MS KATHY LEACH, Her Majesty's Ambassador to the Republic of Kazakhstan

SUMMARY

COP26 concluded in November 2021 with 197 Parties agreeing the Glasgow Climate Pact to ’keep 1.5 alive’: net zero commitments now cover 90% of the world's economy, up fr om 30% two years ago.

But we now need to turn pledges into actions, and continue to ratchet up ambition — with a particular focus on the UK's Presidency priorities: coal, cars, trees/land use and, of course, the finance to pay for it. Glasgow increased the funding for developing countries to $100bn a year by 2023 and outlined special partnerships including a £6bn deal with South Africa for funding a ‘just transition’ from coal. To mobilise finance from international investors and development banks at the scale required to meet its ambitions and commitments, Kazakhstan needs to have a detailed energy plan, including on upgrading its electricity grid: an incentivising  policy framework which puts an increasingly tough price on carbon and supports green energy; and the transparent measurement tools and ESG reporting framework to get carbon neutrality and sustainability into the bloodstream of government, business and consumers. The government also needs to invest in its own capability, with e.g. every relevant ministry having a dedicated climate change team, and budget line to promote sustainable development; and expertise at the centre of government to coordinate and advise. Finally, every Akim should be given financial incentives for developing sustainable, local solutions on energy, energy efficiency, water, transport, and waste.

The welcome speech of Ms. Kathy Leach, British Ambassodor to Kazakhstan

COP26 in November 2021 concluded with 197 Parties to the UNFCCC agreeing the Glasgow Climate Pact. This Pact is just about enough to "keep 1.5 alive" — that is, to keep the prospect of global warming to under 1.5 degrees — but only if all commitments are met and indeed increased over the next crucial decade. Thanks to everyone's efforts net zero commitments now cover 90% of the world's economy, up from 30% two years ago. At Glasgow we also made progress in gaining support for our Presidency priorities, with many countries (including Kazakhstan) making new pledges to phase out coal; to accelerate zero-emission cars; to save and replant our forests; and of course, to mobilise the finance to pay for an ambitious green transition — 100bn a year for developing countries.

The task now is to turn the COP26 pledges into action. We are very grateful to Kazakhstan for its 2060 Net Zero pledge and other commitments, including signing up at COP26 to the Presidency declarations on Forests and Land Use, on Youth and Education, and on a Just Transition from Coal. I believe President Tokayev is committed to the principle of Net Zero. The President has tasked the Ministry of National Economy, in coordination with other Ministries, with developing the detailed plan on how to achieve - it the Carbon Neutrality doctrine.

This is all the more important because at Glasgow Kazakhstan did not yet publish any further detailed policy roadmap to explain how it will achieve its — 15% National Defined Contribution by 2030. Nor did it give more than some headline targets in its Long-Term Strategy to reach Net Zero.

Setting out a detailed policy roadmap for Kazakhstan's energy sector is an absolutely critical next step if Kazakhstan is to attract the investors, multilateral development banks and entrepreneurs who will need to build and finance Kazakhstan's next generation energy infrastructure, at the scale and pace required.

And I say that very well aware that decarbonising an economy like Kazakhstan's is a hugely challenging prospect, even more challenging today. The January events showed how sensitive the issue of energy tariffs is — Kazakhstan's energy prices are currently among the cheapest in the world. And Russia's invasion of Ukraine has exposed Kazakhstan and the wider region to serious geopolitical and economic risk.

These circumstances might lead people to think that a green transformation is no longer something Kazakhstan can afford. I would suggest the contrary — Kazakhstan cannot afford to put it off any longer. Why?

First, because Kazakhstan's existing energy infrastructure — its Soviet-era grid and coal-fired power stations — is already too old, too accident-prone, too dangerous to the health of our children, and is failing to meet demand. Energy dependence on neighbours —for electricity and gas — will only increase. Under any scenario, after years of under investment, investment has to be made right now in infrastructure — energy, water, connectivity, waste management — to lay the foundation for diversified economic growth.

Moreover, if Kazakhstan is to attract investment, it urgently needs —at a time of acute geopolitical risk — to distinguish itself in a competitive global market for capital. I believe Kazakhstan has a great opportunity to position itself as an ambitious, future-oriented, modernising country, with sustainability and equity at the heart of its economic strategy. The President's vision of a New Kazakhstan, outlined for the first time in his speech on January 11, offers this promise.

But a vision by itself is not enough. To mobilise finance at the scale required, Kazakhstan's energy plan needs urgent work in 3 areas.

Second, a detailed long-term energy transformation plan, including, as a priority, a plan to upgrade the electricity grid, improve access to energy to rural communities through renewables, and improve connectivity across Central Asia, to provide resilience. This must also include a credible long-term plan to create a real electricity market, based on realistic tariffs.

Third, an incentivising policy framework for domestic and foreign investors. In the UK and Europe, we have had 20 years of experience in developing policies to attract investment and create an electricity market for the renewables sector. Such a framework must, at a minimum:

• put an increasingly tough price on dirty electricity, through policies like emissions trading, a carbon tax, and reduction targets for methane;
• support both energy efficiency, through incentives and penalties, and renewable energy, with appropriate subsidies.

I particularly want to stress the importance of energy efficiency. Energy investment will require energy tariffs to become more expensive. Therefore, it is essential that steps are taken right now to start developing the right policies, technologies and - most importantly — the mindset and commitment of consumers and businesses to saving energy.

And on renewables, policies must be designed carefully to make sure they are attractive for investment. Existing renewables contracts, priced in tenge, are at huge risk of no longer being economically viable if the exchange rate suddenly changes.

