Dr. Mehmood Ul Hassan
Green has become mantra of every government in the world. Carbon neutrality has become ultimate goal of every country. In this connection, the government of Kazakhstan is also striving hard to transform the economy, state, society and productive channels into green.
The Ministry of National Economy is currently finalizing the policy of achieving carbon neutral goal till 2060. It will provide priorities and mechanisms in terms of new agreements on decarbonization adopted in Glasgow and achieving carbon neutrality.
In this connection, at the COP-26 session 2021 Kazakhstan confirmed the achievement of carbon neutrality until 2060 by joining the Agreement on Forest Ecosystems. It plans to plant 2 billion trees, developing renewable energy sources up to 50 percent by 2050 and gradually reducing coal consumption to 40 percent by 2030. Thus the Republic of Kazakhstan is on the way of green. Unfortunately, due to harsh climatic conditions and geographic situations Kazakhstan still relies heavily on fossil fuel. It uses coal in about 70 percent of its electricity generation.
Kazakhstan has made ambitious commitments to reduce its greenhouse gas emissions and increase the role of renewables, but achieving these goals requires overcoming its dependence on cheap domestic coal and addressing its lack of flexible generating capacity.
Kazakhstan has lowered tariffs for new renewable and gas-fired electricity capacity. It fears that new capacity will have difficulty competing with the country’s coal-fired power plants as long as tariffs for the latter do not fully adjusted for long-term replacement costs and for environmental and climate externalities. Moreover, as Kazakhstan expands renewables, more investment will be needed in flexible capacity such as gas-fired and hydro power plants to accommodate the variability of solar and wind output.
Kazakhstan has successfully attracted major international investors to its oil and gas sector and is currently the largest oil producer in Central Asia. Around 80 percent of Kazakhstan’s oil is exported, with almost all of it passing through Russia via pipeline. Notwithstanding, Russia-Ukraine conflict has highlighted the risks of relying on one transit county which has now been blocked by Moscow.
In this regard, Asian Development Bank partners with European Bank of Reconstruction and Development (EBRD) supports two major solar projects in Kazakhstan. Both are mega projects that will boost the country’s energy mix. The 100 MW M-KAT power plant is one of the largest solar power projects in Central Asia. Moreover, 50 MW Baikonyr solar project is ADB’s first long-term local currency financing in the region.
It seems that the emerging solar industry in Kazakhstan is a major step to decarbonize its economy and promote clean energy sources. Both are managed and operated by the private sector that will improve the country’s energy security particularly in power-deficient southern Kazakhstan.
In 2009, legislation was passed to support renewable energy, which has helped to attract new investors. The aim is to increase the share of renewable energy to 6 percent by 2025, 15 percent by 2030, and by 2050 it should be 50 percent of the energy mix. It would be carbon neutral till 2060. It plans to increase renewable energy capacity through 59 projects with total output of 1400 MW. M-KAT solar power project is a 100-MW power plant in southeastern Kazakhstan that covers about 300 hectares of land. It is ADB’s largest solar power project in Central Asia and is expected to generate an average of 176 gigawatt hours of energy annually. 50-MW Baikonyr solar power project, located in southern Kazakhstan, is ADB’s first long-term local currency financing in Central Asia. Clean energy generated by this plant will reduce CO2 emissions by 40,000 tons annually. It is located in Kyzylorda, which imports 55 percent of its energy supply from other regions. It aims to provide clean energy to this electricity deficient area and decrease its dependence on energy from other regions.
Aside from producing clean energy, the solar projects are creating numerous local job opportunities. The success of these projects demonstrates the viability of solar projects in Kazakhstan.
It is expected to attract more investors in the country’s emerging solar industry and help Kazakhstan take a major step towards transition to green economic growth by 2050.
Kazakhstan is blessed with abundant natural resources that are essential for energy. It aims to take a leading role in Central Asia regarding the development of new technologies and also aims to be a coordinator of clean technology. In November 2021, the country signed the charter of the Green Bridge Partnership Program, and also hopes to create a Central Asian Climate Hub (CACH) which will develop a single regional environmental agenda reflecting the mutually beneficial goals of achieving sustainable development in Central Asia
Kazakhstan policy makers have stated their willingness to take a leading role in the region in the transfer of green technologies and as a coordinator for the development of clean technology. Thus, the CACH aims to develop a “single regional environmental agenda” that reflects “the mutually beneficial goals of achieving sustainable development in Central Asia.
