Circular Economy as an Opportunity for Central Asia Summary Report May 2024 © 2024 The World Bank 1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org All Rights Reserved This work is the product of the staff of The World Bank, Global Factor, KPMG, the Centre for Sustainable Production and Consumption in Almaty, Nazarbayev University’s Civil and Environmental Engineering Department, and GreenEdge Consulting. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of the World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy, completeness, or currency of the data included in this work and does not assume responsibility for any errors, omissions, or discrepancies in the information, or liability with respect to the use of or failure to use the information, methods, processes, or conclusions set forth. 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Any queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522- 2625; e-mail: pubrights@worldbank.org. Circular Economy as an Opportunity for Central Asia Summary Report May 2024 Contents Acknowledgments .......................................................................................................................................................... ii Abbreviations and Acronyms ..................................................................................................................................... iii 1. Introduction and Summary........................................................................................................................................ 1 2. Circular Construction Value Chains: The Case of Kazakhstan .......................................................................4 3. Circular Economy in the Agri-food Value Chain: The Case of Uzbekistan...................................................9 4. Circular Economy at the City Level: The Case of Almaty ............................................................................... 14 5. Conclusions and the Way Forward......................................................................................................................... 21 Figures Figure 1: Construction Sector Value Chain and Its Stakeholders........................................................................ 5 Figure 2: Benefits of CEAP Implementation.............................................................................................................. 7 Figure 3: Agricultural Value Chain and its Potential Stakeholders.................................................................. 10 Figure 4: Five Thrust Areas of the CEAP for the Agri-Food Sector in Uzbekistan........................................ 10 Figure 5: Almaty Waste Streams................................................................................................................................ 14 Figure 6: Methodology for Defining CE Actions.................................................................................................... 16 Figure 7: Construction Sector Value Chain and Its Stakeholders...................................................................... 16 Figure 8: Industry Sector Value Chain and its Potential Stakeholders............................................................ 17 Figure 9: Agriculture Sector Value Chain and its Potential Stakeholders...................................................... 18 Tables Table 1: CE Priority Projects in Kazakhstan’s Construction Value Chain.........................................................6 Table 2: CE Priority Projects in Uzbekistan Agri-Food Sector............................................................................11 Table 3: Projects/Measures Identified in the CEAP for the City of Almaty..................................................... 18 Circular Economy as an Opportunity for Central Asia | Summary Report CONTENTS i Acknowledgments This report summarizes three Circular World Bank), and Nodira Akhmedkhodjaeva Economy Action Plans (CEAPs). The CEAP for (Environmental Specialist, World Bank). Nigara the Construction Value Chain in Kazakhstan, Abate (Senior Knowledge Management and finalized in June 2022, is the product of a Communications Specialist, World Bank) prepared collaborative effort by the World Bank, Global this report for publication. Factor, and the Centre for Sustainable Production The team is grateful for the support and input and Consumption in Almaty. The CEAP for the provided by government, regional, and municipal Agri-Food Sector in Uzbekistan, finalized in officials; representatives from the private sector; March 2022, was developed jointly by the World think tanks and academia; and other stakeholders Bank and KPMG. These two CEAPs were supported in Central Asia who contributed their insights and by the Korea Green Growth Trust Fund. The CEAP time for the development of the three CEAPs. for the City of Almaty, finalized in April 2022, was Special thanks also go to the peer reviewers for prepared by a core team consisting of the World their advice and comments that enriched the Bank, Global Factor, Nazarbayev University’s Civil analysis. A virtual review was chaired by Sanjay and Environmental Engineering Department, Srivastava (Practice Manager, Environment, and the Centre for Sustainable Production and Natural Resources and Blue Economy for Europe Consumption in Almaty. It was supported by the and Central Asia, World Bank) and the peer Global Program on Sustainability. reviewers were Qing Wang (Senior Environmental This Summary Report was produced by the Specialist, World Bank) and Rieko Kubota (Senior World Bank and GreenEdge Consulting under Environmental Engineer, World Bank). Additional the supervision of Kirtan Chandra Sahoo (Senior comments were received from Jane Olga Ebinger Climate Change Specialist, World Bank). The (Sector Leader, World Bank). core writing team consisted of Arno Behrens The team would like to express its profound (Senior Environmental Economist, World Bank) gratitude to Sanjay Srivastava and Kseniya and Ruslan Zhechkov (GreenEdge Consulting). Lvovsky (current and former Practice Managers, Additional contributions were made by Jiyoun Environment, Natural Resources and Blue Christina Chang (Environmental Specialist, World Economy for Europe and Central Asia, World Bank), Yelena Yakovleva (Environmental Analyst, Bank) for their guidance and support. ii CONTENTS Circular Economy as an Opportunity for Central Asia | Summary Report Abbreviations and Acronyms AIES JSC Almaty Electric Stations Joint Stock Company BAU Business As Usual BIM Building Information Modeling CE Circular Economy CEAP Circular Economy Action Plan CDW Construction and Demolition Waste DMC Domestic Material Consumption EPR Extended Producer Responsibility EU European Union GDP Gross Domestic Product GHG Greenhouse Gas GPP Green Public Procurement IBT Ice Bank Tanks IoT Internet of Things MEGNR Ministry of Ecology and Natural Resources MIID Ministry of Industry and Infrastructural Development MSW Municipal Solid Waste NDC Nationally Determined Contribution PET Polyethylene Terephthalate PPP Public-Private Partnership R&D Research and Development SMEs Small and Medium Enterprises USW Urban Solid Waste WWTP Wastewater Treatment Plant Circular Economy as an Opportunity for Central Asia | Summary Report CONTENTS iii 1. Introduction and Summary Introduction The concept of the circular economy (CE) There are multiple gaps and challenges in is gaining attention worldwide as a way to Central Asian countries with regard to the CE promote sustainable development and reduce transition. Data gaps make economy-wide and resource consumption. The CE is an economic sectoral assessments difficult and pose a key system that aims to reduce the use of natural challenge to resource management and related resources and to minimize waste and emissions strategies. Generally, waste management remains by keeping materials in use for as long as possible. inadequate, also due to missing infrastructure A CE seeks to minimize the consumption of finite for the treatment of different waste streams, and resources by promoting three key principles of offers multiple opportunities for improvement. waste management and sustainability: ‘reduce, In addition, the concept of CE is not widespread reuse, recycle’. This equation stands for reducing in Central Asia and CE is not generally addressed resource use and waste generation as well as for at different administrative levels (national, extending the lifetime of products and materials regional, or municipal) or by sectors/value by using them for as long as possible. If a product chains. This also translates into a lack of specific eventually needs to become waste, its materials regulations and standards to promote the CE as should be recycled and used for a new purpose. well as into a lack of capacities to support the Optimizing resource use in this way is the only transition. Similarly, low consumer awareness strategy which allows for decoupling economic results in low demand for green and circular growth from environmental degradation and is products. The fact that the sectors studied for critical for the green and low-carbon transition. this report (construction and agriculture) are The countries in Central Asia are still in the highly fragmented poses an additional obstacle early stages of the CE transition. Central Asia