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Co-operation key to releasing Central Asia’s green energy potential

13 July 2023

The Central Asian states have been moving rapidly up the EU’s political agenda. The process has been taken to the next level by the Brussels Energy Club, with the European capital’s first-ever conference on energy security and sustainability in the entire Central Asia region, writes Political Editor Nick Powell.

Opening the high-level conference, the Principal Representative of the Brussels Energy Club, Marat Terterov, said Central Asia has come out of the shadows. One of the fastest growing areas of the world, both economically and demographically, had arrived. Acknowledging that much of Europe’s focus has been on the region as an east-west trade route and as a source of oil and gas, Mr Terterov said that it was time to not only look through the prisms of connectivity, transportation and conventional energy.

In the sign that the EU’s attention to Central Asia is fully reciprocated, all five countries had a strong diplomatic presence at the conference, including four ambassadors. Kazakhstan’s Ambassador, Margulan Baimukhan, stressed both the strength of his country’s commitment to achieving carbon neutrality and the size of the task. With a high dependence on coal for electricity generation and heating, Kazakhstan would need to attract significant international investment in its green transition.

Kazakhstan also had an important role to play as a strategic partner of the European Union on rare earth metals and other critical raw materials, as well as on the production of batteries and green hydrogen. The Ambassador said cooperation between the Central Asian states would strengthen the efforts of each country and of the EU towards the shared goal of a fair and just energy transition for the whole region.

Uzbekistan’s Ambassador, Dilyor Khakimov, said his country was ready to develop an energy partnership with the EU, using European advanced technologies. Reforms had opened the way for international investment, with long-term guarantees. He pointed to the huge potential for solar energy in a country with 330 days of sunshine each year.

From Kyrgyzstan, Ambassador Aidit Erkin emphasised the huge potential of hydro- electric power generation in his country. Turkmenistan’s Ambassador, Sapar Palvanov, described how a complete new city, using only green energy, had been built. The Tajikistan Chargé d’Affaires, Firdavs Usmanov, stressed that his country not only had great green energy potential but also had great vulnerability to climate change, due to melting glaciers.

The European External Action Service’s Special Representative for Central Asia, Terhi Hakala, said the challenges of climate change, such as drought, were becoming increasingly apparent in the region. She said the green transformation was seen by the EU as an economic opportunity. It had invested €700 million in projects in Central Asia and was committed to supporting all five countries in achieving a sustainable future.

The Senior Advisor to the Brussels Energy Club, Mehmet Ogutcu, described Central Asia as a strategically very important region geopolitically. Fossil fuels continued to dominate its energy sector and a massive shift to green energy is more easily said than done. Not just international investment but regional integration is needed, with a shared electricity grid.

Such a transnational system for Central Asia would be where the European Union could invest, suggested the chairman of the Qazaq Green Association, Nurlan Kapenov. He said his organisation’s goal was to improve the investment climate for the renewable energy sector. Significant progress had been made since 2014 and there were now more than 230 wind, solar, hydro and biofuel projects in Kazakhstan.

The Chief Policy Officer of Wind Europe, Pierre Tardieu, argued that although European countries were mostly further advanced in making mainstream what were once seen as alternative energy sources, Central Asia could leapfrog ahead. It was a question of getting the market incentives and regulatory framework right. Interconnectivity between the different states was important, as it would be good for energy security and competitiveness.

The Head of Climate Change and Sustainable Energy at the European Commission’s International Partnerships Directorate, Stefano Signore, said there was a new emphasis on supporting hard infrastructure under the Global Gateway initiative. In partnership with member states and banks, the EU stood ready to invest. Regional integration was important, as it enabled a better balance of energy sources.

From the world of finance, Vadim Sinista of the European Bank for Reconstruction and Development said his organisation would be open to investing in transnational interconnection projects. Alexander Antonyuk, from the European Investment Bank said they were concentrating on energy efficiency, decarbonisation and power networks. Since 2011, they had built up a €1 billion portfolio, which was growing rapidly.

Ekaterina Galitsyna of KfW IPEX-Bank stressed the opportunities in Uzbekistan and Kazakhstan. There was no need to go through all the steps that Europe had to implement sustainable technologies. It wasn’t all about wind farms, she said, identifying the potential of hydrogen projects in Kazakhstan.

The first hydrogen research and development centre in Kazakhstan has been opened by KMG Engineering. Part of the national oil and gas operator KazMunayGas, it now has a Department of Alternative Energy. Its senior engineer, Daulet Zhakupov, said that there are three main drivers pushing forward work on hydrogen production.

The first is the potential export markets in both China and Europe. The second is the impact of carbon tax, including the EU’s Carbon Border Adjustment Mechanism and of the emissions trading system. The third is the strategy to make Kazakhstan carbon-neutral by 2060.

The Head of Low Carbon Development at KazMunayGas, Aliya Shalabekova, explained the state enterprise’s overall decarbonisation efforts. The strategy required both reducing the carbon intensity of production and developing renewable energy sources. It was working on the production of sustainable aviation fuel and creating the infrastructure for electric cars.

The conference was given what Marat Terterov called a “glimpse of the future” when Jan Haizmann from the European Association of Energy Traders unveiled a new initiative, the Zero Emissions Traders Alliance, to be known as Zeta. It’s a non-profit foundation set up to create a transparent market for the buying and selling of not only commodities but also certificates, such as carbon credits and guarantees of origin.

Zeta is envisaged as a voluntary market, where companies accept third party verification. Transparency would create confidence and attract new players, creating liquidity and wider choice. Jan Haizmann urged Central Asia to embrace this system of standard products and standard contracts. If the five countries cooperated with one another, they would in the process gain greater independence from bigger neighbours.

The benefits of regional cooperation emerged as the theme of the day. It chimed with the spirit of the Central Asian Security and Cooperation Forum, held in the Kazakh capital, Astana, the following week. Deputy Prime Minister and Foreign Minister Murat Nurtleu spoke of Kazakhstan’s mission to promote stronger regional interaction that would unlock Central Asia’s potential. He also delivered remarks from President Kassym-Jomart Tokayev, who said his country has consistently adhered to the principle that a “successful Central Asia means a successful Kazakhstan”.

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