To achieve its climate goals, in 2021 Kazakhstan introduced changes to its environmental code. Key aspects of the new code include a chapter on climate change mitigation and adaptation. GHG emissions reduction and carbon neutrality targets have become law, and a Eurasian Environment Fund (EEF) was created, registered by the Astana International Financial Center’s (AIFC) Green Finance Center. Additionally, a doctrine for achieving carbon neutrality by 2060 has been developed, which will serve as a valuable guideline.
Moreover, Kazakhstan is currently working to bring its national Emissions Trading System (ETS) closer to the European model, which at the moment covers 46 percent of the country’s energy production.
Kazakhstan has also introduced its first green bonds. On September 22, 2021, the Eurasian Development Bank (EDB) successfully placed on the Kazakhstan Stock Exchange (KASE) an issue of three-year Green Bonds (GBs) for a total amount of 20 billion tenge.
Such ambitious goals imply pashing out the use of coal by 2050 and expanding the share of renewables to 83 percent. This target has challenges, including long payback periods for low-carbon investments, a current lack of incentives for the private sector to go green, and a lack of funding for green technologies.
In this context, large-capacity batteries and green hydrogen may be the way forward. Hydrogen will lead a new era of alternative energy while Kazakhstan will play a major role in decarbonisation and providing energy to the rest of the world. According to independent researchers, the country ranks among top 10 countries for green hydrogen export potential.
To mitigate climate change, it is necessary to achieve zero carbon dioxide emissions through decarbonisation of the energy sector. This can be achieved – among everything else – through the transition to a green hydrogen economy.
The government of Kazakhstan Republic Government has signed numerous MOUs with many multinational companies for the roadmap for green hydrogen initiatives in Kazakhstan. SVEVIND is planning to produce 2 Mt of green hydrogen per year in Kazakhstan for domestic use and export to the EU. SVEVIND will build 30 Megawatts (MW) of renewable energy (RE) capacity, and Kazakhstan will become the largest green hydrogen producer in the world by 2030. Such projects will help the country to achieve carbon neutrality by 2060, just as planned by the President.
To conclude, green is the means of human survival against the looming threat of climate change. It seems that Kazakhstan is willing to diversify its macro-economy with alternative, cleaner sources of energy and will reform its agricultural and industrial sectors to spur scientific innovation and the use of advanced technologies.
I suggest that Kazak government should stimulate economic drivers of green development. However, greening the economy of an oil-producing resource-based country requires sustained political commitment, significant long-term investments and a range of other enabling conditions. Following suggestions are given to accelerate the process of greening in Kazakhstan:-
a) The National policy of greening economy should be based on the principles of decarbonization, technological modernization and integration of public-private partnerships in the country.
b) It should give more focus on the greening of national economy and support the development of specific sectors such as renewable energy, energy efficiency, water governance or waste management.
c) There should be a paradigm shift in the National FDI policy, seeking/attracting more and more investments in the renewables projects rather than in oil & gas.
d) The government should establish integrated policy initiatives to prioritize the green economy and should care about all the main stakeholders.
e) A new National Regulatory Body is the need of hour to foster the development of green energy in the country.
f) Moreover, there is an urgent need to further enhance institutional capacities and governance of Kazakhstan through improving accountability and enabling effective public oversight of the green economy program.
g) All befitting fiscal reform and incentives from ‘brown’ to green economic activities and towards inclusive approaches should be pursued and subsequently implemented in the country.
h) Policy review of the system of subsidies and other incentives, notably in the oil and gas, mining and agricultural sectors should be further streamlined and systemized.
i) Domestic savings must be encouraged to invest in Green Financial Bonds.
j) Holistic and comprehensive road map should be prepared and pursued by including all the domestic stakeholders and international partners for the green economy concept.
k) A integrative strategic communication strategy is the need of hour to pursue and showcase the short, medium and long terms policy goals and targets of renewable energy, energy efficiency, water and waste management technologies.
l) Formation of sustainable development model should be pursued to foster green revolution in the country.
m) Further diversification of economy, resources, means and energy production must be adopted as soon as possible for achieving green transformation in the country.
n) Improvement in resource efficiency, climate resilience, and mass public awareness program should be clubbed in line with Kazakhstan’s drive to develop Paris Agreement-aligned strategies.
o) Special attention to financing green and energy efficient technologies through green bonds, for instance those considered by the national grid operator KEGOC and QazaqGaz.
(The author is Director
The Center for South Asia & International Studies (CSAIS) Islamabad Regional Expert: Kazakhstan & CIS)
