The case study details the function and practice of Specialised Environmental Funds in countries of the EECCA Region.
With abundant natural mineral resources, the Eastern Europe, Caucasus and Central Asia (EECCA) countries are important economic contributors to the global mining and industrial sectors. Mineral resource extraction also plays an important role in export earnings, employment and public revenue via taxes and public extraction companies at the national and sub-national levels. Despite economic benefits, the mining sector through its various processes and infrastructures has caused negative environmental impacts on soil, water, ecosystems and air in the region. In addition, mining emits greenhouse gases through transportation and energy use. EECCA countries are already experiencing significant negative effects of climate change: they have all recorded an increase in the average annual temperature and face various climate challenges, such as changes in the duration of the seasons and the amount and distribution of precipitation, increasing numbers of droughts and floods and a decrease in water supplies. This has created an acute need to address environmental and climate issues in these countries, while sustaining and bolstering economic growth by such means as introducing new and green technologies and increasing the efficiency of resource use for infrastructure.
While the private sector is expected to contribute significantly to financing the transition, the state has a key role to play in providing the right incentive structures and regulatory frameworks to stimulate increased demand for green and clean-energy investments. Public financial support – in the form of procurement, investment, or subsidies – is one of the main policy instruments that governments have to accelerate clean energy infrastructure investments. If used effectively, even limited public resources, including those managed through Environmental Funds, can leverage significant external and private funds and contribute to the achievement of priority climate and energy-related national objectives
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