Kazakhstan – the unexpected Green powerhouse

The following is an opinion piece by Christopher Weafer, founder and managing partner of Macro-Advisory, an independent macro consultancy with a focus on Eurasia.

In Central Asia, an unexpected sustainability champion is emerging. After three decades of authoritarianism, perceived corruption and kleptocracy – punctuated by corporate governance scandals such as the ENRC episode – Kazakhstan is resetting its priorities. The new President of Kazakhstan, Kassym-Jomart Tokayev, has been swift and effective in reforming the country’s political and economic model – from the institution of a one-term limit for the Presidency, to an ambitious anti-corruption drive dismantling the cronyism and “offshorisation” – which dominated under his predecessor.

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In governance terms (the “G” in “ESG”) therefore – this is a country on the make. What western audiences may find more surprising is Kazakhstan’s role in aiding global sustainability. Put briefly, the country’s role in our collective efforts to build a green, secure future are impressive and expanding. From food security to the stability of global supply chains and the ability to resource decarbonisation with vital minerals and reduce reliance on fossil fuels – this Central Asian nation occupies a key position at the intersection of every important trend defining the viability of Kazakhstan’s sustainability aspirations.

Kazakhstan’s abundant endowment of critical minerals makes it among the most important cradles of the electric revolution. The country’s natural resource wealth is amongst the largest in the world, with estimates suggesting Kazakhstan’s possession of 30% of the global chrome ore reserves, 25% of manganese ore, 10% of iron ore, 5.5% of copper, 10% of lead and 13% of zinc. Kazakhstan is also the world leader in the supply of uranium, accounting for almost 50% of global supply in 2021. Quite simply, Western dreams of a decarbonised economy will be realised only in partnership with states which can equip them.

Kazakhstan is well poised to lead the green industrial revolution – but the country has got its work cut out to improve its own environmental profile. An overreliance on coal and fossil fuels (Kazakhstan sources 70% of its energy from fossil fuels) must be actively addressed, and tough decisions made. That’s not to say that Kazakhstan has completely neglected renewable energy – there are already 142 renewable energy facilities operating in the country, with a total capacity of 2,332 MW. Moreover, prominent renewables projects such as a wind farm in the Shelek corridor, a hydropower plant in the Raiymbek district, and the Bartogai hydropower plant in Yenbekshikazakh district, demonstrate what the country’s new energy infrastructure could look like.

A start – maybe. But this is clearly a status quo with which President Tokayev is not satisfied – and his reform agenda contains potentially transformative provisions for renewable energy and environmental stewardship. The “Green Economy Plan” launched by the President has set the goal of sourcing 50% of the country’s energy share from renewable sources by 2050 and attaining carbon neutrality by 2060.

Again, the “G” element is a pre-requisite for progression in “S” and “E”. Following President Tokayev’s embrace of sustainability, Kazakhstan’s renewable energy growth has accelerated dramatically. In 2021, Kazakhstan commissioned 19 facilities delivering a total of 393 MW, and in the first quarter of 2022, renewable power generation rose to 933.07 million kWh (generating 3.03% of total power – 14.6% more as compared to the same period of 2021). By 2025, the country’s renewables footprint will expand as 53 additional – and diverse – projects come onstream, with a capacity of 1,074 MW (19 hydroelectric stations, 23 wind farms, and seven solar power stations).

Most importantly, Kazakhstan boasts a unique combination of solar yields, comparable to Southern Spain and wind yields at par with South Africa, making it the perfect hub for the production of green hydrogen. Already, Swedish energy group Svevind has announced a USD 50 billion deal with the Kazakh government to build a 20 GW green hydrogen plant in the country’s Mangystau province to be exported to Europe (one of the largest green hydrogen facilities globally). Europe’s foremost economic power has also grasped Kazakhstan’s suitability as the “green engine” for Europe – and German federal minister Annalena Baerbock in October confirmed that her country will open an Office of Hydrogen Diplomacy in Astana under the auspices of the German Society for International Cooperation.

Again, environmental advances ensue from strong governance, and private and public international investment in green hydrogen is being actively courted by Kazakhstan’s government, with Prime Minister Alikhan Smailov asserting his country’s “potential to become one of the leading centres of green hydrogen production on a global scale”.

As world leaders gather in Egypt to forge a sustainable, equitable economic and industrial model which addresses the climate crisis, it is worth looking at Kazakhstan’s participation in this most high profile of environmental fora. Little more than a week ago, European Commission President Ursula von der Leyen signed a Memorandum of Understanding with the Prime Minister of Kazakhstan Alikhan Smailov establishing a “strategic partnership” between the two sides, and President Tokayev has committed his country, before delegates at Sharm el-Sheikh, to a “Low Carbon Development Strategy” which will involve the construction of 7 GW of renewable energy capacity to be built by 2030.

Kazakhstan is a state geographically and geologically well positioned to power Europe’s transition to a low carbon economy, however the country’s procurement of minerals and commodities vital for a clean economy must itself be clean. Kazakh growth must be built upon environmentally sustainable foundations. It’s no good exporting the components of a green revolution without adhering to its principles at home.

But in a world in which many shout about their environmental achievements with little justification, Kazakhstan is a rarity. The country’s capacity to support collective climate ambitions, and its work already undertaken with this end, are much more significant than many commentators appreciate.