Irina Zavyalova, Center for “Promotion of Sustainable Development”

Sultan Kaspakov, "QazBioEnergy” LLP

The development of this sector will increase efficiency in agriculture and at the same time increase Kazakhstan's exports

Agriculture remains one of the key sectors of the Kazakh economy, which simultaneously provides food security for the whole country and permanent jobs for rural residents. At the same time, it has a negative impact on the environment. The fact is that farming is associated with greenhouse gas emissions, especially methane, a gas that contributes to global warming and climate change on Earth.

Because of this, the industry is constantly looking for solutions that will help reduce the impact of agriculture on the environment. Biogas plants have become one of such solutions, which help to reduce methane emissions and, at the same time, produce energy for the needs of citizens and enterprises – primarily in the agricultural industry.

Biogas plants are systems that use organic material to produce biogas, from which thermal and electrical energy can then be generated. Thanks to this, it turns out not only to reduce greenhouse gas emissions, but also to provide additional generation capacity for the country's energy system. For Kazakhstan, this is the way to achieve the UN Sustainable Development Goals and the development of alternative energy sources.

There are already several successful examples of the operation of biogas plants in the republic. One of such projects is biogas plants seven kilometers from Kogershin settlement in the Zhambyl region. Here, on an area of 30 hectares, there is a pig-breeding complex, the daily productivity of biogas is 5,300 cubic meters per day.

In Kostanay region, on the territory of Karaman-K farm, a biogas plant has been operating since 2011, where annual energy generation exceeds 100 thousand kilowatt-hours. In the East Kazakhstan region, a biogas plant is operating in Privolnoye settlement on the basis of Bagration farm, which allows processing 10 tons of manure per day and producing 400 cubic meters of gas. In the Aktobe region, Sazdy settlement, a biogas plant operates in the Bolashak farm and allows receiving two cubic meters of biogas per day.

One of the active players in this market is “QazBioEnergy" LLP. On July 5, the Director of this company Sultan Kaspakov told about the prospects of biogas production by his example at the National Forum on Methane in Astana.

QazBioEnergy has been promoting biogas technologies in Kazakhstan for several years, supporting an eco-friendly approach to waste management in agriculture and energy production. So, for four years of operation, the company produced more than 11 million kilowatt-hours of electricity worth more than 400 million tenge, for which more than 220 thousand tons of chicken manure were processed. The company has trained 20 locksmiths and operators in the methods of operating a biogas plant to produce biogas.

At the same time, there are a number of obstacles to the development of this industry. One of them is subsidized tariffs and their indexing. The relevance and potential profitability of these indicators in Kazakhstan has been steadily decreasing over the years, and as a result, financial interest in biogas projects is weakening, and their implementation is being delayed more and more every year.

The solution to this problem may be transition of the input tariff to the indexing mode, which entails regular updates and re-indexing on an annual basis.

The significant capital costs associated with the implementation of the biogas project make it less competitive compared to wind and solar power plants. Therefore, it is possible to increase the cost of a kilowatt-hour for biogas energy.

Another important problem is the availability of funding for such projects. There are about 60 meat and egg poultry farms in Kazakhstan in the country, and this is a promising market for biogas plants.

But this sector depends on government subsidies and is currently experiencing difficulties in terms of qualitative development, which leads to the closure and bankruptcy of many enterprises. Unfortunately, not every poultry farm has the finances to secure long-term bank loans for construction and equipment, not to mention covering all project costs.

Despite the considerable interest of entrepreneurs in the implementation of such projects, the high costs and technological difficulties associated with the maintenance of biogas plants puts off even the largest market players.

This situation highlights the critical dependence of the biogas industry on the availability of fast and affordable financing options. Currently, most of the available financing programs require a minimum investment of at least 30% of the project cost, which makes it almost impossible to build a high-quality biogas plant.

According to the company “QazBioEnergy", to solve these problems and promote the mass construction of biogas plants in all regions of Kazakhstan, the industry needs special financing programs and attracting investment capital.

Such initiatives will provide the necessary financial support and incentives for the development of the biogas industry in the country. Now the introduction of biogas plants at enterprises is mostly the enthusiasm of individual managers.

If we talk about the prospect of mass introduction, it is necessary to oblige large poultry farms to process manure at biogas plants, but in view of the difficult situation of existing poultry farms, this is not feasible.

