Kazakhstan is a nation that has historically relied heavily on non-renewable fossil fuels to power the country. Although hydrocarbons like these are a relatively abundant resource in Kazakhstan, they are neither renewable nor unlimited. This, in combination with the growing international trend towards sustainable development, as evidenced by has led towards a push for green energy in Kazakhstan going forward.

Renewable energy presents a significant investment opportunity for Kazakhstan, in addition to its future necessity when fossil fuels are no longer a viable alternative. Due to growing climate change concerns and an increase in public discourse on the matter around the world, many countries have proposed bold and swift initiatives to promote sustainability, presenting a unique opportunity for nations like Kazakhstan to profit from sustainable development.

Kazakhstan has plans both domestically and throughout the region to move towards a greener model through green finance and green initiatives. Green finance refers to the use of bonds exclusively to be used for projects that promote renewable energy, energy efficiency, environmental improvement, climate risk mitigation, reforestation, and any other environmentally conscious initiatives. In addition to green bonds, Kazakhstan continues to host regional sustainability conferences for intergovernmental bodies and regional representatives to cover environmental issues.

A key player in Kazakhstan’s use of green finance and move towards more renewable projects will be the Green Finance Center (GFC), a body under the Astana International Financial Center (AIFC). The GFC’s role is to attract international investment for green projects throughout Kazakhstan and to provide green bonds, concessional lending and subsidies for domestic green initiatives. The influence of the GFC can be seen in their collaborative work with the Kazakh energy holding company Samruk-Energy JSC to aid in ‘green transformation’ of the company.

It is important to note here that although these green projects are ambitious and present substantial investment opportunity, they will not lead to the immediate disuse of fossil fuels in Kazakhstan. Kazakhstan is not only currently reliant on hydrocarbons for its own energy, but also relies on the exportation of its oil and gas for much of its economic growth. The move towards sustainability should thus be viewed as a longer term, gradual project.

With long term change in mind, Kazakhstan has made progress in introducing green legislation. A new environmental code was introduced in July of 2022 to align Kazakh environmental goals and obligations with that of international bodies such as the EU. The code covers forest and soil protection, environmental education and protection of the Caspian Sea among other topics. The country has even pledged to increase its renewable energy output to 15% by 2030 and aims to extend that to 50% of all energy production by 2050.

Kazakhstan is also uniquely positioned to promote green finance throughout central Asia. As a regional power, Kazakhstan has the ability to tap into the expanding market in its region. This market will see substantial growth in the energy sector, with over $5.5 trillion expected to be invested in Asia and the pacific from 2018 to 2050. With an established green finance centre in the AIFC, Kazakhstan will be positioned to advise other countries on how best to invest funds aimed at sustainability and will be a particularly attractive destination for these funds with an established green bond and renewable energy project that is already proving profitable. The AIFC and its GFC are tipped to become the major regional platform for implementing and funding green initiatives in the region.

Although Kazakhstan cannot be said to be rapidly moving away from fossil fuels, the nation is actively setting long-term plans that promote renewable energy and environmental protection. With the help of the AIFC and its GFC, Kazakhstan is already able to promote and fund green initiatives domestically and within Central Asia. 

Blog post author: Matt Davies

For more information on working in the energy sector in Kazakhstan and the central asian market, feel free to contact us via clients@sevenpillars.law