is a to circular action. region that consists of five countries: Kazakhstan, The CE is one of the main potential ways the Kyrgyz Republic, Tajikistan, Turkmenistan, forward for Central Asia on the road toward and Uzbekistan. While the concept of the CE is carbon neutrality. The production of goods and gaining traction globally, its implementation services, including food, for the global economy in Central Asia is still in its early stages. In fact, accounts for nearly half of global greenhouse Central Asian countries score low on almost all gas (GHG) emissions. Addressing GHG emissions CE-related indicators. Critical issues across the region include low resource productivity and low from industry can be technologically challenging recycling rates in the face of resource scarcity. For and costly, particularly in sectors such as iron, example, resource productivity in Kazakhstan steel, aluminum, cement, and plastics, which are is around 10 times lower than in the European associated with hard-to-abate emissions related Union (EU). Recycling of municipal solid waste to high-temperature processes, production (MSW) stands at 11.5  percent in Kazakhstan emissions, and end-of-life emissions. In the and below 10 percent in Uzbekistan, compared food system, food waste is a major source of to about 50 percent in the EU. The situation is GHG emissions. But in other sectors, such as similar in the Kyrgyz Republic and despite lower construction, the extraction and transportation waste generation per capita, the recycling rate for of new materials is linked to GHG emissions which different waste streams is low. However, there is could be avoided in a CE. An increasing focus on growing interest and momentum across the region material efficiency and circularity will help align to explore the potential of CE practices to promote the emissions trajectory of these sectors with the sustainable development and economic growth. goals of the Paris Agreement. Circular Economy as an Opportunity for Central Asia | Summary Report CONTENTS 1 Reducing material consumption leads to less services, the birth of the sharing economy, or pollution, waste, and related health impacts increase in recycling and reuse rates. In the EU, and is key to preserving vital ecosystem the Netherlands is one of the leaders in the CE services and natural resources, including transition. It is estimated that 8 percent of the biodiversity. In the linear system, products Dutch workforce is employed in CE jobs, with the eventually end up as waste, most of which is biggest concentration in activities that preserve landfilled or incinerated. Globally, inadequate and extend the value of materials already in use, solid waste management contributes, among such as reuse and recycling. others, to climate change and (marine) plastic Circular Economy Action Plans (CEAPs), pollution. In Central Asia, solid waste harms such as the ones presented in this report, are public health, putting millions at risk due to soil essential for charting the way forward in the and water contamination and poor air quality. circular transition. This report summarizes Reducing waste and pollution and associated three CEAPs: (a) CEAP for the Construction Value negative environmental impacts will thus have Chain in Kazakhstan, (b) CEAP for the Agri- substantial benefits for public health, including Food Sector in Uzbekistan, and (c) Support in through designing out toxic chemicals. In Financing and Delivering the Circular Economy addition, it is estimated that the extraction and in Almaty. These three CEAPs help provide the processing of natural resources are responsible overarching direction for the circular transition for more than 90 percent of biodiversity loss. in Kazakhstan, Uzbekistan, and Almaty, allowing Decreasing the need for virgin materials can thus for general conclusions for the entire region of make a major contribution to healthy ecosystems Central Asia. The theme and focus of the three and biodiversity preservation. CEAPs have been selected based on several The circular transition can be a driver of private factors. These include economic importance, sector growth and employment in Central employment, material use, carbon footprint, Asia. Although there are only few ex post studies potential for circular improvement (including to verify growth and job creation potential of policy), and stakeholder engagement and buy-in. CE, it is important to note that technological The report is targeted at policy makers at innovation in resource efficiency can lead to national and municipal levels as well as sectoral productivity gains. What is certain is that the level experts, associations, business support goal of decoupling natural resource extraction organizations, and others. The objective is to and use from economic output has already led demonstrate the potential of the CE concept and to a range of concrete business applications to inspire further actions and consolidation with aimed at closing resource utilization loops and regard to sectoral and innovative circular policy slowing down material use. This is evidenced development as well as designing of new, circular by the growth of repair and remanufacture funding opportunities. Summary The report consists of three individual sections municipalities in the region. on the construction value chain in Kazakhstan, To achieve the long-term goals of the CE the agricultural value chain in Uzbekistan, transition, it is essential to have action plans and the urban ecosystem in Almaty. These for identifying practical next steps. Action plans three sections are followed by a chapter with help identify and guide policy levers while setting conclusions attempting to draw useful messages to all countries in Central Asia. It is based on a framework for private sector development. the assumption that although each country has Importantly, they are a tool to identify numerous its unique characteristics, the construction and stakeholders involved in the CE transition and agricultural sectors in the region face similar to engage them in a way that motivates their problems. Similarly, it is assumed that some of contribution and fosters a sense of ownership. In the challenges for Almaty are shared by other particular, the sectoral action plans presented in 2 CONTENTS Circular Economy as an Opportunity for Central Asia | Summary Report this report will help stakeholders understand the the resilience of Uzbekistan’s agricultural sector actions that can be undertaken in different stages to climate vulnerabilities and shocks, while of respective value chains. reducing GHG emissions of the sector by 34 There are ample opportunities to introduce percent. CE business models in the construction value The CEAP for Almaty addresses excessive waste chain in Kazakhstan, and the CEAP focuses on generation in the city, lack of waste processing adopting relevant regulations and standards, infrastructure, and flawed monitoring and infrastructure investments, and collaboration evaluation procedures in three key material- platforms and pilot projects. Examples of actions intensive sectors: construction, industry, include mandatory waste audits as a precondition and agriculture and food processing. The for demolition permits, renovation of Soviet-era focus of the CEAP is on innovative technology, buildings, construction and demolition waste new infrastructure, and waste management (CDW) recycling centers, and an online portal improvement. The nine proposed actions to support industrial symbiosis. In addition, the include a CDW recycling center in Almaty, the CEAP recommends the introduction of market- production of modular construction materials, based incentives such as incineration and landfill the production of secondary raw materials from taxes. A total of 10 actions are proposed, totaling US$289 million in investments over nine years. ash and slag, and the bioconversion of food waste Economic benefits amount to US$1.3 billion over into animal feed and fertilizer. Total investment the same period—a multiple of the investment needs amount to US$368 million until 2030. The needs. Implementation of the CEAP will help actions proposed by the CEAP would help reduce reduce CDW generation by 54 percent and total demand for primary materials by 21 million tons natural resource consumption by 8 percent by (Mt) by 2031, while reducing CDW generation 2030. In addition, it can reduce national GHG by 871 tons annually. In addition, Almaty would emissions by 5 percent, compared to business as benefit from increased local production and use usual, over the same time frame. of resources. The agri-food value chain in Uzbekistan is While the report draws conclusions for the characterized by low productivity, high post- wider region of Central Asia, more research harvest losses, water scarcity, and high GHG is needed in other countries and sectors, emissions; the CEAP helps improve performance potentially highlighting regional solutions of the sector in terms of resource efficiency to common challenges in the management of and waste prevention and management. The natural resources and waste. Improving data CEAP proposes 17 actions in the areas of water on waste management is critical for assessing circularity, bioresource utilization, precision the state of circularity in the region and should farming, energy