Steppes to Net Zero
This report focuses on Kazakhstan’s energy transition pathway and provides a perspective that strikes a balance between the cost of energy, reliability of supply, and environmental sustainability. It also highlights the economic risks of continued support for coal-fired generation and the need for international funding to help with the country’s just transition. Although Kazakhstan’s individual contribution to global emissions is relatively limited, being similar to Spain or France, emissions intensity relative to GDP is very high with the energy sector being the core source of Greenhouse Gas (GHG) emissions in the country with a share of 82.4% (and fuel combustion responsible for 70.5% of overall country GHG emissions). The Central Asian region is also extremely vulnerable to climate change impacts.
 Kazakhstan: CO2 Country Profile – Our World in Data In 2021, the total CO2 emissions of all five Central Asian Counties (Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, Turkmenistan) were 480 million tonnes or about 1% of global emissions. Kazakhstan is the largest contributor in Central Asia with more than 277 million tonnes of CO2.
 See: 2021-25 Road Map for the delivery of updated NDC in Kazakhstan.
 The climate change impact on Central Asia expresses itself in increasing drinking water scarcity (as a consequence of melting glaciers, decreasing surface water runoff, human activity from agriculture and urbanisation), loss of biodiversity and degradation of the ecosystems.
This publication has been produced with the assistance of the European Bank for Reconstruction and Development.
- There is no political commitment to phase out coal given the potential risk of disrupting the fragile socio-spatial and economic balance. Political support for coal-fired technologies is driven by the energy system’s inflexibility and district heating legacy. Continued support for coal will create long-term economic risks and deter investment from economic activity that could diversify Kazakhstan’s economy and facilitate a just transition.
- The upcoming 10-15 years will be critical for laying the foundation of the new economy. Failure to do so will result in economic stranding as legacy revenue streams and old economy jobs dry up without the offset from new (clean) revenue streams and labour opportunities.
- Kazakhstan’s low carbon price does not incentivise energy transformation and is an ineffective tool given the ready availability of free quotas. A higher carbon price driven by materially lower free quotas and government auctions will be an essential policy tool to facilitate Kazakhstan’s energy transition.
- Storage at scale will be required by 2030 to account for growing renewables integration and will be essential to provide flexibility to the system. Governmental planning to support the rollout of storage will be required this decade.
- Without financial aid Kazakhstan cannot accelerate its transition to clean energy: blended concessional financing should be offered to Kazakhstan to facilitate the just transition from coal to clean power on the proviso there is a credible coal phaseout plan.
- Current political and technology commitments will lock-in legacy fossil fuel infrastructure and crowd out renewables. All else equal, power prices will significantly rise with the addition of new coal plants or retrofitting of existing ones. Inclusion of renewables which have demonstrated declining price trends across renewable energy auctions, will lower power prices to end users.
- New coal plants are twice as costly versus new renewables with storage and will require a doubling in power tariffs if these new coal units are to break-even. New renewables will outcompete existing coal units within one year and new renewables with storage will be cost competitive within five years under our base scenario. Renewables need to be rolled out under an accelerated timeframe and on a greater scale than currently.