (between 0 and 16 percent of potential) are quite low suggesting significant potential for deployment;

• Drip irrigation and improved greenhouses with a focus on high value crops are among the best technologies in terms of overall score;

• The analysis indicates good financial returns on investments in drip irrigation and improved greenhouses, and moderate for conservation agriculture. Field machinery presents low returns because of limited diesel savings and reduction of harvest losses when investing in regionally produced machinery. Most efficient field machinery technology is available but it is more costly and difficult to maintain;

• Expanding conservation agriculture adoption would require greater knowledge dissemination, pilots with lead farmers and further development of support services;

• Drip irrigation deployment would benefit from improved institutional arrangements for efficient water governance and greater awareness about the technology and its benefits;

• Adoption of greenhouse technologies such as thermocovers and efficient heating systems could be supported through sensitization campaigns and capacity development;

• Use of more efficient field machinery could be stimulated by enhancing farmers’ knowledge on practices to reduce fuel consumption, technical support services, and incentive and improved access to capital (for small scale farmers).

Livestock technologies (pasture improvement, fattening, manure management)

• All the above technologies perform reasonably well in the country when compared with international best practices;

• All technologies show considerable room for adoption expansion, with current adoption rates ranging from 3 percent in manure management, to 9 percent in fattening units and 17 percent in pasture improvement;

• Fattening units have a high financial return on investment, while pasture improvement and manure management have low estimated financial returns (below cost of capital) and are currently less attractive to private investors;

• Supporting pasture improvement would require organizational, social and financial support to pasture committees to manage pastures in a sustainable way;

• Investing in fattening units would benefit from clear national targets, secured access to markets, pilot programmes to illustrate practice benefits, local value chain organization, tailored support for small farmers, and technical expertise on improved feeding and veterinary care;

• The expansion of manure management practices would benefit from knowledge and awareness campaigns, environmental norms and regulation, and some level of public support .

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Renewables�and�energy�efficiency�technologies� (solar/wind pump, biogas/biofertilizer, efficient steam boilers)

• Renewables rank very low in the analysis due to weak financial results (cheap alternatives available) and low mitigation potential (except biogas) - only 7 percent of total estimated mitigation potential;

• Adoption rates of solar/wind pumps and biogas are very low (less than 1 percent of potential), which suggests opportunities for their promotion. Moderate adoption rates are estimated for biogas (biofertilizer) and steam boilers, 10 and 17 percent respectively, mostly because of their limited adoption potential;

• Solar/wind pumps and biogas show considerably low financial returns (below cost of capital). Focusing on value addition products such as biofertilizer rather than on energy production can make investments more attractive. Efficient steam boiler technology presents a moderate financial return;

• While national legislation provides higher feed-in tariffs for renewable electricity generated, a lack of efficient imple-mentation mechanisms could have adversely impacted the promotion of renewables. Further policy reforms with clear implementation and financial mechanisms seem to be required;

• Introduction of solar and wind pumps can be supported in areas with available pumping water and a lack of access to the electric grid through provision of concessional financial resources, awareness and capacity development as well as qualified support services. Shortage of areas with appropriate wind capacity can limit the adoption of wind technologies;

• Organizational/logistics and regulatory support for collecting feedstock by small-scale farmers, financial incentives and market development for biogas, digestate and biofertilizer can encourage the adoption of biogas technology. High initial investments and limited knowledge and support services seem to discourage investments in technology promotion;

• Development of the efficient steam boilers market seems constrained by growth in the country’s food industry (downstream industries) and a lack of binding GHG emission regulations;

Notes

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