What Future Does Coal Have in Kazakhstan?

by Almaz Akhmetov

Almaz AkhmetovPower derived from coal is an intrinsic part of daily lives in Kazakhstan in the form of electricity, heat and hot water. Coal has been a backbone of industrial development of Kazakhstan since the beginning of the 20th century, thanks to abundant reserves and relatively low mining costs. While oil and natural gas export earnings are the main drivers of economic growth of the country, coal is almost solely utilized for domestic purposes.

In Kazakhstan, coal consumption is the main cause of both outdoor air pollution (mining and power plants), and indoor air pollution when the coal is burned in domestic heating stoves. Very often coal is the only affordable fuel for poor rural households in many of the regions across the country. Residential coal-stoves are often home made and poorly vented, which means families are regularly exposed to hazardous air pollutants. At every stage of its life, from mining to transport to burning and finally disposal, coal seriously impacts public health, causing respiratory, heart and other diseases.

Kazakhstan’s development approach of “Economy first, politics second” backfires in the form of environmental and national health degradation. The quest for profit makes owners of power plants and distribution unwilling to adequately invest in renovation of obsolete and deteriorating coal-fired power plants and central heating systems. The government introduced the “Tariff in exchange for investments” program to encourage owners to invest in modernization. But how far it is possible to modernize and upgrade coal-fired power plants constructed in the 1940s to 60s? And should such tariffs be introduced at all for non-renewable energy options?

The government of Kazakhstan is trying to move towards a green economy by promoting a low-carbon development strategy, promoting renewable energy, setting emission reduction targets and introducing emissions trading system. However, the national plans for expanding the coal industry could make these measures ineffective: ever growing domestic energy demands are incompatible with attempts to meet the national emissions reduction targets. In fact, existing policies – aimed at promoting a green economy – mainly address issues related to greenhouse gases, the biggest contributors of global climate change, while local air, water and soil pollution receive little attention. Ordinary Kazakhs on the other hand tend to see global climate change as a distant problem, while local environmental pollution that affects their health and well-being is their main concern.

Coal is the cheapest domestic fuel option in Kazakhstan, and therefore the most attractive for both power utilities and residential users. But coal brings heavy societal and environmental burdens with it, which often disproportionately fall on final energy users. If we calculate the health and environmental costs caused by coal, it looks like a much more expensive fuel than is usually thought. Perhaps the most effective way to address the issue could be to transfer the damage costs from final users to utility companies. It would encourage companies to reduce their environmental burden by introducing modern clean coal technologies and actively invest in modernization their capacities.

Undoubtedly the coal industry is vital for Kazakhstan’s economy and therefore policies and innovations aimed at promoting a cleaner coal industry are very important. The first obvious step is to develop effective policies to reduce this industry’s burden. The government of Kazakhstan inherited the Soviet practice of making decisions without considering the impact on citizens. As a result, there are no practices in the country to encourage public access to information and participation in government decision-making. Effective environmental policies and regulations are impossible without incorporating the principals of social and environmental justice. At the end of the day, clean air is a basic human right. But are the people of Kazakhstan aware of the scale of environmental problems and ready to actively protect their right to a safe environment and clean air?

Click here to access the Kyrgyz version of this article on BBC Kyrgyz and here for the Uzbek version available on BBC Uzbek.

About the author:

Almaz Akhmetov is the principal at ENCA Management Ltd., a consulting firm with a specialized focus on energy, environmental issues and economics of Central Asia. He holds a Master’s degree in risk engineering from the University of Tsukuba, Japan.