Sustainable infrastructure for low-carbon development in the EU Eastern partnership : hotspot analysis and needs assessment.

194 Pages·2021·4.443 MB·English

by  Organisation for Economic Co-operation and Development,

Green Finance and Investment
Sustainable Infrastructure
for Low-carbon Development
in the EU Eastern Partnership
HOTSPOT ANALYSIS AND NEEDS ASSESSMENT

Green Finance and Investment
Sustainable Infrastructure
for Low‑carbon Development
in the EU Eastern Partnership
HOTSPOT ANALYSIS AND NEEDS ASSESSMENT
This work is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and
arguments employed herein do not necessarily reflect the official views of OECD member countries.
This document, as well as any data and map included herein, are without prejudice to the status of or sovereignty over
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The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of
such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in
the West Bank under the terms of international law.
Note by Turkey
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shall preserve its position concerning the “Cyprus issue”.
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Please cite this publication as:
OECD (2021), Sustainable Infrastructure for Low-carbon Development in the EU Eastern Partnership: Hotspot Analysis and
Needs Assessment, Green Finance and Investment, OECD Publishing, Paris, https://doi.org/10.1787/c1b2b68d-en.
ISBN 978-92-64-53204-5 (print)
ISBN 978-92-64-66738-9 (pdf)
Green Finance and Investment
ISSN 2409-0336 (print)
ISSN 2409-0344 (online)
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© OECD 2021
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Foreword
This project is part of the International Climate Initiative (IKI). The Federal Ministry for the Environment,
Nature Conservation and Nuclear Safety (BMU) supports this initiative on the basis of a decision adopted
by the German Bundestag.
This report has been compiled within the GIZ program “Capacity Development for climate policy in the
countries of South East, Eastern Europe, the South Caucasus and Central Asia, Phase III”.
As a service provider with worldwide operations in the fields of international cooperation for sustainable
development and international education work, GIZ works together with its partners to develop effective
solutions that offer people better prospects and sustainably improve their living conditions. GIZ is a public-
benefit federal enterprise and supports the German Government and a host of public and private sector
clients in a wide variety of areas, including economic development and employment promotion, energy
and the environment, and peace and security.
This report was prepared by Douglas Herrick under the supervision of Kumi Kitamori, Jean-François
Lengellé and Virginie Marchal as part of the work of the GREEN Action Task Force hosted at the OECD.
Aday Nygmanov compiled the database following methodology developed by Alin Horj.
The authors gratefully acknowledge the comments and contributions from colleagues across the OECD,
partner organisations and government agencies. This report benefited from comments from the following
OECD experts: Francesco Alonso, Ksenia Lytvynenko, Alexandre Martoussevich, Gabriela Miranda,
Daniel Quadbeck, Antti Rauhala and Geoff Upton. The authors are indebted to the following external
experts, whose comments greatly improved the draft report: Michael Begak (GIZ external consultant),
Sarah Duhr (GIZ), Julia Gerlach (GIZ), Sergiu Gradinaru (GIZ), Julia Grishchenkova (GIZ), Andrei Isac
(Regional Environmental Centre Moldova), Tatsiana Kananchuk (Ministry of Natural Resources and
Environmental Protection, Republic of Belarus), Jari Kauppila (ITF), Mikheil Khuchua (GIZ), Irina Korolenko
(GIZ), Stephan Kroel (GIZ), Lara Lukina (Ministry of Natural Resources and Environmental Protection,
Republic of Belarus), Dejan Makovsek (ITF), Steffi Mallinger (GIZ), Pavlo Masiukov (GIZ), Anna Petrus
(IEA), Darya Sotnikova (Ministry of Economy, Republic of Belarus), Ilka Starrost (GIZ), Olena Symonenko
(GIZ), Ketevan Vardosanidze (GIZ), Talya Vatman (IEA), Aya Wietzorrek (GIZ) and Oscar Zarzo Fuertes
(GIZ) as well as the Energy Community Secretariat.
The report was prepared for publication by Lupita Johanson.
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Table of contents
Foreword 3
Reader’s guide 8
Executive Summary 11
Overview 13
The infrastructure gap 13
The investment environment 20
Overview of current infrastructure projects, planned and under construction 21
References 22
Notes 23
1. Investment in sustainable infrastructure in Armenia 24
State of play: economy, investment and climate change in Armenia 25
Armenia’s infrastructure needs and current plans 33
Strengths and weaknesses of existing institutional set-up for sustainable infrastructure planning 45
References 49
Notes 53
2. Azerbaijan’s sustainable infrastructure investments 54
State of play: economy, investment and climate change in Azerbaijan 55
Azerbaijan’s infrastructure needs and current plans 61
References 74
Notes 77
3. Trends in sustianable infrastructure investment in Belarus 78
State of play: economy, investment and climate change in Belarus 79
Belarus’s infrastructure needs and current plans 87
Strengths and weaknesses of existing institutional set-up for sustainable infrastructure planning 98
References 101
Notes 105
4. Sustainable infrastructure investment in Georgia 106
State of play: economy, investment and climate change in Georgia 107
Georgia’s infrastructure needs and current plans 113
Strengths and weaknesses of existing institutional set-up for sustainable infrastructure planning 125
References 130
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Notes 135
5. Moldova’s sustainable infrastructure investments 136
State of play: economy, investment and climate change in Moldova 137
Moldova’s infrastructure needs and current plans 144
Strengths and weaknesses of existing institutional set-up for sustainable infrastructure planning 155
References 159
Notes 161
6. Trends in Ukraine’s sustainable infrastructure investments 163
State of play: economy, investment and climate change in Ukraine 164
Ukraine’s infrastructure needs and current plans 172
Strengths and weaknesses of existing institutional set-up for sustainable infrastructure planning 182
References 186
Notes 190

