MR. MARCO ALBERTI, Ambassador of Italy to Kazakhstan

In May 2019, the Mauna Loa Observatory, located in Hawaii, recorded an amount of CO₂ in the atmosphere of 415 parts per million, a level of carbon dioxide concentration equal only to that assumed in geological eras prior to the advent of human beings. The data recorded by the Loa Observatory , indeed, are comparable only to those hypothesized in the Pliocene, a geological era between 2.5 and 5 million years ago, when average temperatures were 2-3 ° C above the current ones. The decade 2010-2019 was the hottest in history since there are reliable records of the average surface temperature of the Earth and the planet keeps heating.

The climate crisis represents one of the main threats to people's health, but also to the political- institutional, economic and social stability of countries and entire areas of the planet. The WHO estimates more than 7 million premature deaths in the world every year due to the same emissions responsible for climate change, almost seven times the inhabitants of Nur-Sultan and more than the victims caused so far by Covid-19. The World Bank foresees over 200 million climate migrants by 2050, while the “NATO 2030 Report” classifies the climate crisis as one of the main causes of insecurity and instability for the countries of the Alliance. Finally yet importantly, a sick planet represents a multiplier of the economic risk, as significant climatic variations affect the transmission channels of monetary policy, influence the work of financial intermediaries and determine the emergence of new threats to the monetary policy of central banks. Hence the growth of environmental, social and governance (ESG) indicators as a tool for assessing government policies and company performance, as well as the use of these metrics to quantify the ability of companies to create long­term value. Nor surprisingly BlackRock, the largest asset management company in the world with over $ 7,000 billion in assets, has declared that it no longer wants to invest in companies with high environmental risks.

Today, compared to the past, global influence depends on "transversal" revolutions, such as the digital and the energy revolutions. Both have turn inseparable, since both are essential to de­carbonize. The fight against climate change, for example, has become a reference element to design national and international policies; a strategic axis to revive or re-design alliances (especially the multilateral ones), promote more sustainable growth and pursue a rebalancing of power. At stake is the future of humanity, but together with this, also global leadership in a strategic sector like climate, in which huge economic resources and extremely advanced technologies converge. Climate policies and technologies reshape business models and change the same concepts of competitiveness and global power. The geopolitical derivative of such scenario is that the environment can be a ground of collaboration or, vice versa, of confrontation. This will depend, largely, on the choices of the players involved. The 2015 Paris Agreement offered an unprecedented platform for relaunching multilateral dialogue on a global issue like climate protection. At the same time, however, the "race to green" has relevant policy implications and, additionally, requires a different use of natural resources, reallocation of production factors, radical changes of pattern that can exacerbate competition.

We live in a transformative time. Delaying decisions will only lead to more problems, and those problems will require more decisions. Regarding the energy transition, three considerations are particularly important.

The first: targets are not enough. Everyone agrees on the urgency of adopting more sustainable models of growth; yet, climate ambition requires precise and long-term choices, a lot of collaboration and adequate resources to convert commitments into projects, develop new industrial supply chains and limit the destabilizing impacts of the transition. Climate does not respond to what people, companies or governments, say. Climate responds to what people, companies or governments do, through tangible actions. All countries face the challenge to adopt a well-designed strategy, based on projects (concrete), players (skilled), resources (abundant) and partnerships (at both national and international level). Italian companies are here in Kazakhstan to accompany the energy transition of the country, according to the priorities outlined by its government. In March, Eni-Arm Wind inaugurated the Badamsha-II, second half of a 96 MW wind plant in Aktobe, and one 50MW PV solar plant is under construction in the Turkestan region. Italy is a European top performer in many indexes of circular economy, like recycling, and we have more than 440 thousands SMEs that have invested in green products and technologies over the last five years¹. Most of them are competitive, innovative, internationalized. We will help them catch the opportunities offered by the “new Kazakhstan”.