Sultan Kaspakov believes that as a first step, it is necessary to oblige new poultry farms to introduce biogas plants that are being built “from scratch”. Those small poultry farms that clearly cannot afford such projects, combine into clusters and recycle waste from two or three poultry farms at one large station in the region, since the construction of one large station is much cheaper than the construction of two small ones.

In addition, there are problems associated with the production of biofertilizers. Despite the fact that existing biogas plants in Kazakhstan produce from 5 to 20 tons of biofertilizers per day, none of them undergoes further processing into the format of granular organic fertilizer NPK.

The main reason for this lies in the high cost associated with the creation of a pellet production shop, which usually requires a minimum investment of 200 million tenge. Not every biogas plant can afford it, and the lack of an affordable market for organic fertilizers further reduces the incentives to create processing enterprises.

To solve these problems, strategies should be explored that encourage the creation of processing plants and stimulate the demand for organic fertilizers on the market. This may include the implementation of financial support programs or creation of partnerships between biogas plants and interested players in agriculture to ensure a permanent and profitable market for organic fertilizers.

Using the potential of biofertilizers and promoting value-added products, Kazakhstan can gain additional economic and environmental benefits in the biogas industry.

The dominance of subsidized mineral fertilizers in the market inadvertently led to the marginalization of organic fertilizers, which made further processing unprofitable for biogas plants and burdened farmers with unreasonable costs.

However, we must not forget that organic fertilizers have significant advantages in comparison with mineral analogues, since they improve soil health and eliminate the need for idle land.

Many large agricultural countries are actively acquiring this type of fertilizer. Unfortunately, the current market conditions make financial investments of ordinary farmers in organic biofertilizers unprofitable.

To solve this problem and use the potential of organic biofertilizers, Sultan Kaspakov proposes to create a large center of wholesale and distribution trade in Kazakhstan. It will serve as a centralized authority for procurement and standardization of all available biofertilizers from biogas plants.

At the intergovernmental level, this will facilitate the export of these standardized biofertilizers to foreign players. This initiative will serve as the agricultural equivalent of “Financial Settlement Center” in the renewable energy sector, providing a stable channel for trade in organic biofertilizers.

By creating such a hub, Kazakhstan will be able to open up new opportunities for both the biogas industry and farmers. This will provide a much-needed market for biogas plants to sell their biofertilizers and encourage them to invest in further processing.

At the same time, the hub will give farmers access to high-quality organic biofertilizers at more affordable prices, which will allow them to improve soil health and increase productivity in their farms.

Moreover, the creation of an international export market for organic biofertilizers will strengthen Kazakhstan's position as a player in the global agricultural sector. This initiative will not only support the country's economic growth, but also contribute to sustainable farming practices and environmental conservation.

In the world market of biofertilizers, the average price is about 120 thousand tenge per ton, which gives opportunities for profitable trading. Biogas plants in Kazakhstan with a pricing strategy that allows them to sell biofertilizers at a price of 50 thousand tenge per ton can get more than 50% margin. This will make it possible to make significant investments in the proposed center of wholesale and distribution trade.

With the creation of the hub, Kazakhstan will be able to meet the growing demand for biofertilizers around the world. Every year, the hub can receive more than 50% of its income from the sale of fertilizers, and the conclusion of long-term contracts for purchase of biofertilizers will increase the investment attractiveness of biogas projects.

In addition, the hub can establish strong ties with the Ministry of Agriculture of Kazakhstan, which will allow for distribution within the country and facilitate the export of surplus fertilizers. Together with competitive prices, this will benefit all interested parties.

With connection biogas plants to the hub, the process will become even more efficient. Biogas plants can focus on electricity generation, as the hub becomes the sole buyer of biofertilizers.

Biogas plants will no longer need to spend time and resources searching for buyers, and farmers will receive reliable supplies of environmentally friendly fertilizers, attracting new investments and introducing sustainable farming methods. At the same time, it will be easier for banks to finance projects with 100% sales of products, which will increase their confidence in lending to the sector.

Thus, cooperation between biogas plants, the hub and the Ministry of Agriculture will contribute to the creation of sustainable and profitable ecosystem that will benefit all stakeholders.