Green Economy for Central Asia begins with Kazakhstan

Kazakhstan moves towards a Green Economy.

Speaking at the World Climate Summit in Dubai as part of the UN Climate Change Conference, the country’s President Kassym-Jomart Tokayev supported the UN call for concrete actions aimed at preserving the environment for future generations, and said that his country will contribute to the comprehensive adaptation of “green” technologies in almost every sector of the national economy.

The Climate Summit traditionally brings together the heads of state and government of the world and discusses the most pressing climate issues of all humanity.

The peculiarity of the current meeting is that Central Asia is represented at it precisely as a region that unites several former countries.

The Regional Environmental Center for Central Asia (CAREC), with the support of countries and international partners, organized a Central Asia pavilion, which will help draw the attention of the world community to the high vulnerability of our region and the risks associated with climate change.

Also, for the first time at the regional level, a joint preparatory meeting was held at a high government level on November 7th, 2023 in Astana.

At the forum “Central Asia on the way to the 28th Conference of the Parties to the UNFCCC: 5 countries – 1 region – 1 vote”, on the initiative of CAREC and with the support of the International Center for Green Technologies and Investment Projects (Astana), GIZ, USAID and UNDP, current issues were discussed issues of cooperation to solve climate change problems.

As experts note, joint efforts in the fight against climate change and the unification of the region are extremely important for long-term sustainable development and a prosperous future of the region.

Also on the sidelines of the last COP27 world leaders summit in Egypt, Kazakhstan and the European Union entered into a memorandum of understanding and strategic partnership in the field of sustainable raw materials, batteries and green hydrogen value chains.

The Government of Kazakhstan and Fortescue Future Industries have entered into a Framework Agreement on the implementation of projects for the production of “green” hydrogen in several regions of the republic.

Earlier, in 2021, the government of Kazakhstan and the German-Swedish company Svevind Energy GmbH signed an agreement on the construction of renewable energy projects and the production of up to 2 million tons of green hydrogen or 11 million tons of green ammonia.

The preliminary investment amount is more than 50 billion euros. In the summer of 2023, German President Frank-Walter Steinmeier participated in the launch of test drilling as part of the construction of a green hydrogen production plant in Kazakhstan. Implementation of the agreements will make a significant contribution to achieving the country’s goal of reducing greenhouse gas emissions by 15% by 2030 and achieving carbon neutrality by 2060.

Future projects are designed to produce significant volumes of green hydrogen, which is also planned to be supplied to the European market. In general, the introduction of accessible technologies for the production of “clean” hydrogen can allow Kazakhstan to enter the top 10 in 5-7 years and become one of the world’s largest suppliers of this environmentally friendly type of fuel.

Kazakhstan is making a real contribution to the global movement to combat climate change and decarbonize the economy.

The country’s government has adopted international obligations and strategic documents, as well as legislative acts to reduce greenhouse gas emissions and transition to a green economy. In February 2023, the Strategy for Achieving Carbon Neutrality by 2060 was approved by Presidential Decree.

Kazakhstan’s international commitments to sustainable and low-carbon development must certainly be supported by investments.

Over the past seven years, more than two and a half trillion dollars have been allocated to green bonds around the world.

In this regard, the President of Kazakhstan emphasized that the Astana International Financial Center should become the main platform in the region for attracting “green” funding.

It is worth recalling that the key was the identification of the development of “green” finance as one of the priority areas of the Astana International Financial Center when it was created in 2016. In 2020, the debut green bonds for the domestic market were issued on the AIFC Exchange, and thus the country launched a sustainable finance market.

This year (as of the end of November), the domestic market for “green” financing reached 152 billion tenge, of which “green” bonds amounted to 115 billion tenge.

The investment required by the Central Asian region in renewable energy sources and modernization of national and regional networks by 2030 is $20 billion. Green finance mechanisms based on blended finance principles will be an important cornerstone in achieving net-zero greenhouse gas emissions targets without compromising socio-economic well-being.

Given the enormous amount of green investment required in the context of the interdependence of water and energy systems, as well as the challenges in transforming an energy-intensive economy, the next step may be to consider the idea of creating a regional green finance mechanism with governments, national development institutions, as well as international funds and MDBs .

The International Climate Fund is also involved in this task. It can also serve as an example for the creation of a national “green” fund at the AIFC site with its further transformation into a regional fund in Central Asia.

In international practice, government issues are critical elements of the market that influence its development. By entering the sustainable bond market, the government is sending a strong signal of sustainability intentions to the private sector and investors.

This could act as a catalyst for internal market development by attracting additional sources of investment and encouraging more issuers to use capital markets to finance assets, projects and expenditures that contribute to sustainable development.

Kazakhstan has enormous potential for the development of wind and solar energy, as well as for the production of “green” hydrogen. It continues to work closely with its partners to unlock this potential.

As a leading exporter of uranium, accounting for 43% of the world’s supply, the Central Asian republic plays a critical role in generating carbon-free electricity on a global scale.