The United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) and the United Nations Economic Commission for Europe (UNECE) are jointly implementing the UNDA project “Strengthening energy policies of Countries with Special Needs to build back better from COVID-19” (January 2022- June 2025) for eight beneficiary countries, including the Republic of Kazakhstan.

The project is aimed at supporting national Kazakhstan obligations in the framework of the SDGs implementation. The main goal of the project is to develop a Roadmap for Kazakhstan to achieve Sustainable Development Goal 7 (SDG7) “Ensuring access to affordable, reliable, sustainable and modern energy sources for all.”

The project uses the National Expert SDG Tool for Energy Planning (NEXSTEP), which is an integrated and innovative approach to policy decision-making that involves an intensive data collection process, multi-stakeholder consultations, in-depth energy and emissions modelling, economic analysis, and policy analysis. The tool will support the development of the SDG 7 Roadmap for Kazakhstan, which will assess the readiness of Kazakhstan in achieving SDG 7 and NDC targets, identify gaps and recommend areas that will require further efforts to ensure achievement of these targets.

Introduction to Energy Modeling and Scenarios

The base year for modeling analysis is 2021, utilizing the most recent comprehensive data. Scenarios are modeled for the period 2022-2030, with one prospective scenario extending to 2050. Five scenarios were developed for Kazakhstan using a bottom-up approach:

1. Business-as-Usual (BAU): Projects energy demand and emissions trajectory based on historical improvements.

2. Current Policy (CP) Scenario: Considers existing policies and plans implemented or scheduled for implementation during the analysis period, and are aligned with SDG 7 and national NDC goals.

3. SDG Scenario: Aims to achieve SDG 7 targets and unconditional NDC targets by 2030, including universal access to electricity and clean cooking technologies, increased renewable energy share, and improved energy efficiency.

4. Sustainable Heating Scenario: Examines measures to reduce heating demand and increase the share of renewables in heat production.

5. Pathway to Neutrality by 2050: Investigates technological interventions, timelines, and legislative frameworks required for Kazakhstan to achieve net-zero emissions by 2050.

Key Assumptions, Demand Analysis and Growth Projections

The growth in energy demand is estimated using the activity level and energy intensity in the LEAP (Low Emissions Analysis Platform) tool. The demand outlook throughout the NEXSTEP analysis period (2021-2030) is influenced by factors such as annual population growth, annual GDP growth and per capita GDP.

ENERGY DEMAND AND EMISSION PROJECTION

1. Current Policy (CP) scenario

The total final energy consumption (TFEC) is expected to increase from 43.3 Mtoe in 2021 to 55.6 Mtoe in 2030, an average annual growth rate of 2.8 per cent. In 2030, the industrial sector consumption will be the largest at 31 percent, followed by the residential sector 29.6 per cent, the transport sector 20.2 percent, and the service sector 14.3 percent. The agriculture sector will account for2.5 percent, while the remaining will go to non-specific energy use and non-energy use. Figure 1 shows the forecast of TFEC by sector under the CP scenario.

GHG emissions from the energy sector are estimated to increase to 219.6 MtCO2-e in 2030. Power and heat generation emissions will be the largest at 103.4 MtCO2-e. It is followed by the residential sector at 37.4 MtCO₂-e coming from solid fuel combustions for cooking and space heating. The emissions attributable to the industrial sector are estimated at 35.1 MtCO2-e. The transport sector emissions will be 32.3 MtCO₂-e arising from direct fuel combustions in internal combustion engines. The service and agriculture sector emissions together will be around 11.4 MtCO₂-e.

2. Sustainable Development Goal (SDG) scenario

Access to affordable, reliable, sustainable, and modern energy is essential to achieving the 2030 Agenda for Sustainable Development and the Paris Agreement on climate change. Kazakhstan has achieved a 100 percent electricity access rate in the current policy scenario. Nonetheless, a concerted effort is needed in other areas to allow the achievement of allSDG7 targets, specifically the clean cooking target and the energy efficiency target, with measures recommended in the SDG scenario.

In this scenario, the total final energy consumption is expected to increase from 43.3 Mtoe in 2021 to 51.7 Mtoe in 2030, a reduction of 3.9 Mtoe compared to the CP scenario (figure 2). This reduction is due to the adoption of higher energy efficiency measures. In 2030, the industrial sector consumption will be the largest at 32.3 percent, followed by the residential sector 27.3 per cent, the transport sector 20 percent, and the service sector 15.1 percent. The remining goes to agriculture and non-specific energy use.

GHG emissions from the energy sector is estimated to increase to 187.8 MtCO₂-e in 2030 in the SDG scenario. Emissions from the power and heat generation sector will be the largest at 86.1 MtCO₂-e. It is followed by the industrial sector at 35.1 MtCO₂-e and the transport sector at 28.7 MtCO₂-e. The residential sector will account for 26.4 MtCO₂-e while service and agriculture sectors’ combined emission will be around 11.4 MtCO₂-e.

3. Sustainable Heating by2030 scenario

Due to its climatic condition, a significant amount of heat is consumed in Kazakhstan. Most of the demand, however, is supplied from unclean heating technology. Building on the SDG scenario, the sustainable heating scenario further explores how the country can transition its heating demand and supply towards cleaner technologies.