Tables
Table 0.1. Selected infrastructure indicators in the EU Eastern Partnership 17
Table 0.2. Regional transport corridor initiatives in Eastern Europe, the Caucasus and Central Asia, including
the EaP countries 19
Table 0.3. Selected investment climate indicators in EaP countries 21
Table 1.1. Key indicators on Armenia’s economy 25
Table 1.2. Hotspot projects in the transport sector in Armenia 38
Table 1.3. Hotspot projects in the energy sector in Armenia 42
Table 1.4. Main strategic documents in force 48
Table 1.5. Other relevant documents 48
Table 2.1. Key indicators on Azerbaijan’s economy 55
Table 2.2. Hotspot projects in the transport sector in Azerbaijan 66
Table 2.3. Hotspot projects in the energy sector in Azerbaijan 69
Table 2.4. Main strategic documents in force 72
Table 2.5. Other relevant documents 73
Table 3.1. Key indicators on Belarus’s economy 79
Table 3.2. Hotspot projects in the transport sector in Belarus 91
Table 3.3. Hotspot projects in the energy sector in Belarus 95
Table 3.4. Main strategic documents in force 100
Table 3.5. Other relevant documents 101
Table 4.1. Key indicators on Georgia’s economy 107
Table 4.2. Hotspot projects in the transport sector in Georgia 119
Table 4.3. Hotspot projects in the energy sector in Georgia 123
Table 4.4. Main strategic documents in force 128
Table 4.5. Other relevant documents 130
Table 5.1. Key indicators on Moldova’s economy 137
Table 5.2. Hotspot projects in the transport sector in Moldova 150
Table 5.3. Hotspot projects in the energy sector in Moldova 153
Table 5.4. Main strategic documents in force 157
Table 5.5. Other relevant documents 158
Table 6.1. Key indicators on Ukraine’s economy 164
Table 6.2. Hotspot projects in the transport sector in Ukraine 176
Table 6.3. Hotspot projects in the energy sector in Ukraine 180
Table 6.4. Main strategic documents in force 185
Table 6.5. Other relevant documents 186

