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Kazakhstan’s new parliament could usher in green energy, rare earth investments

Ecology and Natural Resources Minister Zulfiya Suleimenova spoke to NE Global about Kazakhstan's energy transition

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Kazakhstan held internationally monitored elections for the Mazhilis, the lower chamber of the Kazakh Parliament, on March 19, following major constitutional reforms, which most observers have said is an important step towards the democratization of the Central Asian nation’s political culture.

Following deadly riots that rocked the political establishment in January 2022, Kazakhstan has responded by implementing key reforms, including amending its constitution and introducing registration rules for political parties and electoral legislation. The threshold to enter the Mazhilis has also been reduced to 5 percent, with a 30 percent quota in place for women, young people and those with special needs. These numbers go beyond the party lists, but also for the distribution of mandates, to ensure wider representation in parliament of all groups in Kazakhstan.

Observers from the Organization for Security and Co-operation in Europe said the parliamentary elections help bring Kazakhstan closer to holding elections that are in line with international standards. The Organization, or OSCE, welcomed the improvements, including those related to election laws, but said attention to protect citizens’ fundamental freedoms is still needed.

The OSCE – the world’s largest regional security-oriented intergovernmental organization, whose mandate includes overseeing arms control, the promotion of human rights, freedom of the press, as well as free and fair elections – also wants to see the results for each polling station released publicly in future elections.

Wider ramifications

For many, these elections provide Kazakhstan with a window to accelerate the expansive overhaul of its electoral system, while further bolstering the national democratization mandate put forward by the current government, Deputy Foreign Minister Roman Vassilenko said in the nation’s capital, Astana on March 16.

“As far as the new parliament is concerned, they will be asked to review several important pieces of legislation before the end of this year … including the new tax and social (security) codes, but the tax code is directly related to how the markets work. The government’s plan is to continue to further liberalize – to streamline – the tax administration in order to provide an even more conducive environment for both domestic and foreign business,” said Vasilenko.

‘New Kazakhstan’ seeks new energy solutions

Ecology and Natural Resources Minister Zulfiya Suleimenova said she is looking forward to tough, dynamic discussions when it comes to the country’s new parliament.

“I was a member of parliament in the past. There are now very dynamic discussions (going on). Having a more diverse parliament means bringing (in) new perspectives to the parliament and the legislation-making process. We are excited. We are looking forward to working with the new parliament,” the 32-year-old politician told NE Global on March 17.

Astana hopes to achieve carbon neutrality by 2060

Suleimenova told NE Global that Kazakhstan plans to pursue decarbonization, energy transition and green hydrogen.

“We have adopted a strategy on the transition to carbon neutrality for 2060, and that would be possible by basically phasing down – hopefully, completely phasing out by 2060 – coal … and moving towards renewable energy,” she said in comments to NE Global prior to her departure for New York for the UN’s Water Conference. “Kazakhstan wants to be part of the solution.”

“We have almost five percent of renewables in our energy mix. That is probably not a lot if you look at it, but it is increasing and there is an increased interest in developing renewable energy sources,” she said.

Kazakhstan is heavily dependent on highly polluting coal for electricity generation and cannot realistically phase out coal before 2060.

Renewable development

KazMunayGaz Chairman Magzum Myrzagaliev noted that oil and gas extraction and supply remains a priority for his vertically integrated company, but it has also signed agreements with France’s TotalEnergies and Italy’s ENI on renewables.

Suleimenova, herself, alluded to similar deals, saying agreements had already been signed to develop a massive renewable energy project with KazMunayGaz and Samruk-Kazyna to develop a 1GW wind farms, along with the aforementioned deals with TotalEnergies and ENI.

“Regarding green hydrogen, we know where we want to be in 15-20 years. Today, we are a big oil and gas exporter, but we understand that the world is changing and we, as the ‘New Kazakhstan’, want to see ourselves as part of the change. We want to make sure that we are part of the solution to climate issues and decarbonization. If we have the potential for green hydrogen development, why not explore it? This is the reason why we are paying attention to green hydrogen, and why we are cooperating with our partners, the private sector, and the European Union to tap into the potential that we have in green hydrogen,” Suleimenova added.

Kazakhstan is looking for the right know-how and the best technology for any future projects. Astana has already signed an agreement with the EU that includes exploring green hydrogen development.

Earlier, Deputy Foreign Minister Vassilenko said Kazakhstan also plans to reach its 2060 decarbonization goals through the construction of a nuclear power station.

