Current Policy Projections
Current policies overview
While Kazakhstan recognises the need to transition into a greener future, currently implemented policies are not yet sufficient to meet its targets and would lead to emissions of 324 MtCO2e by 2020 (a reduction of 11% compared to 1990 levels) and 362 MtCO2e by 2030 (an increase of 3% reduction below 1990 levels). The current policy landscape prioritises energy sector emissions, which is feasible given that energy-related activities account for 85% of the country’s annual GHG emissions.
Kazakhstan is a country heavily invested in fossil fuels: around 20% of Kazakhstan’s GDP is dependent on oil revenues (World Bank, 2016), around 60% of exports are oil products and it belongs to the top 20 countries endowed with large natural gas reserves (Central Intelligence Agency, n.d.). Natural gas production increased twofold from 2013–2016. Almost all electricity is generated from fossil fuels; 85% of all electricity in 2016, with coal accounting for around 65% of electricity generation, and natural gas for around 20% (Ministry of Energy of the Republic of Kazakhstan, 2017, fig. 11).
These sources of energy are complemented by hydro energy, which accounts for around 10%. Other renewables have started to make a contribution in recent years, and the share of renewable energy sources in primary energy supply has increased from 0.5% in 2012 to 0.9% in 2016 (Ministry of Energy of the Republic of Kazakhstan, 2017)
Besides efforts to transform its energy mix, Kazakhstan recognises the need for energy efficiency, and includes targets in the Green Economy Concept to decrease the energy intensity of GDP by 25% by 2020 and 50% by 2050 below 2008 levels (Republic of Kazakhstan, 2015). Measures are cross-sectoral in nature, and range from initiatives for district heating to thermal renovation of houses, to various energy standards and energy efficiency categories for buildings and household appliances.
Kazakhstan’s “Concept for Kazakhstan’s Transition to Green Economy” adopted in 2013 sets the target of providing 30% of electricity generation from alternative and renewable energy sources (including nuclear) by 2030 and 50% by 2050, and reducing current CO2 emissions in electricity production by 40% by 2050, while also increasing the share of gas power plants to reach 30% by 2050 (Republic of Kazakhstan, 2015).
Plans to expand coal and oil production deepen, and increase Kazakhstan’s dependence on fossil fuels. The volume of coal production amounted to 52 million tonnes and the volume of oil and condensate increased to 45.2 million tonnes by June 2018, a 5.1% and 6.2% increase relative to the same period last year respectively (“Refineries in Kazakhstan increasing production volumes,” 2018). These trends are likely to continue, with ministerial statements indicating a likely increase of oil production to more than 100 million tonnes in 2025 (The Times of Central Asia, 2018). The government also plans to expand the energy sector to include coalbed methane exploration and production in the Karaganda region (kazinform, 2018).
These actions fail to acknowledge the short-term steps necessary to keep the window open for a 1.5°C-consistent GHG emissions pathway. For the power sector this means no new coal plants should be built and the use of coal in electricity need to be reduced by two-thirds between 2020–2030 and phase out globally by 2050 (Climate Action Tracker, 2018). Prioritising the modernisation of existing coal plants, as well as plans to replace coal with natural gas is short-sighted, considering that gas is not a long-term solution for the deep decarbonisation needed (Climate Action Tracker, 2017).
The government estimates that the transition to a green economy will be accompanied by substantial economic and societal benefits: By 2050, it is expected to create more than 500,000 jobs, develop new industries and living standards improve the quality of life (Ministry of Energy of the Republic of Kazakhstan, 2017; Republic of Kazakhstan, 2015). The costs are valued at USD 3-4 billion or about 1% of GDP per year (IEA, 2015).
Along with the Action Plan for the Development of Alternative and Renewable Energy for 2013–20, adopted in 2013 to generate 31 renewable energy projects with a combined capacity of 1,040 MW (IEA, 2015), in November 2016 the government has announced target indicators for the development of the renewable energy sector. These targets include renewable energy contributing 3% to total electricity production by 2020; and total installed capacity of renewable energy of 1,700 MW by 2020 being made up of wind power (933 MW), solar power plant PV (467 MW), hydroelectricity power plants (290 MW) and biogas plants (10 MW) (Republic of Kazakhstan, 2016b).
By growing its clean energy portfolio Kazakhstan is tapping into its abundant renewable potential, estimated at more than 1,000 TWh per year (IEA, 2015). Yet, as a country richly endowed with fossil fuels, the transition has been slow in the past, and a more stringent effort is needed in order for Kazakhstan to achieve its climate targets.
To achieve its long-term targets, Kazakhstan will also need to become an attractive investment option for private investors. To this end, Kazakhstan already reformed its energy tariffs, which have been regarded as one of the key reasons for underinvestment (International Crisis Group, 2011). In 2019, a power capacities market will function along the electric energy market, and the feed-in tariff be divided into two parts: an electric energy tariff (variable) and capacity tariff (fixed) (Ministry of Energy of the Republic of Kazakhstan, 2017).
The Government has also launched the Solar Resources Atlas, a website mapping Kazakhstan’s solar energy potential for the public to view in order to help with investment decisions (“AtlasSolar,” 2017). A handful of large-scale projects have been announced, suggesting that these policies have had some impact, however, most investments are through development finance institutions.
After a temporary suspension, the Emission Trading Scheme restarted operation on 1 January 2018 with new allocation methods and trading procedures for all market participants (International Carbon Action Partnership, 2018). The World Bank and the Ministry of Energy of Kazakhstan launched an online platform in February 2018, which allows online transmission and recording of GHG emissions data and trade. An emissions cap has been set for 129 companies for the period 2018–2020, which is set by in the National Allocation Plan, adopted in January 2018 (World Bank, 2018b).