Kazakhstan is an example of a carbon lock-in, heavily reliant on oil exports and, to a lesser extent, gas exports. Domestically, the economy is powered by cheap electricity, predominantly produced from abundant local coal resources. Fossil fuels within the country are significantly subsidized, and incentives for investments in renewable energies savings are largely lacking. Renewable energy development in Kazakhstan has taken place largely as an add-on to the fossil-based economic system. Moving forward, Kazakhstan will need to address sensitive and challenging issues such as planning a just coal phaseout. At present, however, there are no plans to significantly reduce coal-fired power generation, which limits the prospects of a successful coal phase-out in the near future.
Securing access to affordable financing and streamlining the fragmented national climate and energy policy framework remain significant challenges. While an effective carbon pricing system could be a key pillar in incentivizing economy-wide industrial decarbonization, this would require a comprehensive reform of the national emissions trading system. Currently, the system is undermined by the overallocation of free allowances and low carbon prices, which fail to provide sufficient incentives for decarbonization.
Kazakhstan may be the first Central Asian country to set renewable energy targets, develop a functioning support mechanism for wind and solar, launch an emissions trading system, and establish a net zero target by 2060. However, these efforts fall short of the comprehensive action required for a full energy transition. The transition in many key sectors, including energy-intensive industries, transport, and the residential heat sector, has yet to begin. Without clear sectoral reduction targets and strategies, coupled with effective support mechanisms, it is questionable whether a successful transition can be implemented.
This Monitor Sustainability underscores the importance of robust and coherent policy measures, substantial financial investments, and strong international partnerships to achieve a sustainable and resilient energy future. While Kazakhstan has made significant strides in setting its ambitious targets, the country faces substantial challenges in achieving a comprehensive energy transition. Without addressing these challenges, Kazakhstan’s path to a sustainable future faces significant delays and setbacks.
