Item 3, presentation by Peline Atamer (OECD) on OECD work on industry decarbonisation and planned activities in the frame of Sustainable Infrastructure Programme in Asia (SIPA) during the GREEN Action Task Force Annual Meeting 2023.

1. OECD WORK ON INDUSTRY
DECARBONISATION AND PLANNED ACTIVITIES
UNDER SIPA
Green Action Task Force annual meeting
11 May 2023
Peline Atamer
SIPA co-lead - Central Asia
Peline.Atamer@OECD.org
Deger Saygin
Industry Lead
Deger.Saygin@OECD.org

2. The importance of industry and industrial decarbonisation in
Kazakhstan, Mongolia and Uzbekistan
- Industrial value-added represents over 30% GDP in
Kazakhstan, Mongolia and Uzbekistan, vs. an OECD
average of 22.4%
- In 2020, industry accounted for 31.1% TFC in
Kazakhstan, 32.2% in Mongolia, and 20.5% in
Uzbekistan
- The increase of RE in total energy mixes and
electrification efforts will contribute to the broader
industrial sustainability
- However, the economic importance of hard-to-
abate industrial sub-sectors such as mining and
cement mean that industry is an important source of
GHG and particulate emissions, and that specific
solutions need to be found for decarbonising the
industry
Source: IEA (2023)
33%
38%
33%
31%
32%
21%
1.4%
3.9%
1.0%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
Kazakhstan
Mongolia
Uzbekistan
Industry VA % GDP (2019 data) Industry in TFC (2020)
Share of renewables in TES (2020)
(2018)

3. SIPA supports governments with policies for the decarbonisation
of industries in Central Asia
Supports public-
private dialogue
Helps the government
develop and enforce clear
frameworks, guidelines and
tools
Supports initiatives at
sectoral and micro-
level
Industry
decarbonisation
• LEDS
• Strategic Environment Assessments / Environment
Impact Assessment
• Best Available Techniques
• National MRV systems, reporting requirements and
methodologies (e.g. ISO standards)
• Carbon pricing-related measures (FFS, ETS)
• Organisation of consultations, public-private
roundtables and meetings
• Trainings involving private sector representatives
• Mobilisation of private-sector organisations such
as Investors’ Council, Chambers of Commerce
• Development of Decarbonisation targets and
pathways at sectoral / firm level
• Identification and development of case studies
• Support to pilot projects
• Finance and investment measures

4. Development of a vision for green hydrogen use in Mongolia:
context
-10
40
90
140
2015 2016 2017 2018 2019 2020
GDP Agriculture, forestry
Mining and quarrying Manufacturing
Water supply; sewerage, waste Construction
Wholesale and retail trade; repair of motor vehicles Transportation and storage
Other Energy intensity of total GDP
Source: Mongolia’s national statistics
• Mongolia ranks as 32nd most energy-
intensive economy out of a total of 196
• The mining and quarrying sectors and
water supply, sewerage and waste
sectors have become more energy-
intensive than the total economy since
2018-2019
• Mongolia has a number of measures in
place for clean energy development
and industry decarbonisation,
including measures to reduce
emissions in the cement industry
• The country wants to develop green
hydrogen as part of its New Recovery
Policy
• Three green hydrogen projects have
been identified in the country

5. Development of a vision for green hydrogen use in Mongolia:
conclusions of the Roundtable held in March and follow-up
• There are a number of opportunities for the development of green hydrogen in Mongolia, including the
huge potential for the development of renewables and access to markets (inner Mongolia)
• Depending on the time horizon, domestic applications of green hydrogen could include the transport
sector and the heating of households
• Cost competitiveness will matter: according to the Mongolian Hydrogen Council, current domestic
production costs of green hydrogen stand at $9/kg. To become competitive, these costs need to be
brought down to $3/kg
• One of the main challenges facing the development of green hydrogen in Mongolia is access to clean
water, which is critical to the production of green hydrogen
• The development of infrastructure for both export and domestic applications will also be key
• The government wants to support the development of the low-carbon hydrogen industry in Mongolia,
acknowledging that the development of a clean energy has a key role to play in the reduction of GHG
emissions and for achieving the NDC targets
• Building on the public-private platform established during the Roundtable, SIPA will support the
development of a vision for the development of green hydrogen in the country as part of its
decarbonisation strategy
Opportunities
and
challenges
Next steps

