Kazakhstan: A future without coal?
Renewable energy, innovation, and investment in new technologies will help Kazakhstan decarbonize its economy without sacrificing the wellbeing of its people.
Kazakhstan’s remarkable economic growth during the last two decades, propelled by strong exports of fossil fuels and metals, has come at a high environmental cost. The country’s greenhouse gas emissions have already exceeded the 1990 level, amounting to approximately 400 million tons annually with electricity and heat generation accounting for a third of them.
Unless appropriate policies and state regulation are adopted, the total volume of greenhouse gas emissions in Kazakhstan will continue to grow. This not only jeopardizes the country's commitments under the Paris Agreement to reduce carbon dioxide emissions by 15% by 2030, but also threatens the government’s ambitious pledge to achieve carbon neutrality by 2060.
Kazakhstan uses coal in about 70% of its electricity generation. Coal, being one of the most carbon-intensive fossil fuels, is considered the main culprit in the country’s worsening air pollution. Kazakhstan is currently the world’s 14th largest CO2 emitter, and the air quality in wintertime in its capital Nur-Sultan often exceeds the permissible norms, according to the World Air Quality index.
From 2023, the European Union (EU) will gradually introduce a carbon tax on imports to tackle global warming. As Kazakhstan’s biggest trade partner, the EU accounts for about 40% of the country’s total exports. Other countries are following the same tax policy. This puts Kazakhstan in a difficult position, as the carbon intensity of its GDP is two times higher than the world average and three times higher than the EU. Unless the country shifts towards less carbon-intensive production, the competitiveness of its exports will substantially diminish.
There is a downward trend in global production and use of coal, despite significant reserves. The UK and France have announced plans to abandon coal by 2024, Italy by 2025, Denmark and Canada by 2030, Germany by 2038, and Poland by 2049. Since 2005, the People’s Republic of China has systematically reduced use of coal and aims for coal to be only 20% of its total energy balance by 2025. Most international financial institutions, including the Asian Development Bank (ADB), have stopped funding coal projects and refocused investments on clean energy.
This global trend towards a green economy has already reduced imports of Kazakhstan’s coal in favor of cleaner sources. In turn, domestic consumption is predicted to gradually decline, which will present a series of critical policy challenges. For instance, how can a new future be created for the country’s coal-producing regions, and 28,000 coal miners retrained? Are there ways to find other uses for coal beyond electricity generation?
Unless appropriate policies and state regulation are adopted, the total volume of greenhouse gas emissions in Kazakhstan will continue to grow.
Recalibrating coal’s economic role means finding a continued use for it beyond the energy market. Bekturov Institute of Chemical Sciences, an Almaty-based research institution, is trying to identify commercially viable alternative coal products and technologies, including for improving soil fertility, cleaning contaminated soil, and water purification. The government’s focus on innovation and investment in science is important for helping local scientists develop such technologies and make better use of abundant coal resources.
However, in 2019 Kazakhstan invested only around 0.1% of GDP in research and development (R&D) with the private sector contributing just 45% of the total spending. Other upper middle-income countries spend at least 2%-3% of their GDP on R&D. Boosting investment in R&D is important to promote innovation and develop commercially viable technological solutions for an alternative use of coal.
As heating season in most of the country lasts over six months, the heating sector is one of the key contributors to the economy’s high energy intensity and growing greenhouse gas emissions. Kazakhstan’s heating system emits an estimated 24 million tons—at least—of CO2 per year, with two-thirds of boiler houses and combined heat and power plants using coal.
In addition, over 30% of private households not connected to the central heating system are using coal. To address this and develop a cleaner heating sector, the government is collaborating with ADB on the development of the Concept of the Law on Heat Supply. Once approved, this law should create incentives for modernizing the heat sector using green and low-carbon energy sources.
The phase-out of coal-fired plants needs to be thoroughly planned and implemented, while considering grid stability and electricity pricing. If it takes too long, the timing for transformation would be missed and carbon neutrality will be even more difficult to achieve. Kazakhstan needs to start work now on a range of carefully tailored measures to mitigate the economic, social, and environmental impacts of this impending transition.
There is no time to waste. Focusing on renewable energy, innovation, and investment in new technologies will keep Kazakhstan competitive in global markets while navigating the economic consequences of the transition.
With careful preparation, Kazakhstan can decarbonize its economy and promote clean energy sources to achieve carbon neutrality without sacrificing the wellbeing of its people.
A version of this blog post was first published in The Times Of Central Asia.