Under the SDG scenario, it is expected that at least 14.4 percent of the rural population will still use coal boiler technology by 2030. In this sustainable heating scenario, NEXSTEP suggests phasing out of the remaining inefficient heating technology in the residential sector by promoting electrical heaters and natural gas boilers. In both urban and rural areas, the average natural gas boiler efficiency can also be improved from 75 percent to 84 percent (IEA, 2020). Additionally, actual thermal savings may be maximized, up to an estimated 15 percent, by further insulation measures in roof spaces, basements and windows through deep retrofitting. This will result in 2.2 Mtoe energy saving in the residential sector. Figure 3 shows energy saving potential by fuel and technology.

In the supply side, it is also critical to increase the share of renewable energy in heating generation. In 2021, the heating demand was supplied mainly by fossil- fuelled Combined Heat and Power (CHP) and coal Heat Only Boiler (HOB). NEXSTEP analysis suggests adding of 2.5 GW heat pump to reduce heat generation from fossil fuel. As a result, this scenario will improve the following indicators:

•  increase the share of renewable energy in heat generation to 20 percent by 2030, compared to none in the SDG scenario;

•  increase the share of renewable energy in TFEC to 10.6 percent by 2030, compared to 6.8 percent in the SDG scenario;

•  reduce the energy intensity to 3.9 MJ/US$2017 by 2030, compared to 4 MJ/US$2017 in the SDG scenario; and

• reduce GHG emissions to 180.3 MtCO₂-e or a reduction of 69.3 MtCO₂-e (27.8 percent) compared to 1990 level which will exceed the conditional NDC target.

4. Towards Net Zero by 2050 scenario

This scenario explores challenges and opportunities for the Government of Kazakhstan to align its energy sector in line with the global ambition of achieving net zero emissions by 2050. Various stringent measures across different sectors will need to be implemented as we move beyond 2030. The first step would be to plan for full decarbonization of the power sector by 2050. In the demand side, the utilization of 100 per cent electric cooking stove will be needed to achieve by 2050 to fully decarbonize the residential sector. Similarly, the transport sector will need the adoption of 100 per cent e-mobility. In the service and industrial sectors, fuel switching has a significant role, particularly the switching from fossil-fuel to electricity.

This scenario would save energy demand by around 25.6 Mtoe compared to the CP scenario. However, this scenario requires 713.9 TWh of electricity by 2050, an additional 454.4TWh, compared to the CP scenario. Further implementation of energy efficiency would help reduce this electricity demand. In terms of supply, it is estimated that 276 GW of wind power capacity, 15 GW solar power capacity, 4 GW hydropower, and 2.2 GW mini hydro on top of 2.7 GW gas engine are required to fulfill the electricity demand by 2050. In addition to this, 18 GW heat pump will be required to fulfill the heat demand. Figure 5 presents comparison of energy demand under five scenarios.

Policy recommendations

• Targeted policy measures are required to address the gap in clean cooking by 2030. Achieving access to clean cooking technologies will not be a challenge for Kazakhstan since the gap is low at the moment. The adoption of electric cooking stoves to close the 2.2 percent gap will significantly help improve clean cooking access. The cost of deployment of electric cooking stoves would be US$ 7.6 million by 2030.

• Increasing the efficiency of energy use in all economic sectors should be pursued. The presence of energy efficiency concept will help Kazakhstan reduce its energy intensity by 2029. Kazakhstan can further increase its energy reduction by 2030 through additional measures under the SDG scenario. The residential sector is the highest energy consuming sector in Kazakhstan. Therefore, the utilization of improved heaters for space heating will significantly help improve energy efficiency and reduce emissions. The more aggressive MEPS adoption and thermal insulation improvement in the residential sector can be implemented to achieve a more sustainable heating system. In addition to the residential sector, industry and service sectors might have significant energy saving potential through deep retrofitting and motor replacement. Very high consumption of fossil fuel in the industry sector will pose a major challenge should the country wishes to pursue the net zero emissions pathway. In terms of decarbonization of the whole economy by 2050, the industrial sector might be a challenge for Kazakhstan since the consumption of fossil fuels is quite high. Therefore, fuel-switching options would need to be considered.

• Transport electrification provide multi-fold benefits in the long-term. Vigorous adoption of electric vehicles reduces the demand for oil products, hence reducing Kazakhstan’s reliance on imported petroleum fuels. At the same time, it can contribute to climate mitigation and improve local air quality. Transport electrification would be critical to decarbonise . the passenger transport sector by 2050. An adoption rate of 15 per cent of passenger cars, 5 per cent electric buses and 10 per cent of freight trucks by 2030 has the potential to save energy by 0.9 Mtoe and reduce emissions by 3.5 MtCO2-e.

• Decarbonisation of the heating system provides the highest potential in GHG emission reduction as well as improves energy security. As can be noted in the sustainable heating scenario, a substantial GHG emission reduction is possible through the implementation of efficient and renewable energy-based heating system. Although the required additional capacities could be challenging technically and economically, they will help improve energy security through the utilization of indigenous resources. NEXSTEP analysis suggests 2.5 GW heat pumps be introduced by 2030, which should increase to 18 GW by 2050.

• Decarbonisation of the power supply is the key to achieving net zero emissions by 2050. Decarbonisation of the power sector is important to prevent shifting of emissions from one sector to the other when implementing policies, particularly on clean if the country plans to move towards net zero by 2050. Decarbonisation attempt will require a substantial increase in renewable capacities, which could be challenging but it will offer multiple benefits, including reducing emissions and improving energy security through the utilization of indigenous resources. In terms of electricity supply, it is estimated that 276 GW of wind power capacity, 15 GW solar power capacity,4GW hydropower, and 2.2 GW mini hydro are required to fulfill the rising electricity demand.