WHY WOULD OIL-RICH KAZAKHSTAN INVEST IN RENEWABLE ENERGY SOURCES ?
We have already watched Abu Dhabi building one of the largest solar power plant in the world. We are also seeing an increasing interest for renewable energy sources in Kazakhstan. Why would such oil-rich countries choose to invest in renewable energy sources?
Kazakhstan is rightly famous for its oil reserves: the country is the second largest oil producer and exporter in the Former Soviet Union, after Russia. With proven oil reserves amounting to 30 billion barrels, Kazakhstan ranks as the 14th largest oil exporter in the world, according to the US Energy Information Administration (EIA).
Unsurprisingly, the oil and gas industry makes up one quarter of the GDP, according to a 2013 study by EY, a consultancy. This sector is also attracts foreign direct investment in the country. To sum it up, Kazakhstan owes most of its impressive growth in the 2000’s to its subsoil.
Yet, the Kazakhstani government has recently set out priority sectors for its economic development. One of them includes the development of alternative energy forms. In addition, Astana is getting ready to host the 2017 Expo. This world’s fair is themed «Future energy». In other words, within three years’time, Kazakhstan will display on the international stage its commitment towards renewable energy sources. At a national level, President Nursultan Nazarbajev has set an ambitious target: increasing the use of renewable energy sources to 50% by 2050, from one percent these days. Measures recently taken support this goal: we think for instance of the emissions trading scheme or of the feed-in tariffs for energy produced from renewable sources, both introduced in 2013.
Why is oil-and-gas rich Kazakhstan showing so much enthusiasm for renewable energies? First and foremost, Kazakhstan is not only sitting on impressive fossil fuel reserves: it does also have an impressive potential in terms of renewable energies. Wind power capacity is estimated to 1820 million kWh (UNDP figures) and solar power capacity is estimated to 340 billion tons of fuel. Still this potential remains so far mostly untapped. Up to 80% of domestic consumption is provided for by burning coal, while the whole coal industry is a dirty one, generating a fair share of emissions. Also, these coal-fired plants are situated in Northern Kazakhstan. The Southern regions of Kazakhstan must therefore rely on electricity imports from neighbouring Kyrgyzstan. Locally producing energy from renewables sources would help on both fronts, by allowing to curb emissions and to reduce dependency towards neighbouring countries.
Fostering renewable energies is also likely to generate international interest and cooperation: the EBRD invested early on in renewable energy sources in Kazakhstan. The German Energy Agency (Dena) donated solar panels to be installed in the Baikonur space launch facility and the Eurasian National University of Astana, recounts Komila Nabiyeva in «Energy Transition». Germany seizes there an opportunity to demonstrate its advanced solar technology and Kazakhstan learns from countries transitioning to renewable energy sources.
Oh, and while we are it… why do the United Arab Emirates invest in solar energy? Because they are sun-burned, first, and second, because the more solar energy they produce for local consumption, the more – pricey – oil they can export! This last argument certainly makes sense for most oil-rich nations…
So, why would oil-rich nations choose not to invest in renewable energies, after all? Arguments in favour are plenty and the interest of Kazakhstan’s authorities for renewable energy sources finally appear more than understandable; the results of this interest for renewable energies remain to be seen in the (very)long-term… but we are patient, and, above all, very curious about it!
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