Kazakhstan should consider a recent Asia Development Bank report, and Uzbekistan's experience, of pricing renewable electricity contracts in a way which will not put all currency risk on the investor.

Fourthly, Kazakhstan needs to invest in deepening its measurement and verification expertise on emissions monitoring, and a strengthen a transparent, obligatory ESG (Environment, Social, Governance) reporting framework in line with international standards for financial institutions and businesses. This is already starting to happen — the Agency for Financial Regulation is doing great work — but it needs to be speeded up. Kazakhstan needs to get carbon neutrality and sustainability into the DNA of government, business and consumers.

Fifthly, the financial architecture to support a green transition and leverage funds from foreign investors needs expanding. For example, Kazakhstan could create a Green Bank — perhaps this could be the new purpose of the Development Bank of Kazakhstan —and issue sovereign sustainable development bonds. In Glasgow, 95 banks with 43% of global banking assets, committed to achieve carbon neutrality by 2050 — this means that international investors will be looking for projects which meet their tough ESG criteria. Efforts should also be considered to accredit a Kazakh institution so that it can receive funds directly from international funds such as the Green Climate Fund or Adaptation Fund. Currently, all funds can only be received via multilaterals with relevant accreditation, such as EBRD.

We know all too well that it takes time, and expertise, to build a great, detailed plan, to build consensus among stakeholders, and then to deliver this plan at an acceptable cost. The UK has spent the last 20 years building its green energy policy. Over that time, we have learnt as we have gone along, making mistakes, changing policies that weren't working or were too expensive, but continuing to drive forward our green transformation.

The headlines speak for themselves: in 2008,80% of our electricity came from fossil fuels.

Renewables generated just 6% of electricity. Electricity demand had been rising for decades. But since 2008, we have cleaned up our electricity faster than any other world economy. Our energy mix has shifted from 40% of coal in power generation to around 5%. Over 50% of our electricity is low-carbon — renewables and nuclear.

Sometimes — on a particularly windy day — renewables even make up 50% of electricity. We have also reduced electricity demand by about 25% per capita, despite our rising population and growing economy, through huge improvements in energy efficiency in homes and household appliances, by setting targets for business, and by some increase in prices.

The UK's low carbon economy is now worth more than £200bn, almost four times the size of the country's manufacturing sector, with growth expected to accelerate in the coming years. More than 75,000 businesses from wind turbine manufacturers to recycling plants employ more than 1.2 million people in the green economy.

We have developed, with international partners, many initiatives wh ere we try to share the policy lessons we and other international partners have learnt, to support countries like Kazakhstan: the Powering Past Coal Alliance, the Green Grid Initiative, the Clean Green Initiative, Zero Emission Vehicle regional dialogues, the Race to Zero, the C40 cities initiative. We would love to get Kazakhstan's Ministries, oblasts, cities, businesses, NGOs and entrepreneurs involved in some of these schemes. And of course, we have some brilliant companies — Hive Energy on solar and green hydrogen transport, Independent Power Company, Rolls-Royce for small modular nuclear, the National Grid, and engineering companies like Worley and Wood Mackenzie, to build green infrastructure —just to name a few. All have experience and expertise to share.

Let me finish with a couple of final suggestions. To reorient Kazakhstan's economy and to convince foreign investors you are serious, another lesson the UK has learnt is that you also need to put the right structure and resource into government itself. A few thoughts to consider:

• Make energy policy a separate national project of its own under the Agency for Strategic Planning.
  
  
• Put commitments into law. We passed the Climate Change Act in 2008, putting our climate targets into law, and set up the Climate Change Committee, a specialist independent body, to provide annual guidance and advice on whether government plans were sufficient to meet our targets.
  
  
• Invest in expertise. Every relevant Ministry should develop a specialist climate change team. As a bureaucrat I can tell you — if it is not 100% of your job, the critical long-term issue of climate change will never be urgent enough compared to the short-term issues of today. You might also consider developing a specialist coordinating and crosscutting body or agency, whether in the Ministry of National Economy, or in the Presidential Administration or office of the Prime Minister, with expertise from government, industry and academia and a budget for research, consultancy, conferences and publicity. In the UK, for example, in 2008 we created the Department of Energy and Climate Change, bringing together the energy team from the Department of Trade and Industry, and the climate change team from the Department of the Environment. This was transformational.
  
  
• Promoting sustainable development needs to run through government from top to bottom. I am told the Ministry of Information has a budget of billions of tenge, but no budget line to promote sustainable development.
  
  
• Every department should have a budget line for sustainability —and should be communicating the importance of "greening Kazakhstan". Governments have to bring the people along with them on this journey, demonstrating the value of cleaning up their environment and investing in the high-tech jobs of a green economy.
  
  
• Work bottom up as well as top down.Empower rural akim to develop sustainable development strategies, with financial incentives.
  
  
• Introduce green bonds for regional akimats.

Promote small scale renewables in rural communities. One final example — in 2008 we had around 2,000 small scale renewables, largely roof top solar. In the last 14 years we have had around 1.2m installations — in remote places such as the Orkney Islands, 20% of the population have renewable energy. With the right government support, it is one of the answers to fuel poverty.

Kazakhstan's achievements over the Iast30 years in building a prosperous, modern state, educating its young people and being a responsible global citizen have been hugely impressive. But history teaches us that economic growth is not inevitable — every country must continue to invest in new technology and new skills for its young people, if it is not to lag behind in the global race for development.

As the Presidency of COP26 until November this year, I feel a particular responsibility to help Kazakhstan find its "green transformation" pathway, building the next generation of infrastructure, technology and skilled jobs, which will ensure Kazakhstan's continued prosperity and security over the next 30 years.