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Figures
Figure 0.1. Global connectivity 14
Figure 0.2. Logistics costs and trade openness 15
Figure 0.3. The World Bank's Logistic Performance Index, Infrastructure Indicator 16
Figure 0.4. GHG emmissions by country, 1990-2015 18
Figure 0.5. Chinese investment across EaP countries, by sector 20
Figure 0.6. Investment projects in the Eastern Partnership, by country and sector 22
Figure 1.1. Trade of Armenia 28
Figure 1.2. Greenfield FDI in Armenia by economic activity, 2003-2017 30
Figure 1.3. Armenia's FDI stock by country of origin, 2017 31
Figure 1.4. GHG emissions and GDP of Armenia, 1990-2019 32
Figure 1.5. Quality of infrastructure in Armenia 33
Figure 1.6. Investment projects in Armenia, by sector 34
Figure 1.7. Inland transport infrastructure investment in Armenia (2008-2016) 35
Figure 1.8. Transport projects in Armenia, by sub-sector 37
Figure 1.9. Electricity generation by source 40
Figure 1.10. New electricity generation capacity in Armenia, by energy source 41
Figure 1.11. Industrial output by NACE subsection 43
Figure 1.12. Industry, mining and water infrastructure projects in Armenia, by sub-sector 44
Figure 1.13. Policy development and co-ordination indicators 47
Figure 2.1. Trade of Azerbaijan 57
Figure 2.2. Greenfield FDI in Azerbaijan by economic activity, 2003-2017 59
Figure 2.3. Type title hereForeign capital directed to fixed capital in Azerbaijan by foreign countries, 2016-
2019 60
Figure 2.4. GHG emissions and GDP of Azerbaijan, 1990-2019 61
Figure 2.5. Quality of infrastructure in Azerbaijan 62
Figure 2.6. Investment projects in Azerbaijan, by sector 63
Figure 2.7. Inland transport infrastructure investment in Azerbaijan (2012-2018) 64
Figure 2.8. Transport projects in Azerbaijan, by sub-sector 65
Figure 2.9. Electricity generation by fuel (GWh, 2019) 67
Figure 2.10. Energy projects in Azerbaijan, by sub-sector 68
Figure 2.11. Industrial output by NACE* subsector 70
Figure 3.1. Trade of Belarus 82
Figure 3.2. Greenfield FDI in Belarus by economic activity, 2003-2017 84
Figure 3.3. Belarus's FDI inflows by country of origin, 2019 85
Figure 3.4. GHG emissions and GDP of Belarus, 1990-2019 86
Figure 3.5. Belarus in the Logistics Performance Index, 2012 and 2018 87
Figure 3.6. Investment projects in Belarus, by sector 88
Figure 3.7. Inland transport infrastructure investment in Belarus (2005-2018) 89
Figure 3.8. Transport projects in Belarus, by sub-sector 90
Figure 3.9. Electricity generation by source 93
Figure 3.10. New electricity capacity in Belarus, by energy source 94
Figure 3.11. Industrial output by NACE* subsector 96
Figure 3.12. Industry, mining and water infrastructure projects in Belarus, by sub-sector 97
Figure 4.1. Trade of Georgia 109
Figure 4.2. Greenfield FDI in Georgia by economic activity, 2003-2017 111
Figure 4.3. FDI in Georgia by source country, 2006-2019 112
Figure 4.4. GHG emissions and GDP of Georgia, 1990-2019 113
Figure 4.5. Quality of infrastructure in Georgia 114
Figure 4.6. Investment projects in Georgia, by sector 115
Figure 4.7. Inland transport infrastructure investment in Georgia (2006-2018) 116
Figure 4.8. Transport projects in Georgia, by sub-sector 118
Figure 4.9. Electricity generation by source 120
Figure 4.10. Electricity generation projects in Georgia, by source 122
Figure 4.11. Industrial output by NACE* subsector 124
Figure 4.12. Policy development and co-ordination indicators 127
Figure 5.1. Trade of Moldova 140
Figure 5.2. Greenfield FDI in Moldova by economic activity, 2003-2017 141
Figure 5.3. FDI in Moldova by country of origin, 2015 142
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Figure 5.4. GHG emissions and GDP of Moldova, 1990-2019 143
Figure 5.5. Quality of infrastructure in Moldova 145
Figure 5.6. Investment projects in Moldova, by sector 146
Figure 5.7. Inland transport infrastructure investment in Moldova (2000-2017) 148
Figure 5.8. Transport projects in Moldova, by sub-sector 149
Figure 5.9. Electricity generation by source 151
Figure 5.10. Energy projects in Moldova, by sub-sector 152
Figure 5.11. Industrial output by NACE* subsector 154
Figure 5.12. Industry, mining and water infrastructure projects in Moldova, by sub-sector 155
Figure 6.1. Trade of Ukraine 167
Figure 6.2. Greenfield FDI in Ukraine by economic activity, 2003-2017 169
Figure 6.3. Ukraine's inward FDI stock by country of origin, 2018 170
Figure 6.4. GHG emissions and GDP of Ukraine, 1990-2019 171
Figure 6.5. Quality of infrastructure in Ukraine 173
Figure 6.6. Investment projects in Ukraine, by sector 174
Figure 6.7. Transport projects in Ukraine, by sub-sector 176
Figure 6.8. Electricity generation by source 178
Figure 6.9. Energy projects in Ukraine, by sub-sector (in USD million) and electricity generation projects by
source (in MW) 179
Figure 6.10. Industrial output by NACE* subsector 181
Figure 6.11. Industry, mining and water infrastructure projects in Ukraine, by sub-sector 182
Figure 6.12. Policy development and co-ordination indicators 184