6. Decarbonising the industry in Kazakhstan:
overview and SIPA support
• November 2022: training on ISO standards for carbon management
• Q2 2023: Kazakhstan established its Conformity Assessment Body (first in Central Asia)
• July 2023: Regional SIPA workshop on industry decarbonisation in Astana
Key events
under SIPA
• July 2021: the new environmental code came into force, with a number of new provisions regulating environmental
consequences of industrial activities. The Code notably sets an expectation that the 50 largest companies, which account for
80% of emissions in Kazakhstan, to adopt the best available techniques (BAT) by 2025
• February 2023: Kazakhstan released its Low Carbon Development Strategy until 2060
• The Ministry of Industry and Infrastructural Development is working on measures to help domestic companies adapt to the
implementation of CBAM, including tools and methods to measure CO2 emissions from industrial activities
Selected
measures
adopted in
Kazakhstan for
mobilising the
private sector
• In Ust-Kamenogorsk, Kazzinc, the largest mining company in the region, says it has been implementing 35 different
environmental initiatives in the past 12 months
• Some initiatives implied preventive maintenance of equipment, optimization of production processes, filtration systems
upgrade, and tree planting
• The company says it reduced CO2 emissions from 69k tpy in 2021 to 16k tpy in 2022
• Kazzinc also reports significant reduction of sulfur dioxide emissions - from 69 KT in 2001 to 16 KT in 2022. Acid plants will be
equipped with offgas after-treatment lines by the end of 2025 which will help to reduce SO2 emissions by another thousand
tonnes as per the company’s estimates
Case study:
KAZZINC

7. Solutions for a net-zero transition requires
understanding of industry / country considerations
Technology
transfer & R&D
Carbon
Markets
Asset
stranding
High costs of
transition &
competitiveness
A flexible approach is
needed to develop
tailored solutions that
encompass many
considerations for
emerging and developing
economies
• Improving enabling conditions
• Financing
Strategic alignment with:
• Nationally Determined
Contributions
• Net-zero emission targets
• Just transition plans
• Other energy, climate and industry
strategies

8. The Framework is a step-by-step guide
on how to approach industry transition
3. Framework
benefits
Framework
for
Industry’s
net-zero
Transition
Country
priorities
Market &
Financing
solutions
Trade
Industry
Value
Chain
Net-Zero
Pathway
Just
Transition
Carbon
markets
Technology &
Digitalisation
Transition
finance
Blended
finance
Emissions
tracking &
ESG
Projects
develop
ment
Standards &
certification
Finance institutions
Industry
Policy makers
OECD
coordination
of the
Framework
Stakeholder groups
September 2022:
Framework
launch
Timeline
2022-2024
Country
implementation:
Egypt, India,
Indonesia,
South Africa, Thailand
and others

9. Framework implementation outcomes
(example of steel industry decarbonisation)
9
Technologies:
• Energy efficiency, WHR
• Increase scrap use
• By-products recycling
• PCI substitute (biomass, RDF/SRF...)
• Hydrogen injection in BF
• (Low-carbon) hydrogen-based DRI
• CCUS
• ...
2020 2050
2030 2040
Emissions of Focus Area
[ Mt CO2/yr ]
Current policies
scenario
Net-zero transition
pathway
Step 3
Business Cases and Pipeline of Projects
Step 4
Market and Financing Solutions
BF: Blast Furnace; CCUS: Carbon capture, use and storage; DRI: Direct Reduced Iron; EAF: Electric Arc Furnace; PCI:
Pulverised Coal Injection; RDF: Refuse-derived fuel; SRF: Solid Recovered Fuels; WHR: Waste Heat Recovery
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
200%
BF-BOF Hydrogen-based DRI-
EAF
Electricity: USD 2 ct/kWh
Hydrogen: USD 2/kg
Electricity: USD 6 ct/kWh
Hydrogen: USD 4/kg Solutions:
• Low-cost
debt
financing
• CCfD
• Carbon
pricing
• ...
CAPEX
OPEX
Other
energy
Hydrogen

10. Thank you!
sipa@oecd.org