efficiency, and sustainable be a priority before drawing conclusions on next packaging. Examples of concrete actions include steps. Building upon an improved data basis, the introduction of drip irrigation, eco-friendly future research needs to analyze sectoral barriers wastewater treatment for reuse in agriculture, the and potentials for increasing circularity. Key substitution of chemical fertilizer with organic sectors could be identified by their economic compost, manure management for electricity generation, biogas from organic waste, and importance, the amount of natural resources conversion of polyethylene terephthalate (PET) used and waste generated, and their potential to bottles into synthetic fibers for packaging. While become more circular. Such an analysis will allow implementation costs are significant (estimated for identifying common challenges and solutions at US$860 million over nine years), the return across the countries of Central Asia, potentially on investment is almost 100 percent. Moreover, paving the way for streamlined action in support implementing the CEAP will significantly increase of the CE across the region. Circular Economy as an Opportunity for Central Asia | Summary Report CONTENTS 3 2. Circular Construction Value Chains: The Case of Kazakhstan Background Kazakhstan’ population and economy are climate change but also from the commitments growing, but so is its vulnerability to climate under international obligations such as the Paris change. For the past few years, Kazakhstan’s Agreement and the Agenda 2030 for Sustainable economy has been growing at an annual rate Development.1 As a result, Kazakhstan pledged of 3–4 percent. The economic growth relies to reach carbon neutrality by 2060—a goal which on several key sectors, including extraction of calls for a transition to net-zero emissions, a mineral resources, construction, agriculture, more resilient economy, and higher investment and transport, which are also among the sectors across all sectors. CE is an important instrument with the highest carbon footprint. At the same for this transition. time, the country is vulnerable to climate change, particularly in terms of water scarcity and Yet, Kazakhstan is still in the early stages of droughts. the CE transition. The material resource produc- Kazakhstan faces the double challenge of tivity of the country is EUR 0.2 (gross domestic achieving economic development while product [GDP]) per kg of domestic material reducing negative impacts on climate and the consumption (DMC) compared with an EU27 natural environment. The pressure to reduce average of EUR 2.1. On average, the recycling of the carbon footprint comes not only from an MSW stands at 11.5 percent compared to more intrinsic incentive to lower the impacts of than 45 percent in the EU27. The Construction Value Chain in Kazakhstan: Circularity and the Case for Action The construction sector has a significant Environmental Code. All these factors led to the carbon footprint and at the same time there selection of the construction sector as a suitable are tangible opportunities for improvement candidate for the development of a CEAP. The in terms of circular business models. In selection was validated at a roundtable held Kazakhstan, the construction sector was in January 2021 with the Ministry of Ecology estimated to consume 65 Mt of materials and Natural Resources (MEGNR), the Ministry in 2019, 30 percent of which was imported. of Industry and Infrastructural Development Moreover, domestic material extraction and (MIID),2 the Bureau of Statistics of the Agency production activities emit 13.9 Mt of CO2e per of Strategic Planning and Reforms, and the year—almost 4 percent of the country’s annual Ministry of National Economy. emissions. Circularity elements have already been introduced into selected policies, such as The construction sector in Kazakhstan is the ‘Nurly Zher’ housing program and the 2021 fragmented . It consists of 70,000 private and 1 https://sdgs.un.org/2030agenda. 2 Reorganized as the Ministry of Transport and the Ministry of Industry and Construction on September 1, 2023. 4 CONTENTS Circular Economy as an Opportunity for Central Asia | Summary Report public entities including mineral miners, are real estate developers and one-third are CDW industrial manufacturers, contractors and management companies. The value chain of the real estate developers, and CDW management construction sector and its various stakeholders service providers. Almost two-thirds of these are shown in Figure 1. Figure 1: Construction Sector Value Chain and Its Stakeholders REGULATORY GOVERNANCE MATERIAL-GENERATION CONSTRUCTION VALUE CHAIN AND PRODUCTION ACTIVITIES ACTIVITIES RENOVATION, DEMOLITION, BUILDING AND WASTE- OPERATIONS MANAGEMENT PRIMARY-MATERIAL SECONDARY- INTERMEDIATE ACTIVITIES EXTRACTION MATERIAL CONSTRUCTION PRODUCTION AND GENERATION PRODUCTION STAKEHOLDERS Mineral Industrial Contractors and C&D Waste Miners Manufacturers Real-estate Developers Management • Importers • Importers • Construction-material • Waste-collection / • Domestic producers • Domestic manufacturers suppliers and distributors management companies • Construction companies • Waste recycling • Designers • Landfills (polygons) • Real-estate or property • developers TANGENTIAL MARKET-PLAYERS Source: Original to this publication based on CEAP for the Construction Value Chain in Kazakhstan (2022). The circularity performance of the Kazakh have the potential to strengthen circularity. construction sector is low. The use of secondary For example, the Nurly Zher housing program is raw materials is not measured but by all evidence, intended to stimulate the domestic production and backed by stakeholders, almost all materials of building materials, creating a register of best available technologies and promoting the used are primary. Most CDW is landfilled with no inclusion of materials recycled and recovered information on the recycling rate. from local industry. The 2021 Environmental On the positive side, sector-focused regulations Code bans landfilling of construction materials and programs in the construction value chain and also incorporates CE principles. Circular Economy Action Plan for the Construction Sector The CEAP for the construction sector aims to sector, a detailed explanation of a number of CE increase material efficiency and competiti- actions and initiatives, and a set of technically veness, prevent waste generation, and promote and financially feasible infrastructure projects resilience. This is to be achieved through improved (building renovation and waste recycling). resource productivity, eco-design, and the The CEAP also includes suggestions for policy circular use of resources, thereby minimizing the changes and a proposal for further technical environmental impacts of Kazakhstan’s economy. assistance and investments needed to implement The CEAP structure consists of a further elabo- the necessary changes. These are summarized in ration of the challenges facing the construction Table 1. Circular Economy as an Opportunity for Central Asia | Summary Report CONTENTS 5 Table 1: CE Priority Projects in Kazakhstan’s Construction Value Chain Investment Projects/measures Key issues addressed Impacts needs (US$) Regulations and standards Introduce waste audits as a requirement to obtain a demolition or 21,768,350 Lack of waste management Reduction of waste sent renovation permit system to landfill Introduce a CE certification system Large number of illegal Monitoring and control of 19,786,000 landfills and dumps waste generated in the Introduce CDW management protocol Data gaps country as a requirement for manufacturing and 700,000 production in the construction sector Infrastructure investments Renovation projects for Soviet-era High volumes of waste Reduction and prevention 179,660,000 buildings generation of waste generation Gypsum/drywall waste recycling Waste recovery 2,636,073 Lack of infrastructure Increased volumes of Lack of waste recovery recycled material CDW recycling centers sorting facilities to recover 48,080,000 Reduced volumes of waste waste sent to landfill Information, collaboration platforms, and pilot projects Support national industrial symbiosis portal for stakeholders at all levels of Low waste recovery rate Reduced waste 2,421,418 the construction and demolition value chain High amount of waste generation streams sent to landfill Increased waste Integrate building information modeling High amount of waste recovery/recycled (BIM) into residential construction generation material 11,705,120 design, management, and CDW management Assess the use of fly ash from the Lack of infrastructure for Reduced waste sent to 1,601,794 combustion sector waste recovery landfill Replace natural aggregates with High-value waste not Increased recycled recovered material 1,330,000 furnace slag in pavement construction Source: Original to this publication based on CEAP for the Construction Value Chain in Kazakhstan (2022). In addition, the CEAP proposes the introduction followed by the construction of CDW recycling of market-based incentives. These include centers (US$48 million). The implementation of introducing incineration or landfill taxes, while the CEAP requires significant resources from at the same time encouraging practices high on public and private