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Reader’s guide
This report presents key findings from an analysis of the strengths and weaknesses of existing institutional
frameworks for strategic planning of sustainable infrastructure in the six countries of the European Union’s
Eastern Partnership in Eastern Europe and the Caucasus: Armenia, Azerbaijan, Belarus, Georgia,
Moldova and Ukraine. It follows the methodology and format developed for a similar study published in
2019, Sustainable Infrastructure for Low-carbon Development in Central Asia and the Caucasus, which
covered eight countries: Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Mongolia, Tajikistan, Turkmenistan
and Uzbekistan. Two chapters from the present report – Azerbaijan and Georgia – are updated versions
of the chapters published in the aforementioned 2019 study.
It also provides an inventory of infrastructure projects, both planned and under construction, in the region,
with the objective of assessing the extent to which infrastructure plans are consistent with long-term
development, climate and environmental objectives.
The Overview provides a brief outline of the trends observed in the regions.
Chapters 1 to 6 present country profiles that consist of three components:
1. a rapid assessment of the challenges and opportunities related to investment, climate
and infrastructure;
2. an analysis of hotspot infrastructure projects, which are defined as infrastructure
projects (planned and under construction) with potentially high environmental, social
and economic impacts;
3. an overview of strengths and shortcomings in the existing framework for strategic
infrastructure planning.
Due to limited data availability, the data points for the six countries included in the present study are not
always comparable. The authors have included the most recent data points available and, as much as
possible, have used the same sources for each sector. When possible, other data points were included
from national statistics offices from the most recent year available.
Methodology: building the database of infrastructure projects
The analysis draws on a database of infrastructure projects compiled by the OECD. The database covers
six countries (Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine) and five sectors:
 Transport (including airports, roads, railways, multimodal transportation hubs, transportation and
logistics centres).
 Energy (including projects related to electricity generation, electric power transmission and
distribution, upstream oil and gas, oil and gas pipelines).
 Industry (including manufacturing projects related to iron and steel production, cement plants,
petrochemical plants, fabricated metal products, coke and refined petroleum).
 Mining and quarrying (including of metal ores such as gold, chrome, copper, zinc, iron, tin,
uranium).
SUSTAINABLE INFRASTRUCTURE FOR LOW-CARBON DEVELOPMENT IN THE EU EASTERN PARTNERSHIP © OECD 2021