The contemporary socio-economic progress of the world heavily depends on the utilization of energy resources, particularly oil. Kazakhstan, the largest oil producer in Central Asia, is taking significant steps in its transition towards green energy. This move is driven by global efforts to combat climate change and the need to diversify its economy. The country’s ambitious plans include increasing the share of renewables in its energy mix and exploring the potential of green hydrogen. However, this transition must be balanced against the political stability of the regime. This article, while limited by its broad scope and its reliance on secondary sources, aims to provide an overview of the implications of Kazakhstan’s energy transition.

Kazakhstan as Rentier State

As the largest oil producer among Central Asian states, Kazakhstan’s economy heavily depends on fossil fuels, with oil and gas comprising 60% of national exports (Franke et al., 2009; IEA, 2022; Pradhan, 2021). “The significance of oil is of unequivocal importance for Kazakhstan”, meaning that political and social stability, economic growth, territorial security, regional strength and international standings are all dependent on energy security, as oil generates the revenue needed for development in other sectors of the economy (Siraj and Afridi, 2020). Yet, despite being conducive to economic development, oil rent can also be held responsible for Kazakhstan’s position as an “ideal type of rentier state” and its subsequent struggle in establishing a strong democratic political system (Franke et. al, 2009; Gyene, 2016; Siraj and Afridi 2020). A country is a “rentier state” when its economy relies on substantial external rent from other countries. The government is the principal recipient of this rent, thus allowing the few who have economic power to seize political power also (Beblawi, 1987, 384). In the case of Kazakhstan, the rent is defined as the external financial rewards of the ownership and export of fossil fuels.

While the highest share of this rent comes from the European Union, followed by China and Türkiye, all great powers are sustaining the Kazakh rentier system (KAZENERGY, 2023). The US, Russia and China have each promoted rentier capitalism in Kazakhstan through their respective economic strategies, namely the Washington Consensus, China’s Belt and Road Initiative (BRI), and the Russia-led Eurasian Economic Union (EaEU), and have invested billions into the Kazakh energy structure (Sanghera and Satybaldieva, 2023; Zhou, He and Yang, 2020). Domestic elites have thus leveraged these global economic strategies to secure substantial rents for themselves and foreign investors, often at the expense of local populations, resulting in social and economic issues (Sanghera and Satybaldieva, 2023). Thus, in its efforts to escape the “resource curse”, Kazakhstan has been rethinking its energy strategy, aiming to become more self-sufficient and, consequently, more open to changes.

Decarbonization efforts

Although Kazakhstan is still reliant on oil, it has made significant strides in the production and use of green energy. Renewable energy production has increased by 40% in the last few years and now accounts for 3.5% of the country’s energy mix, yet is set up to reach 24% by 2035 (KAZENERGY, 2023; PwC, 2023). The government has successfully implemented numerous policies to support the transition to green energy, including conducting auctions for renewable energy projects, attracting international investment from both Western and Eastern countries and establishing important infrastructure (Astana Times, 2022; PwC 2023). Kazakhstan is also exploring the potential of green hydrogen, planning to produce millions of tons of green hydrogen annually by 2032, supported by partnerships with international firms like Svevind and Fortescue Future Industries (Astana Times, 2022; PwC, 2023). In February 2022, President Kassym-Jomart Tokayev signed an ambitious strategy for achieving carbon neutrality, detailing targets and milestones for the green transition across various sectors of the economy (Astana Times, 2022). The country thus aims to reduce greenhouse gas emissions to 15% below 1990 levels by 2030, produce half of its total electricity through renewable sources by 2050, and achieve carbon neutrality by 2060 (IEA, 2022; Koch and Tynkkynen, 2019). However, these plans may be too ambitious, as in a study funded by the Kazakh government oil production is set to grow until 2034 and then decline to 7% lower than the current level by 2050 (Alpysbaeva et al., 2022, 563). While significant strides are being made in the Kazakh energy structure, it is unlikely that short- and medium-term goals will be met on schedule.

Reinforcing the Political Structure

According to the EIU (2024) World Democracy Index, Kazakhstan is a transitioning authoritarian regime, as freedom and fairness of elections and several governance indicators do not rank well. While political instability generally increases as a result of natural resources in developing countries, Kazakhstan is an exception to this rule. As a post-Soviet petrostate, Kazakhstan is used to relying on the government’s control of resources for economic and social wellbeing and actually uses it as an advantage when exporting fossil fuels (Gyene, 2016). Thus, while decarbonization policies have brought along fear of instability, the centralized control over the country’s resources allows the government to implement and manage significant changes with minimal public discord. The Kazakh government is now gradually reducing dependency on fossil fuels while ensuring stability and continuous economic growth through renewable energy investments (Groce, 2020).

Conclusion

Kazakhstan’s bold path towards green energy and decarbonization reflects a proactive approach to global climate commitments and economic diversification. While significant challenges remain, the country’s strategic initiatives, supported by robust policies and international partnerships, position it as a leader in the green energy transition in Central Asia. By leveraging its centralized political structure, Kazakhstan is not only adapting to the global shift towards renewable energy, but also reinforcing its governmental stability, showcasing a unique resilience in the face of significant economic and environmental challenges.

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About the author

Mrs. Daria GUȘĂ

Mrs. Daria GUȘĂ is an International Relations and Middle East Studies Masters student at the University of St Andrews and a journalist for Solid News and Diplomatic Affairs.