sources, domestically and the waste hierarchy and the mapping of current internationally. These could be in the form of illegal CDW management. subsidies, concessional loans, guarantees, and others and could be accompanies by technical The investment needs for the circular assistance. transition of the construction sector in Kazakhstan have been estimated at US$289 At the same time, the potential benefits for million, distributed over nine years as follows: Kazakhstan are significant. Costs of US$289 US$154 million (Years 1–3), US$66 million million for the implementation of all actions (Years 4–6), and US$69 million (Years 7–9). in the CEAP are met with benefits estimated at The investment needs have been calculated by US$1.3 billion over nine years. The bulk of these project and are listed in Table 1. The biggest benefits comes from value generation from the investment by far (US$179 million) is needed sale of secondary raw materials (US$909 million), for the renovation of the Soviet-era buildings followed by the increased value of renovated 6 CONTENTS Circular Economy as an Opportunity for Central Asia | Summary Report building (US$354 million) and avoided costs of substantially reduced CDW generation, natural transportation and landfilling (US$72 million). resource consumption, and GHG emissions (see In addition, Kazakhstan would benefit from Figure 2). Figure 2: Benefits of CEAP Implementation • 54% reduction in CDW generation Environmental • 8% reduction in total natural resource consumption benefits • 5% reduction in Kazakhstan's GHG emissions compared with the BAU projection Economic • Waste management cost reduction - approximately US$72 million after 9 years • Recycled material value - approximately US$909 million after 9 years benefits • Renovated infrastructure value - to generate approximately US$354 million Source: Original to this publication based on CEAP for the Construction Value Chain in Kazakhstan (2022). Kazakhstan could benefit greatly from tech- awareness raising on environmental and CE nical assistance interventions to raise and matters. Currently, company environmental support national capacities for the transition. objectives exist only to meet legal requirements. Concrete technical assistance would be needed There is a need to increase the knowledge of the with regard to each of the projects listed in Table construction value chain stakeholders about the 1. However, stakeholders in the construction CE and the potential benefits it can bring. sector also identified the need for further Relevance for Central Asia The construction value chain has a significant essential for drafting a CEAP. Concrete actions carbon footprint in all Central Asian countries need to be taken at various stages: material considering their legacy of Soviet-era buildings. extraction, building design, and material input At the same time, it offers tangible opportunities (upstream) as well as building energy renovation for improvement. Tackling circularity in the and development of the market for recycled construction sector is a precondition to reaching aggregate and CDW (downstream). This is valid climate neutrality in the future. for all countries in Central Asia. Integrating CE into the national and local The actions in the CEAP for the construction regulations related to construction is a main value chain in Kazakhstan are relevant for enabling factor for the circular transition in the other Central Asian countries, but more Central Asia. Changes could include landfill research is needed. It is recommended that limitations, requirements for waste audits, intro- the precise relevance of each technical and soft duction of a CE certification system, introduction measure should be explored additionally based of a CDW management protocol, introduction of on an analysis of needs. However, key transversal market-based incentives, and others. recommendations are also relevant for other Central Asia countries: Developing a culture of collaboration and ensuring economic interest is a precondition • Integrate a CE monitoring system and track for successful CE transition. The mapping of the progress of the transition toward the stakeholders in the four stages of the construction CE model. Monitoring of the progress is a value chain (material production, construction, precondition for staying on track during the building operation, renovation/demolition) is process of circular transition. Circular Economy as an Opportunity for Central Asia | Summary Report CONTENTS 7 • Strengthen waste management institu- • Develop the market of recycled aggregate tional capacity in general and construction to close the loop and maximize material waste management capacity in particular. efficiency in this sector. The market price for This includes mainly the capacity to design recycled aggregate stands at around US$10 quality regulatory measures. per ton, which generates a potential of around US$90 million in cost recovery, considering • Improve inadequate infrastructure through the 9 Mt of annual CDW streams. three concrete infrastructure investment projects targeting renovation of Soviet-era buildings and recycling centers for gypsum and CDW waste. 8 CONTENTS Circular Economy as an Opportunity for Central Asia | Summary Report 3. Circular Economy in the Agri-food Value Chain: The Case of Uzbekistan Background Uzbekistan’s growing economy is increasingly and measures in terms of energy efficiency, vulnerable to climate change. Both Uzbekistan’s renewable energy sources, sustainability of population and economy are growing, the industrial enterprises, water use efficiency, and latter at around 5 percent annually. Economic the average productivity of basic agricultural growth relies on several main sectors including products. The country has also adopted a second agriculture, infrastructure, and construction Nationally Determined Contribution (NDC) which are among the sectors with the highest document with a commitment to reduce specific carbon footprint. At the same time, the country is GHG emissions per unit of GDP by 35 percent by vulnerable in terms of climate change and there 2030 and the Solid Waste Management Strategy are risks of water scarcity and desertification. in the Republic of Uzbekistan 2019–2028. CE These pose a risk to agricultural production and a actions in the agricultural sector are also enabled threat to the country’s food security. by the ambitious Agriculture Development Uzbekistan is a party to the Paris Agreement Strategy of the Republic of Uzbekistan for 2020– and to put it into practice a Strategy for the 2030 targeting reduction in GHG emission of Transition of the Republic of Uzbekistan to a agricultural origin by 50 percent and increasing Green Economy for 2019–2030 was adopted. the coverage of water-saving technologies. This strategy establishes national targets Agri-Food Value Chain in Uzbekistan: Circularity and the Case for Action Overall, there is scarce data on resource Nonetheless, it is resource intensive and efficiency, the use of secondary raw materials, generates a considerable amount of waste. For and waste management. However, existing example, Uzbekistan’s 1,500 existing refrigerated data and analysis of the agricultural sector show warehouses can accommodate only 4.5 percent that the circularity interventions are more than of the harvest. This results in 45 percent of the necessary to improve the performance of the country’s most perishable products to be damaged sector in terms of resource efficiency and waste or lost to waste in the post-harvest stages, prevention and management. generating significant economic loss.3 Additional Uzbekistan’s agriculture sector is responsible problems include inefficient farming practices for 18 percent of the country’s GHG emissions and scalability issues; underdeveloped market and generates a high volume of waste. However, for agricultural inputs; restricted access to new it also contributes 30 percent of national GDP technology adoption in farming; lack of adequate and employs around 27 percent of the country’s support to research; education, extension, and economically active population. In 2018, advisory services, and many more. The value agriculture was also the leading contributor chain of Uzbekistan’s agricultural sector and its of all economic sectors to gross value added. various stakeholders are shown in Figure 3. 