Feature: Kazakhstan's green energy future
Kazakhstan is going global in a bid for cleaner energy resources, with heavy government backing and ambitious renewable energy commitments. Saltanat Berdikeeva looks at the challenges that lie ahead.
As of this year, Kazakhstan has moved to a system of procuring electricity from renewable energy sources at international auctions. The initiative is aimed at bringing down the cost of electricity from renewable sources throughout the country. It is hoped that this shift from fixed rate purchase to auctions will reduce costs as well as attracting foreign investment, forming the latest step in Kazakhstan’s gradual, but ambitious, direction toward meeting 50% of its energy needs by 2050 from renewable sources.
This begs an obvious question: why would the second-largest producer of oil in the former Soviet Union after Russia, with an economy more than 60% dependent on oil sales, be interested in renewable energy? One of several reasons is the growing domestic demand for energy. Kazakhstan’s economic growth has ramped up its traditionally fossil fuel-based energy consumption over the past decade, with the International Energy Agency predicting demand in the country to double by 2035. For decades, coal-fired power plants have been at the core, accounting for nearly 75% of total power generation. However, coal production has fallen due to diminishing profitability and rising mining accidents. In addition, coal-fired power plants contribute to high air pollution rates in the country.
Kazakh authorities also stress the necessity to develop renewable energy because they believe that oil prices will rise in the next decade, while they fear the country’s recoverable oil reserves will decline. The development of renewable sources of energy will therefore be necessary for preservation of the country’s long-term economic stability. The country’s growing concern about climate change is another factor. In 2016, Kazakhstan announced its plan to reduce its greenhouse gas (GHG) emissions by 15% by 2030 from the 1990 base year. It seeks to meet its Paris Climate Agreement obligations through commitments to renewable energy and reduction of greenhouse gas emissions.
This Central Asian country has a strong potential to harness energy from renewable sources, particularly in the south-east which is further away from coal, oil and natural gas sources. Supplying energy to that region requires substantial monetary resources and investments in technology. Local observers argue that the country’s least expensive form of renewable energy is hydropower, and believe it is possible to cover the energy deficit in southern Kazakhstan with mini power stations without retaining dams. The country is also a favourable location for large-scale use of wind energy, with an estimated potential generation of 929bn kWh of electricity per year as well as solar power with a potential of 2.5bn kWh/year according to Renewable Market Watch.
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Progress and Challenges
While renewable energy is at early stages, Kazakhstan is ramping up policy efforts to incorporate green energy as part of the country’s future. It is one of the first countries in Central Asia to have built an institutional framework to transition to a green economy, having adopted an Ecological Code in 2007, Law on Supporting the Use of Renewable Energy in 2009, and the Concept of Transition to Green Economy in 2013. Development of renewable energy is an important component of this program, in particular hydropower (especially small hydropower stations), solar and wind. In an effort to learn from international experiences, Kazakhstan became a member of the International Renewable Energy Agency and ratified its charter in 2009. Moreover, it is partnering with international financial institutions to develop the country’s renewable energy infrastructure.
Although renewable energy currently makes up just 1% (mainly from solar and wind), clean energy is slowly maturing in Kazakhstan’s laws and commerce. The authorities are now aiming to meet 3% of the country’s overall energy balance from renewables by 2020. However, the long-term goal is much more ambitious. According to the Vice Minister for Energy, Gani Sadibekov, Kazakhstan plans to get 30% of its electricity from renewable energy by 2030, with the Kazakhstan-2050 strategy stating renewable energy must constitute 50% of the country’s total energy consumption by 2050.
According to the Energy Ministry, Kazakhstan generated 1bn kWh from solar, wind and biogas in 2017, a 22% rise year on year. The plan for 2018 is to generate 2.7bn kWh from renewables. By 2020, the Kazakh Energy Ministry plans to roll out 52 renewable energy projects with a cumulative capacity of 2GW. The country’s Ministry of Investment and Development along with national company Kazakh Invest came up with a list of 145 investment projects worth nearly $47bn. This year, 15 of these projects will be built and 23 will be launched. One of the largest utility-scale solar power stations in Central Asia will be built in Karaganda.
Financing remains a challenge for building renewable energy infrastructure in Kazakhstan. Lack of domestic technical know-how, coupled with the expense of foreign renewable technology, competes with cheaper, abundant domestic fossil-fuel based energy. Despite a limited number of institutional investors in renewable energy in Kazakhstan, local green energy experts argue that it is necessary to continue seeking funding due to declining capital costs of renewable energy sources. The country’s leadership is now actively searching for foreign investors to develop renewable energy potential. Last year, the European Bank for Reconstruction and Development (EBRD) pledged to invest €200mn to finance the construction and operation of solar, wind, small hydropower, and biogas infrastructure as well as upgrades of the electricity grid to facilitate the integration of renewable energy sources into the grid. Kazakhstan is also seeking to attract $480mn in investments from other international financial institutions to fund more than 500MW capacity of renewable energy.