“We currently do not have a nuclear power station. We used to have a nuclear power station during Soviet times, but it was decommissioned. There are now ongoing discussions and preparations for the launch of that project with international partners, including those that have expertise in building nuclear power stations. One of them is from France,” said Vassilenko.

Kazakhstan also intends to participate in the 2023 United Nations Climate Change Conference, or COP28, to actively discuss the country’s contributions to the reduction of greenhouse gas emissions and present the laws that regulate this area.

UK and Europe looking at Kazakhstan for rare earth minerals

British MP Daniel Kawczynski told NE Global that Kazakhstan and Mongolia can play a key role in reducing the world’s reliance on rare earth metals from China.

Kawczynski noted that over-reliance on Beijing for supplies of rare earth minerals is extraordinarily dangerous.

“We went to war in 1956 over the Suez Canal because we thought the provision of oil could be impeded with the nationalization of the Suez Canal and yet today and tomorrow rare earth minerals are going to be even more vital to Western Europe’s democracies than oil. And as oil runs out, so we move to the next most important commodities, which are minerals and rare earth,” Kawczynski said in an interview with NE Global on March 19.

China accounts for 63 percent of the world’s rare earth mining, 85 percent of rare earth processing, and 92 percent of rare earth magnet production.

“China will use this as a bargaining chip with the West, particularly as tensions over Taiwan and the South China Sea increase. We cannot allow China, which is a Communist dictatorship, to have such a stranglehold over our national economies,” he warned.  “That’s why I and others are urging our own government to divest our over-dependence on China and to move more production and to bring processing expertise to countries like Mongolia and Kazakhstan so that is not just producing rare earth minerals but already turning the rare earth into magnets which are then air cargoed to Europe. We need to create alternative supply chains,” Kawczynski said.

Britain’s Foreign Secretary James Cleverly visited Astana where he reportedly signed a memorandum with Kazakh officials on critical minerals such as rare earth metals.

Kazakhstan has 12% of the world’s uranium resources and in 2019 produced 43% of the world’s uranium. It also has large deposits of rare earth minerals which the West has traditionally sourced from China or Russia.

Kawczynski said a new more dynamic Mazhilis that would introduce laws could facilitate investment.

“Perhaps Kazakhstan had a reputation for having an extraordinarily powerful president and a parliament that was more of a rubber stamp rather than a regular legislative body. It seems they are moving towards a functioning parliament and a constitutional president. That’s the sort of dynamic which inevitably attract more investment, because we can see the system of checks and balances growing in this country. That is a key ingredient to creating confidence,” Kawczynski said.

The upcoming Astana International Forum taking place in June will focus on global issues, including food security, climate change and geopolitics.

Kazakhstan to reduce reliance on Russian gas

Kazakhstan will eventually have to switch to renewable sources, the British MP said, adding that the UK also does not want Kazakhstan to be overly dependent on Russian gas.

Land-locked Kazakhstan, which has massive oil and gas reserves and is geographically larger than the whole of Western Europe, is one of the world’s largest oil producers but is struggling to produce enough gas to supply its own domestic needs.

“Poland has led the way in Europe by building liquified natural gas and importing more liquified gas from the US. It is also buying more gas from Norway, which is a fellow NATO partner. I think that energy security is an extremely important policy for any government. You do not want to be over-dependent on one source. Particularly when that one source can use gas as a weapon or to threaten you. More British companies are coming here, as we are doing in Mongolia, in the areas of hydroelectricity, solar power and green technology. These are huge opportunities for British companies, but also help the Kazakhs and Mongolians to become less dependent on the Russians, so it’s good competition. Competition is very important in any market,” Kawczynski said.

Walking a tightrope between China and Russia

Kazakhstan finds itself in a difficult situation as it is located geographically between Russia, which invaded and continues to wage war on Ukraine, and a rising China.

Commenting on the elections, Yerkin Tukumov, from the Kazakhstan Institute for Strategic Studies, said he hopes the new parliament has a more advanced and pro-active foreign policy approach.

“They have to have knowledge about our foreign policy, but also be much bolder in their interaction with our foreign partners and defend our national interests,” he said, adding that the country’s multi-vector foreign policy remains unchanged and stressed that political reforms were the only way forward.

“The only way to make our country stronger – to be more independent – even in our geopolitical conditions, is through reforms, which are much harder to do in our situation,” Tukumov said, adding, “This is going to be the main answer to all these internal and external challenges.”

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Co-founder / Director of Energy & Climate Policy and Security at NE Global Media

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