3 https://www.adb.org/sites/default/files/linked-documents/47305-002-sd-01.pdf. Circular Economy as an Opportunity for Central Asia | Summary Report CONTENTS 9 Figure 3: Agricultural Value Chain and its Potential Stakeholders REGULATORY GOVERNANCE VALUE CHAIN RECYCLE, HARVEST FOOD / PRODUCT COMPOSTING PRODUCT AND FARMING PRODUCERS AND AND WASTE- CONSUMPTION MANAGEMENT ACTIVITIES RETAIL ACTIVITES ACTIVITIES Farmers / Food-processing Retailers & Organic-waste STAKEHOLDERS Harvesters Plants Distributors Management • Domestic farmers • Importers • Food stores • USW management companies • Domestic harvesters • Domestic manufacturers • Animal-feed stores • Waste-collection / • Importers • Supermarkets -managementcompanies • Big-box retailers • Waste recycling • Landfills (polygons) TANGENTIAL MARKET-PLAYERS Source: Original to this publication based on CEAP for the Agri-Food Sector in Uzbekistan (2022). Circular Economy Action Plan for the Agri-Food Sector CE offers a pathway for Uzbekistan to address waste, and pollution simultaneously. Circularity development challenges and meet national and in the agri-food value chain enables minimizing sectoral strategic targets. The agricultural sector external inputs, closing nutrient loops, reducing has been selected for drafting a CEAP due to its negative discharges to the environment, and importance for both economy and environment as valorizing agri-food waste for reuse. well as its significant potential for implementing The CEAP identifies five thrust areas along the CE improvements. The circular transition of the value chain with the most potent and high-impact agri-food value chain can potentially address solutions to circularity. These thrust areas are the aforementioned challenges, while unlocking water circularity, resource and energy efficiency, incremental value and growth opportunities in bioresource utilization, plastics circularity, and the sector. It is a system solution that tackles precision farming (see Figure 4). They are also climate change challenges, biodiversity loss, relevant for other Central Asian countries. Figure 4: Five Thrust Areas of the CEAP for the Agri-Food Sector in Uzbekistan Water Circularity Resource & Energy in Farming Efficiency in agri-food Bioresource Plastics Precision Operations Infrastructure Utilization Circularity Farming Source: Original to this publication based on CEAP for the Agri-Food Sector in Uzbekistan (2022). 10 CONTENTS Circular Economy as an Opportunity for Central Asia | Summary Report Table 2: CE Priority Projects in Uzbekistan Agri-Food Sector Key issues Investment Projects/measures Impacts addressed needs (US$) Water circularity in farming operations Drip irrigation programming systems Tensiometers to check the level of humidity in the root Water scarcity GHG reduction area Water intensity of more than 2.2 Eco-friendly wastewater treatment for safe reuse in 95 percent of million tCO2 350,000,000 agriculture agricultural output Water savings of is produced on 433 million liters Use of internet of things (IoT)-based closed-circuit irrigated land systems to maximize water efficiency Bioresource utilization Substituting baby corn husk with silk and baby corn fodder as animal feed Post-harvest losses Substituting grains used for animal feed with discarded Food waste due processed potato crop to inadequate and GHG reduction of inefficient cold more than 13.3 Piloting anaerobic digestors in tomato farming clusters 40,000,000 chain million tCO2 to generate energy and heat Wasteful production Water savings Developing composting and consumption Implementing manure management practices including processes generation of electricity from cow manure Precision farming GHG reduction Efficiency of the of more than 16.7 irrigation system million tCO2 Using IoT-based and remote sensing-based services Optimization of 28,000,000 Various other fertilizers and other resource water chemicals savings Resource and energy efficiency for the agri-food value chain Energy-efficient nutrient removal of sludge from Sanitation municipal wastewater treatment plants (WWTPs) conditions of WWTPs Replacement of existing inefficient Ice Bank Tanks (IBT) Storage and GHG reduction Anaerobic treatment of organic waste to capture transportation of of more than 1.5 methane and use it to generate electricity in dairy, perishable goods million tCO2 poultry, and beef/meat industry 382,000,000 Particularly relevant Various other Installation of desuperheater in refrigeration system to as the government energy and extract waste heat intends to triple the resource savings number of 1,500 Solar water heater for dairy, poultry, and beef/meat existing refrigerated processing industries warehouses Sustainable packaging solutions GHG reduction Converting agriculture and food industry sludge potential of 32,200,000 obtained from WWTP to bioplastics 440,687 tCO2 . Requires initial investments Converting PET bottles generated from urban region but could into synthetic fibers generate revenue of up to 276 million Source: Original to this publication based on CEAP for the Agri-Food Sector in Uzbekistan (2022). Circular Economy as an Opportunity for Central Asia | Summary Report CONTENTS 11 The total costs of implementing the actions been estimated to create up to 46,000 jobs in proposed in the CEAP amount to US$860 Uzbekistan. million over nine years, but these costs are For all thrust areas and measures, the CEAP has met with significant benefits. With regard identified relevant policy support and regulatory to financing the above solutions, a number of interventions including the adoption of new models could be applied such as public-private legislation, introduction of tax incentives, partnerships (PPP), leveraging of private capital, implementation of capacity-building programs, working with international donors, creation and others. Overall, all the interventions should of investment vehicles, and others. In fact, 42 also be accompanied with capacity building and percent of the estimated costs could be financed awareness raising as well as the implementation of by the private sector, with a significantly high different activities to drive innovation, knowledge return on investment—estimated at 100 percent. exchange, and close cooperation between technical The overall benefits of the projects and measures institutions. The Ministry of Agriculture, Ministry listed above include a reduction of CO2 emissions of Finance, and Ministry of Investment and by 34 million tons, more than 0.5 billion liters Foreign Trade will be the primary institutions in of water savings, and other resource efficiency charge of circular solutions in the agri-food sector, gains. GHG emissions from the agricultural supported by a number of other institutions. sector could be reduced by 34 percent, while the share of renewable energy sources in agricultural CEAP implementation relies on the colla- energy demand could be increased to 5 percent, borative work of several institutions in with large potentials for additional scale-up. In charge of different aspects of the program. addition, CEAP implementation will enhance These include a number of ministers dealing the resilience of Uzbekistan’s agricultural sector with economic development, agriculture, water to climatic vulnerabilities and shocks. In terms resources, investments and foreign trade, of employment, CEAP implementation has energy, innovative development, and finance. Relevance for Central Asia CE in the agri-food sector offers an opportunity adoption of new legislation, introduction of tax for other Central Asian countries to meet incentives, implementation of capacity-building national and sectoral strategic targets and programs, and others. strive for a shift of the mindset toward a As in other sectors, developing a culture of systemic approach. Agriculture offers concrete collaboration and ensuring economic interest possibilities for circularity which would help is a precondition for a successful CE transition. achieve different national climate and sectoral The mapping of stakeholders in the four stages of targets across Central Asia. Circularity in the agri- the agriculture value chain (harvest and farming food value chain will also help minimize external activities, production and retail, consumption, inputs, close nutrient loops, reduce negative and recycling/composting) is essential for discharges to the environment, and valorize agri- drafting sectoral CEAPs across the region and for food waste for reuse. It will also make the sector their successful implementation. more resilient to climate change. The circular transition in the agricultural Integrating circularity in the national value chain is associated with five key areas of agricultural vision as well as into different intervention, applicable to countries in Central regulations is a precondition for making the Asia to a varying extent. These five thrust areas agriculture value chain more circular. Work for are water circularity in farming operations, the preparation of the CEAP for Uzbekistan (and resource and energy efficiency for the whole Almaty, see below) could serve as an inspiration agri-food value chain, bioresource utilization, for this integration. Regulatory barriers to plastics circularity, and precision farming. The implement the foreseen measures need to development of the agri-food sector across be removed. Foreseen measures include the countries of Central Asia is comparable and most 12 CONTENTS Circular Economy as an Opportunity for Central Asia | Summary Report of the suggested actions would be relevant for the awareness raising as well as the implementa- other Central Asian countries. Nevertheless, the tion of different activities to drive innovation. agri-food sector is dependent on climatic conditions These include research and development (R&D) and therefore the necessary policy interventions and knowledge exchange, close cooperation will vary and depend on individual analysis. between technical institutions, and others. A Overall, all the interventions should also share of these could come through technical be accompanied by capacity building and assistance. Circular Economy as an Opportunity for Central Asia | Summary Report CONTENTS 13 4. Circular Economy at the City Level: The Case of Almaty Background Cities play