Although the general investment climate in the country has improved in recent years, investments in renewable energy sources remain risky for Kazakhstan. Oil, gas and coal, which have been the backbone of the country’s energy use and economic growth, are key barriers to developing renewable energy. There is also skepticism about lesser known and costlier renewable energy sources. On the other hand, there has been a gradual shift in mentality and policy towards embracing renewables given the country’s growing energy demand, inadequate access to electricity in remote and rural areas, anticipated price rises for oil and gas, and concern over the environmental impact of fossil fuel exploitation. In 2017, Kazakhstan was chosen to host EXPO-2017, an international green energy exposition. This event was a further push for Kazakhstan to search for projects that make sense for its economy. Progress may be slow and bumpy, but Kazakhstan is on the right track in its pursuit of renewable energy.
Carbon dioxide removal revenues worth £2bn a year by 2030
Carbon dioxide removal revenues could reach £2bn a year by 2030 in the UK with costs per megatonne totalling up to £400 million, according to the National Infrastructure Commission.
Engineered greenhouse gas removals will become "a major new infrastructure sector" in the coming decades - although costs are uncertain given removal technologies are in their infancy - and revenues could match that of the UK’s water sector by 2050. The Commission’s analysis suggests engineered removals technologies need to have capacity to remove five to ten megatonnes of carbon dioxide no later than 2030, and between 40 and 100 megatonnes by 2050.
The Commission states technologies fit into two categories: extracting carbon dioxide directly out of the air; and bioenergy with carbon capture technology – processing biomass to recapture carbon dioxide absorbed as the fuel grew. In both cases, the captured CO2 is then stored permanently out of the atmosphere, typically under the seabed.
The report sets out how the engineered removal and storage of carbon dioxide offers the most realistic way to mitigate the final slice of emissions expected to remain by the 2040s from sources that don’t currently have a decarbonisation solution, like aviation and agriculture.
It stresses that the potential of these technologies is “not an excuse to delay necessary action elsewhere” and cannot replace efforts to reduce emissions from sectors like road transport or power, where removals would be a more expensive alternative.
The critical role these technologies will play in meeting climate targets means government must rapidly kick start the sector so that it becomes viable by the 2030s, according to the report, which was commissioned by government in November 2020.
Early movement by the UK to develop the expertise and capacity in greenhouse gas removal technologies could create a comparative advantage, with the prospect of other countries needing to procure the knowledge and skills the UK develops.
The Commission recommends that government should support the development of this new sector in the short term with policies that drive delivery of these technologies and create demand through obligations on polluting industries, which will over time enable a competitive market to develop. Robust independent regulation must also be put in place from the start to help build public and investor confidence.
While the burden of these costs could be shared by different parts of industries required to pay for removals or in part shared with government, the report acknowledges that, over the longer term, the aim should be to have polluting sectors pay for removals they need to reach carbon targets.
Polluting industries are likely to pass a proportion of the costs onto consumers. While those with bigger household expenditures will pay more than those on lower incomes, the report underlines that government will need to identify ways of protecting vulnerable consumers and to decide where in relevant industry supply chains the costs should fall.
Chair of the National Infrastructure Commission, Sir John Armitt, said taking steps to clean our air is something we’re going to have to get used to, just as we already manage our wastewater and household refuse.
"While engineered removals will not be everyone’s favourite device in the toolkit, they are there for the hardest jobs. And in the overall project of mitigating our impact on the planet for the sake of generations to come, we need every tool we can find," he said.
“But to get close to having the sector operating where and when we need it to, the government needs to get ahead of the game now. The adaptive approach to market building we recommend will create the best environment for emerging technologies to develop quickly and show their worth, avoiding the need for government to pick winners. We know from the dramatic fall in the cost of renewables that this approach works and we must apply the lessons learned to this novel, but necessary, technology.”
The Intergovernmental Panel on Climate Change and International Energy Agency estimate a global capacity for engineered removals of 2,000 to 16,000 megatonnes of carbon dioxide each year by 2050 will be needed in order to meet global reduction targets.
Yesterday Summit Carbon Solutions received "a strategic investment" from John Deere to advance a major CCUS project (click here). The project will accelerate decarbonisation efforts across the agriculture industry by enabling the production of low carbon ethanol, resulting in the production of more sustainable food, feed, and fuel. Summit Carbon Solutions has partnered with 31 biorefineries across the Midwest United States to capture and permanently sequester their CO2 emissions.
Cory Reed, President, Agriculture & Turf Division of John Deere, said: "Carbon neutral ethanol would have a positive impact on the environment and bolster the long-term sustainability of the agriculture industry. The work Summit Carbon Solutions is doing will be critical in delivering on these goals."
McKinsey highlights a number of CCUS methods which can drive CO2 to net zero:
- Today’s leader: Enhanced oil recovery Among CO2 uses by industry, enhanced oil recovery leads the field. It accounts for around 90 percent of all CO2 usage today
- Cementing in CO2 for the ages New processes could lock up CO2 permanently in concrete, “storing” CO2 in buildings, sidewalks, or anywhere else concrete is used
- Carbon neutral fuel for jets Technically, CO2 could be used to create virtually any type of fuel. Through a chemical reaction, CO2 captured from industry can be combined with hydrogen to create synthetic gasoline, jet fuel, and diesel
- Capturing CO2 from ambient air - anywhere Direct air capture (DAC) could push CO2 emissions into negative territory in a big way
- The biomass-energy cycle: CO2 neutral or even negative Bioenergy with carbon capture and storage relies on nature to remove CO2 from the atmosphere for use elsewhere