Second consideration: renewables are not enough. As said, a sick planet is an economic and financial risk. Investors are well aware of that and bet on countries, companies and projects with a high index of environmental, economic and social sustainability. In 2021, renewables accounted for 70% of the $530 billion invested globally on energy generation². Yet, even if renewables bring investments and contribute to cut emissions, they are not the silver bullet of the transition. The ecological transformation does not end with a diversification of the generation mix. It also requires greater demand-side management; massive processes of electrification and decentralization; infrastructure digitalization; the involvement of a range of new energy actors, and demand for new energy inputs, such as critical minerals. According to IRENA (International Renewable Energy Agency), by 2050 33 trillion US$ of additional investments are required into efficiency, renewables, end-use electrification, power grids, hydrogen and innovation³. Each of these changes infers a need to re-think how the energy system is designed and how it affects geo­politics and geo-economics. Without flexible, digitized electric grids, for instance, countries cannot achieve de-carbonization targets and move quickly from a carbon-intensive economy to a more efficient, cleaner one. De-carbonizing the system requires a transformation in the way societies generate, transport, distribute and consume energy.

A third consideration: governments are not enough. The fight against environmental degradation, and the creation of a net-zero society, first require the vision of the public, but also ideas, skills and resources of the private sector. De-carbonization is a shared challenge, not only a governmental responsibility; its success depends on the ability (and availability) to create multi-stakeholders platforms and orchestrate their action. Today, what countries need is not simply flows of investments, but innovative blending of capitals, supported by an enabling convergence of policies, strategies and regulatory frameworks to modernize the system, scale-up climate investments, accelerate the low-carbon transition. Moving this way will require an unprecedented level of investment, particularly in the form of green finance. A new public-private alliance is required, since no government alone will be able to provide all the resources necessary to accelerate its own transition. In this regard, partnerships with development banks play a key-role. The solid, long-standing cooperation with the EBRD, for example, is helping, and will help, Kazakhstan to achieve its de-carbonization goals faster and more effectively. From this point of view, the Astana Financial Days, organized by AIFC in Nur­Sultan at the end of June, provided interesting insights. Among those, the need to enhance ability of the financial system to mobilize private capitals for green and sustainable investments. Additionally, the importance to develop new financing tools, like green bonds, and - particularly - the innovative sustainability- linked bonds, to match potential investors with the green financing requirements and to help mobilize capitals in the scale required.

As the world is heating up, any country faces a dual challenge: scaling up climate action and managing the potential disruptions following from the energy transition. The current geopolitical tensions emphasize one of the messages sent last year at Glasgow: the future is green, but visions on the transition are different. Even under the most aggressive climate change policies, evidence show that the world will continue to use oil and gas for some time, and for sure until 2050. Empowering the early winners of the green transition is good and desirable, but we should also focus on risks related to the potential disruption resulting from a (too) rapid transition. In response to that, governments and international organizations, should make any possible effort to link low- carbon transition with foreign and security policy, as they did with oil and gas in the past decades. The EU pays a special attention to the importance of balancing these two aspects. Fit for 55, for example, commits the EU to cutting emissions by at least 55% by 2030, an intermediate step towards climate neutrality by 2050. On one side, Fit for 55 stands as an opportunity to accelerate the green race. On the other side, yet, it recalls the importance to promote a fair transition, trying to make it fast, but also just.

As for diplomats, from now on we should consider the transformative impacts of the green revolution on geopolitics. We still ignore what the energy geopolitical map will look like in 30 years, but we already know that pursuing net-zero society requires managing three transitions at a same time: digital, ecological and geopolitical. Digitalization boosts the green race, and, in turn, digital and ecological transformations affect geopolitics and geo-economics, reshaping the concepts of power and influence; the relations between States; the concept of alliance and the economic dispute or convergence of developed/developing countries. In such new scenario, we face two, overlapped “geopolitics of energy”: the traditional one and the transitional one.