a central role in the transition to extreme weather and droughts. Moreover, there is the CE. They have direct agency on different significant air pollution due to the transportation, circular actions such as improving their overall industrial, and mining sectors. Water pollution is energy and resource efficiency, decreasing waste due to industrial and agricultural activities. generation, and reducing their carbon footprint. Excessive waste generation, the lack of In addition to being home to an increasing share waste processing infrastructure, and flawed of the population, cities have the technological, monitoring and evaluation procedures in human, and financial capital to implement the Almaty pose a challenge to closing loops circular transition. Cities can also be frontrunner and recovering resources. Almaty recycles 14 role models and inspire national action. While percent of MSW, industry recycles 56 percent of priority sectors can vary from city to city industrial waste while in the construction sector (depending on the city economy and baseline), the figure is close to zero. There are additional the construction, industry, and agriculture issues related to accumulated industrial waste. In sectors prioritized in Almaty are consistently general, waste management takes place through among the highest GHG emitting sectors. These 61 waste collector companies at the city level three sectors have also been identified within a (out of which one collects 70 percent of the total CE Opportunities Study conducted in 2019. 4 volume), in one official and in 25 unauthorized Almaty has 1.9 million inhabitants, and it landfills and illegal dumpsites. produces almost 20 percent of the national The different waste streams and ways of handling GDP of Kazakhstan. Climate change is becoming are illustrated in Figure 5. a serious issue and the city is frequently hit by Figure 5: Almaty Waste Streams WASTE MANAGEMENT AND WASTE DATA WASTE GENERATION WASTE GENERATION Construction - Official Landfills Municipal and Demolition Landfills - Illegal Landfills Waste Waste - Illegal Dumps Industrial Waste Waste Waste Sorting Waste Recycling Collection Centres Facilities Agriculture Waste REGULATION Source: Original to this publication based on CEAP for Almaty (2022). 4 https://shiftingparadigms.nl/wp-content/uploads/2019/02/Circular-Economy-opportunities-in-Almaty-Web-spread-20190627-1.pdf. 14 CONTENTS Circular Economy as an Opportunity for Central Asia | Summary Report Circular actions at the urban level are also by 2060,5 the 5-year ‘Zhasyl (Green) Kazakhstan’ necessary to achieve national commitments. National Project,6 the Environmental Code of The implementation of CE in Almaty will the Republic of Kazakhstan (2021),7 Concept benefit the achievement of national policies, for Transition of the Republic of Kazakhstan including under the Paris Agreement as well as to Green Economy - 2050,8 the Almaty-2050 Kazakhstan’s national strategic frameworks such Development Strategy,9 and the Almaty Green as the Strategy on Achieving Carbon Neutrality City Action Plan.10 Priority Sectors for the Circular Economy Action Plan: Circularity and the Case for Action The construction, agriculture, and industry Sectoral barriers and enablers—from legal to sectors have been selected for inclusion in economic and technological—were identified the CEAP based on their carbon intensity with local stakeholders. In the construction and potential for improvement. Fossil fuels, sector, the low cost of landfilling waste is biomass, and carbon-intensive construction reflected in the low recycling rate for CDW. materials are the main resources used in the city, Almaty lacks the quality infrastructure and rules most of which are imported. Food value chains, and standards to certify alternative construction construction, and industrial processing are the materials. Stakeholders also noted that material most material-intensive sectors. Agriculture, processing processes, construction methods, and resource extraction, the utilities industry, and recycling technologies are obsolete. Despite the construction have the greatest environmental 2021 Environmental Code, the industry sector still impact. Based on the aforementioned CE lacks a waste categorization system and a defined Opportunities Study for Almaty, construction, methodology for waste treatment processes, as industry, and agriculture were chosen as priority illustrated by the number of illegal landfills in sectors for transition to a CE: Almaty. In addition, the government framework for monitoring and evaluating industry activities • Construction: The construction sector has is outdated. In the agriculture sector, current a large carbon footprint. Most of its GHGs standards, legislation, and rules do not allow for are generated outside Almaty city in the or do not consider waste stream material recovery cement kilns and blast furnaces that produce activities. As a result of the lack of regulatory construction materials. As the city is growing, incentives to innovate and introduce new processes new construction is inevitable.  in agriculture, the sector has fallen behind and • Industry: The main drivers for the growth of agricultural workers, experts, and technologies industrial activity are machine building, food are not up to date. Stakeholders recognize the need processing, and the production of construction for innovation within the sector.   materials. New national regulations and city policies could accelerate initiatives that The methodology for defining the CE actions extract and retain value from residues.  in Almaty includes seven steps: a policy framework analysis, a description of the value • Agriculture: The national government chain, a material flow analysis, the identification supports Almaty’s goal to double its of policy gaps, the definition of projects, the agricultural production and processing prioritization of projects, and an investment capacity. The additional capacity will produce needs analysis. The steps are shown in Figure 6. new organic residues.   5 https://adilet.zan.kz/rus/docs/U2300000121. 6 https://primeminister.kz/en/news/alikhan-smailov-orders-to-develop-action-plans-to-improve-environment-in-each-region-2574922. 7 https://adilet.zan.kz/rus/docs/K2100000400. Unofficial English translation: https://wecoop.eu/wp-content/up- loads/2021/04/2021-KZ-ENV-Code_full-text_en.pdf. 8 https://w w w.oneplanetnetwork.org/knowledge-centre/resources/concept-transition-republic-kazakhstan-green-economy. Site includes download link to Concept. 9 https://almatydc.kz/en/press/news/o-strategii-razvitiya-almaty-2050. 10 https://ebrdgreencities.com/assets/Uploads/PDF/GCAP-Almaty-EN.pdf?vid=3. Circular Economy as an Opportunity for Central Asia | Summary Report CONTENTS 15 Figure 6: Methodology for Defining CE Actions Policy Material Investment Value-chain Policy Project Project framework flow need description gaps definition prioritization analysis analysis analysis Source: Original elaboration for this publication. A Multi-Criteria Matrix was used to rank the CE related to feasibility. The overall benefits of the projects, based on their potential social-economic projects include improved resource efficiency for benefits for businesses. The economic, social, and the city, extension of the life of the products, and environmental aspects of the projects were evalu- decreased air pollution. The precise GHG reduction ated, as well as the cross-cutting characteristics potential is to be explored at a later stage. The Construction Sector in Almaty: Circularity and the Case for Action Spatial development of Almaty is characterized and methodologies regarding the reduction of by insufficient effective planning solutions and waste generation along the construction and weak regulation in urban planning policy. More demolition value chain. The accreditations than 100,000 people do not have water supply and rules that authorize new alternative safe and sewer systems cover only 79 percent of the materials for construction are missing. population. The construction value chain consists of four Almaty’s built environment is highly energy stages: material generation (primary and intensive because of its aging infrastructure. secondary); construction; building operations; Moreover, as the city is growing, there is a need and renovation, demolition, and waste for new construction and renovation of existing management activities. Each stage is associated infrastructure. Hence, the sector has great with respective stakeholders from miners and potential for circularity in all life cycle phases importers through industrial manufacturers, of construction. There are no policies on CE in contractors and real estate developers, and CDW the sector yet and there are no requirements management companies (see Figure 7). Figure 7: Construction Sector Value Chain and Its Stakeholders REGULATORY GOVERNANCE STAKEHOLDERS VALUE CHAIN MATERIAL-GENERATION CONSTRUCTION AND PRODUCTION ACTIVITIES ACTIVITIES RENOVATION, BUILDING DEMOLITION, OPERATIONS AND WASTE- PRIMARY-MATERIAL SECONDARY- INTERMEDIATE MANAGEMENT EXTRACTION MATERIAL PRODUCTION CONSTRUCTION ACTIVITIES AND GENERATION PRODUCTION Mineral Industrial Contractors and C&D Waste Miners Manufacturers Real-estate Developers Management • Importers • Importers • Construction-material • Waste-collection / • Domestic producers • Domestic manufacturers suppliers and distributors management companies • Construction companies • Waste recycling • Designers • Landfills (polygons) • Real-estate or property • developers TANGENTIAL MARKET-PLAYERS Source: Original to this publication based on CEAP for the City of Almaty (2022). 