Kazakhstan and the Global Clean Energy Transition
The clean energy transition is forging new forms of cooperation and economic ties, giving countries like Kazakhstan the opportunity to solidify a greater role on the world stage and broaden their partnerships. Kazakhstan’s position as a crossroads between Europe, Asia, and the Middle East, as well as its wealth of natural resources, have set up the country to play a role in the global transition to clean energy.
Traditionally, Kazakhstan has been an exporter of fossil fuels, with the twelfth largest oil reserves in the world. Most of these exports went to Russia or the European Union (EU) until 2010-2014, when China claimed the top destination for Kazakh oil, and again in 2020-2021. At the same time, Kazakhstan began importing more goods from China. Kazakhstan has pursued a pragmatic foreign policy that has been characterized as “multi-vector” diplomacy, drawing it away from its traditional Russian sphere of influence. With a weakened Russia and Kazakhstan’s economic ties to the China and EU, new geopolitical dynamics are being forged through energy diplomacy.
Kazakhstan’s energy and economic potential have attracted a suite of international investors. The country’s multilateral policy will serve it well as the world undergoes the transition to clean energy. Kazakhstan has abundant energy resources, with approximately 12 percent of the world’s uranium reserves and around 33 percent of the world’s uranium production. This, plus its critical mineral deposits, and a proliferation of wind, solar, and green hydrogen projects, has created a diverse set of resources with significant energy and economic potential. In fact, the wind potential for Kazakhstan exceeds its current energy consumption by roughly 10 percent. Furthermore, the country has announced plans to develop its solar, wind, and green hydrogen potential. Additionally, Kazakhstan’s substantial uranium mines generate tailings, which have been found to contain sizeable amounts of rare earth minerals (REEs) elsewhere, and are critical for the clean energy transition.
Though historically tied closely to Russia, China is the largest market for Kazakhstan’s energy exports, and Kazakhstan has been described as the “belt buckle” in China’s Belt and Road Initiative. The strengthened relationship between the two countries grew out of China’s hunger for fossil fuels and its expanding engagement with the world. As such, the China-Kazakhstan relationship continues to evolve. As China undergoes the process of diversifying its energy sector, it is looking to Kazakh natural gas and investing in the country’s rich uranium deposits. With China betting heavily on nuclear energy, Kazakhstan solidified a deal for uranium mining, allowing it to power China’s nuclear transition.
Yet China is not the only party interested in the energy potential of Kazakhstan. In 2021, Germany and Greece were Kazakhstan’s fastest-growing export markets. The EU more broadly, provided 48 percent of Kazakhstan’s total gross foreign direct investment in 2019 and has pursued a new strategic partnership over clean energy supply chains and greater economic integration. Kazakhstan’s clean energy transition will rely heavily on wind and solar energy, which creates another promising export opportunity for Kazakhstan–green hydrogen. The country plans to construct the world’s largest green hydrogen project by connecting the electrolysis process to solar and wind power, which it will then turn around and sell to the EU along with access to its critical minerals. This deal not only increases the presence of another major world player in Central Asia but also helps the EU move away from Russian oil and gas. Kazakhstan’s multidirectional energy ties to the EU, Russia, and China are indicative of its efforts to limit any one country’s influence within its borders.
While Russia will always play a role in Kazakhstan’s economy because of its size and proximity, that role may shrink over time as Kazakhstan shifts its energy resources away from fossil fuels and diversifies its own energy markets. Kazakhstan will continue to sell oil and natural gas in the interim period leading up to the realization of the clean energy transition. However, the eventual phase-out of hydrocarbons poses a long-term issue for Kazakhstan’s economy, which the country recognizes and to resolve this, has devised its own ambitious net zero 2060 plan. This opens an opportunity to invest in Kazakhstan’s clean energy transition, potentially solidifying a greater role for the U.S. and EU in a region traditionally influenced by Russia and China. Kazakhstan’s role in the global clean energy transition offers an opportunity to broaden the country’s economic ties and shift regional dynamics in Central Asia.