16 CONTENTS Circular Economy as an Opportunity for Central Asia | Summary Report The concrete actions proposed for the construction sector in Almaty are presented in Table 3. The Industry Sector in Almaty: Circularity and the Case for Action Industry generated more than 5 percent of The industry value chain consists of five stages: the national GDP in 2019. Almaty is a major design; sourcing of raw materials; production; industrial center with the food and beverage use; and repair, recycling, and waste manage- industry accounting for about one-third of its ment activities. Each stage is associated with industrial activities. There are no policies on CE respective stakeholders—designers, raw material in the sector yet and there are a number of illegal extractors, industrial manufacturers, retailers, waste streams detected around Almaty. Almaty’s and operators of MSW and industrial waste (see industry boasts a large number of small and Figure 8). medium enterprises (SMEs). Figure 8: Industry Sector Value Chain and its Potential Stakeholders REGULATORY GOVERNANCE STAKEHOLDERS VALUE CHAIN RAW / RECYCLED REPAIR, RECYCLE MATERIALS, PRODUCT AND WASTE- DESIGN PRODUCTION USE MANAGEMENT ACTIVITIES ACTIVITIES MSW / Raw-material Industrial Retailers / Designers Industrial-waste Extractors Manufacturers Stores Management • Industrial • Importers • Importers • Suppliers and • Waste-collection / designers • Domestic extractors • Domestic distributors - management manufacturers • Goods exchangers companies • Stores • Waste recycling • Logistic companies • Landfills (polygons) TANGENTIAL MARKET-PLAYERS Source: Original to this publication based on CEAP for the City of Almaty (2022). Considering the situation and the stakeholder needs in the industrial value chain, a number of CE projects have been identified, as shown in Table 3. The Agri-Food Sector in Almaty: Circularity and the Case for Action Agriculture is an important sector for separated on-site, which lowers its quality. Kazakhstan and Almaty and has been a key Moreover, the law does not allow the use of sector in national and local development organic waste as fertilizer. plans. The ambition is to increase agriculture’s The agriculture sector value chain consists of contribution to the GDP by five times and also four stages (harvest and farming activities, enhance food sovereignty for Almaty. production and retail, consumption, and The Almaty 2050 Development Strategy does recycling/composting) with respective not mention CE explicitly, but its goals are stakeholders associated with these stages— aligned with it. Additionally, norms on organic farmers, food processing plants, retailers, and agriculture are already in place. However, waste organic waste management operators. The streams are not controlled and waste quality analysis in the CEAP focuses on the first and cannot be guaranteed. Organic waste is not fourth stage (see Figure 9). Circular Economy as an Opportunity for Central Asia | Summary Report CONTENTS 17 Figure 9: Agriculture Sector Value Chain and its Potential Stakeholders REGULATORY GOVERNANCE STAKEHOLDERS VALUE CHAIN RECYCLE, FOOD / PRODUCT COMPOSTING HARVEST AND PRODUCERS AND PRODUCT AND WASTE- FARMING ACTIVITIES RETAIL ACTIVITES CONSUMPTION MANAGEMENT ACTIVITIES Farmers / Food-processing Retailers & Organic-waste Harvesters Plants Distributors Management • Domestic farmers • Importers • Food stores • USW management companies • Domestic harvesters • Domestic extractors • Animal-feed stores • Waste-collection / • Importers • Supermarkets -management companies • Big-box retailers • Waste recycling • Landfills (polygons) TANGENTIAL MARKET-PLAYERS Source: Original to this publication based on CEAP for the City of Almaty (2022). Specific CE actions proposed for the agriculture sector are presented in Table 3. Circular Economy Action Plan for Almaty Considering the situation and the city needs in have been identified for each of the three sectors. the three value chains, a number of CE projects These are presented in Table 3. Table 3: Projects/Measures Identified in the CEAP for the City of Almaty Key issues Investment needs Projects/measures Impacts addressed (US$) Construction sector Will improve Infrastructure gap the resource Lack of recycling The Almaty CDW - Recycling Center (CON 1) efficiency of the 5,000,000 centers city Scalable solution Job creation Waste generation Extend the life of Modular building production - Design for Disassembly Short product life the products 48,700,000 (CON 2) Scalable solution Waste prevention Adaptable solution Resources Plastic waste is Establishment of a plant for production of recovery abundant 2,600,000 construction material from plastic waste (CON 3) Pollution Plastic pollution reduction Industry Upcycling solution Construction of a plant for 100 percent processing Decreasing of air of ash storage facilities at co-generator of heat and Resource pollution power (Almaty-2 thermal power plant) of Almaty 278,600,000 utilization Revenue Electric Stations Joint Stock Company (AIES JSC) and generation production of marketable products (IND 1) Job creation Statistical data at Better data Integrated digital system of municipal waste city-level waste availability 22,600,000 management for Almaty agglomeration (IND 2) streams are poor Scalable solution 18 CONTENTS Circular Economy as an Opportunity for Central Asia | Summary Report Key issues Investment needs Projects/measures Impacts addressed (US$) GHG emission reduction High volumes of A complex for the industrial production of compost Job opportunities biodegradable 7,900,000 and artificial soils from biodegradable waste (IND 3) Synergy with other waste sectors and the agriculture sector Agriculture and food processing Food waste Bioconversion of food waste into animal feed and utilization fertilizers with the help of black soldier fly larvae 1,200,000 Applicable to (Hermetia illucens) (AGR 1) other regions Adaptable to Increased Organic rural bio-factories (AGR 2) different type of resilience of local 257,000 farms and crops. farmers Low levels of Technopark of green innovations: Bioconversion of innovation fallen leaves and plant residues of Almaty city into 647,000 Applicable to organic fertilizers (AGR 3) other regions Source: Original to this publication based on CEAP for the City of Almaty (2022). The estimated discounted net investment the creation of 375 new jobs. is US$368 million until 2030, which equals One of the actions proposed in the CEAP for to 1.1   percent of Almaty’s GDP. Projects in Almaty is currently under development. It is the industrial sector account for most of the the construction of a bottom ash processing investment (84 percent), followed by those plant near the city’s Almaty-2 thermal power in the construction sector (15 percent) and plant. As announced in June 2023, with private in the agricultural sector (1 percent). Private investments of about US$21 million, a bottom ash investment represents the major share of the investments that corresponds to almost 90 processing plant will be built with a capacity of percent of their total value. It is followed by 300,000 tons per year, which may gradually be public funds that cover an estimated 6.2 percent. increased to a capacity of 1 million tons per year The actions proposed under the CEAP would (equivalent to 100 percent of ash produced by the help reduce demand for primary materials by Almaty-2 thermal power plant and dumped into 21 million tons by 2031, while reducing CDW storage facilities annually). Processing of the generation by 871 tons annually. In addition, bottom ash will result in various products, which Almaty would benefit from increased local can be used in metallurgical and construction production and use of resources as well as from industries, as well as for heating. Relevance for other Central Asian cities Cities in Central Asia should make use of the The CE transition at the urban level represents a territorial capital. It holds significant assets significant opportunity for Central Asian cities that are key building blocks on the road to a CE. in terms of improving their overall energy This capital varies across territories (for example, and resource efficiency, decreasing waste geographical location, natural resources, social generation and land take and biodiversity loss, capital, and institutions), its economic role in and ultimately reducing their carbon footprint the cities and regions, and how much it can be from multiple activities. Cities represent the levera-ged to foster transition to the CE. Being right scale and possess the necessary ecosystem to able to realize the potential of the territorial capital implement the transition. Approaching CE through depends on a number of factors including policy, the city prism is complementary to addressing it institutions, political will, and the financial context. through a sectoral / value chain viewpoint. Circular Economy as an Opportunity for Central Asia | Summary Report CONTENTS 19 Each city needs to prioritize intervention example, with the goal of allowing the use of waste sectors in line with the weight of individual as secondary raw materials) to unblock changes sectors and their carbon footprint, the city and to create the necessary incentive framework. strategic documents and climate plans, the Almaty could serve as a potentially good and city capabilities, and so on. Waste management remains a central horizontal area for improve- inspirational example of circular transition ment in the process of circular transition. for other municipalities in Central Asia. The Construction and industry are also sectors with three sectors covered in the CEAP—construction, significant leverage, as demonstrated by Almaty. industry, and agriculture—share similar These two sectors also lend themselves to CE problems and challenges in all Central Asia interventions and business models. countries without exception. Nevertheless, the Cities need to integrate CE consistently and replicability of individual measures should be systematically into local strategic documents. investigated, and they should be adapted to the Sectoral regulations need to be amended (for local circumstances. 20 CONTENTS Circular Economy as an Opportunity for Central Asia | Summary Report 5. Conclusions and the Way Forward The Importance of Circular Economy Action Plans CE offers an impactful pathway for Central Asia There are different ways to identify the focus of countries to address development challenges CEAPs; in the case of the three CEAPs presented and meet international obligations as well as in this report, focus sectors were selected based national and sectoral strategic targets. CE is a on economic importance, employment, material system solution framework that tackles global use, carbon footprint, potential for circular challenges such as climate change, biodiversity improvement (including policy), and stakeholder loss, waste, and pollution. It leads to decoupling engagement and buy-in. of economic activity from the consumption of CEAPs have become possible due to significant finite resources and is a resilient system that is stakeholder engagement and bottom-up buy- good for business, people, and the environment. in. In general, this is a precondition for circular At the same time, CE is an opportunity for job transition in Central Asian countries, cities, creation for Central Asia. sectors, and value chains. The participation of CEAPs, such as the ones presented in this report, business intermediaries at the local level is of are essential for charting the way forward in utmost importance as they are close to the local the circular transition. CEAPs help provide the stakeholders. At the same time, the CE planning overarching direction for the circular transition process has been instrumental in raising awareness in Kazakhstan, Uzbekistan, and Almaty as well of the stakeholders about the existing opportunities as investment security for the private sector. and aligning them behind priority actions. Drivers of the Circular Transition The circular transition in the construction, players is of significant importance. Hence, there industry, and agriculture sectors is hampered by is a need for policy makers to introduce market economic, market failure, and regulatory failure and fiscal incentives that can strengthen the barriers. There is a need to adopt a program for company motivation and reward front-runners. overcoming these, starting with the key market The economic gains of companies and the positive and regulatory failures. It is also necessary to adopt social impact on society due to CE measures should a life cycle approach to accelerate the CE transition be constantly highlighted and communicated to and use mandatory and voluntary mechanisms create an additional momentum for change. such as green public procurement (GPP), The circular transition in all sectors covered by environmental labeling or standards, extended producer responsibility (EPR) schemes, and others. the three CEAPs and governance levels requires As waste prevention and management is central to significant financing from public and private circular transition in all sectors and governance sources accompanied by guidance and technical levels, it would be advisable to consider additional assistance. Often the business case for circular bans on landfilling and mandatory requirements business models is still not clear which sometimes for segregation of waste. In addition, taxation of prevents the active participation of private capital. primary raw materials should be considered. Therefore, the role of public funding is highly important. Demonstrating the economic benefit of In addition to regulatory pressure as a factor for CE will eventually increase the funding flows. unlocking the circular transition, the economic motivation of companies and other market For export-oriented or foreign-owned opera- Circular Economy as an Opportunity for Central Asia | Summary Report CONTENTS 21 tors in the construction and agri-food sectors, of waste generation and treatment, supported pressure from the value chain or the mother by appropriate methodologies and responsible companies is crucial. Programs that bring institutions. together local suppliers with international The circular transition requires targeted companies could be introduced so that Central activities to build the necessary skills for Asia can benefit from good international practices. introducing resource efficiency measures Availability of data on waste generation and and new circular business models. It is also management, resource efficiency, and secondary a question of mindset shift to prioritize and materials is key to understanding material emphasize the transition to circularity. Upskilling flows. Hence, there is a need to implement a should happen at all governance levels as well as comprehensive monitoring and reporting system at sectoral/value chain level. Way Forward The success of the CEAPs presented in this report together with concrete actions to support depends on their level of implementation. All circularity in these sectors will provide the basis three CEAPs present numerous actions discussed for the transformation of the entire region to a and confirmed with relevant stakeholders. more CE. These can be implemented individually or in Based on additional analysis, measures can be their entirety. While each action will bring identified which could be implemented at the respective sectors closer to circularity, only the regional level. Where challenges affect multiple implementation of all actions will allow the countries (for example, in waste management), achievement of the full benefits described in each regional approaches could be identified which CEAP. Since the economic benefits are estimated could reduce the costs of individual countries for to surmount economic costs considerably, there advancing circularity. For example, awareness- is a clear case for implementing as many actions raising campaigns for consumers could be as possible. However, even where actions should coordinated and common programs for capacity not be implemented in the short to medium term, building could be designed—regional in nature but the CEAPs contribute to the analysis of CE in tailored to specific country contexts. In terms of the respective sectors as well as to the ongoing investment, regional recycling centers could be debate about sustainable development and an option to reduce costs in waste management. decoupling economic growth from environmental Depending on the concrete actions or measures, degradation. two or more countries could coordinate efforts The analysis undertaken for the three CEAPs toward their implementation. In other cases, a needs to be expanded to cover more sectors and national approach may be more effective and more countries of Central Asia to facilitate the would need to be identified on a country-by- CE transition across the region. The countries of country basis. Central Asia have many commonalities as well as Addressing data gaps is an essential prere- differences. While it is possible to draw conclusions quisite for any future work on the CE in Central from the sector- and country-specific CEAPs Asia. Given that CE-related data are scarce, presented in this report for other countries in incomplete, and unreliable in all countries across Central Asia, further analysis is required covering Central Asia, any future work in support of the the key sectors in all five countries of Central Asia. CE transition will need to address data gaps to Sectors could be selected based on similar criteria reach sound and evidence-based conclusions. used in the CEAPs presented above, including There are numerous methodologies available economic importance, employment, material internationally which can be applied to produce use, carbon footprint, potential for circular relevant data (for example, as developed by improvement (including policy), and stakeholder Eurostat), but it is important that data are engagement and buy-in. Identifying the key comparable across the region and internationally sectors in each of the five Central Asian countries to identify challenges and measure progress. 22 CONTENTS Circular Economy as an Opportunity for Central Asia | Summary Report Circular Economy as an Opportunity for Central Asia Summary Report May 2024 CONTENTS