|Energy Efficiency in Kazakhstan|
Legal framework and Policy
In December 1997, the Law “On Energy Saving of the Republic of Kazakhstan” came into force. It is intended to regulate social relations in the energy saving sphere in order to create economic and organizational conditions for effective use of fuel and energy resources in the Republic of Kazakhstan and for environmental protection. Among energy saving objects, it covers processes related to production, processing, transportation, generation, storage and use of all types of fuel and energy resources, thermal and electric energy, i.е. including supply and distribution of heat through district heating networks.
The Law of the Republic of Kazakhstan “On Power Industry” is dated 9 July 2004. This Law regulates social relations arising in course of generation, transmission and use of electric and thermal energy.
The National Energy Saving Programme was adopted in 1996, and as was stated above, the Law “On Energy Saving” was adopted in 1997; however, neither the Programme, nor the Law gave the expected results due to lack of specifically set goals, incentives for energy saving, effective by-laws and functioning administrative bodies for implementation of energy saving programmes. Along with shortcomings, of course there are some positive points: the Law addresses such matters as raising public awareness of energy saving, introduction of fuel and energy consumption standards and certification of equipment, etc.
Energy efficiency has since 2007 been drawing significant attention in Kazakhstan. A Government-sanctioned draft Law on Energy Efficiency was initiated in that year, and in June 2009 the draft was filed with the Majilis, the lower chamber of Kazakhstan's Parliament, for eventual adoption.
Upon request of the Kazakh Government, EBRD has hired consultants for assistance in drafting the Law, specifically considering the fact that the international best practice in this sphere should be taken into account in preparation of the new draft law.
From the time of submission till June 2010 draft of the Law had been under revision in Majilis and finally, it was sent back to Government for further improvement. In such way the draft of the Law was sent to Ministry of Industry and New Technologies (MINT).
The new draft of the Law was renamed into Law on energy saving and enhancement of energy efficiency. It is considered conceptual changes in the new Law, e.g. it was included chapter on ESCO, there is set specific goals on reduction of energy intensity of GDP by 10% in 2015 and 25% by 2020 and etc.
In March 2010, several ministries have been reorganized; some of them have been dissolved and their functions transferred to other agencies, and some new ones have emerged. Thus, the Ministry of Energy and Mineral Resources (MEMR) is reorganized into the Ministry of Oil and Gas and the Ministry of Industry and Trade (МIТ) of Kazakhstan is reorganized into the Ministry of Industry and New Technologies. All matters related to the national energy complex will be regulated by the MINT.
Prior to the reorganization, MEMR had the Department for Energy Saving, Energy Efficiency and Renewable Energy Sources, its activity being focused on coordination of the national policy in the sphere of energy saving, energy efficiency and renewable energy sources.
After reorganization it was established in the Ministry of Industry and New Technologies administration (management) of energy saving and energy efficiency within the department of new technologies and administration (management) of usage of renewable energy sources within the department of development of electrical energy and coal industries.
It is worthy to note the National Programme for Accelerated Industrial and Innovation Development of the Republic of Kazakhstan for the period from 2010 to 2014. One of the main targets of the Programme is to reduce energy intensity of industry in order to achieve competitiveness of Kazakhstan’s economy.
Energy Saving potential in Industry
Kazakhstan has a room for improving its level of energy efficiency. Potential for enhancement of energy efficiency in industry is high (approx. from 10 to up to 30%), the main reasons are usage of outdated technologies and equipment. Currently, most of the industrial companies of Kazakhstan are privatized and owners are as local and as well as foreign companies. In order to keep competiveness in the world market it is required to introduce new technologies, so, the process of modernization and introduction of new technologies in industry already started in Kazakhstan, but at a low pace.
Kazakhstan’s total primary energy supply divided by gross domestic product (TPES/GDP), an indicator used by the International Energy Agency (IEA), is 1.84, in the same class as in Russia (1.65), but many times higher than e.g. in Western Europe (0.17).
Another frequently used indicator, where the total primary energy supply is divided by population (TPES/pop), is 4.29 for Kazakhstan, for Russia 4.75 and for Western Europe 3.36. The compound indicators for all former Soviet Union states are 3.59 (TPES/GDP) and 1.65 (TPES/pop).
These numbers reflect the fact that both Russia and Kazakhstan are countries with long distances and large energy-intensive industries. There are other reasons for high energy-intensity of economy of these countries:
Financing of Energy Efficiency Projects
Implementation of energy saving policy and financing of EE/RES projects are impossible without adequate funding. Therefore, this section addresses potential financial sources for implementation of EE/RES projects.
In Kazakhstan, there is no targeted financing of energy efficiency and renewable energy projects by local financial institutions. International governmental and non-governmental organizations, financial institutions etc., play great part in financing, issuing of small grants and supporting of energy efficiency improvement. Among them, we may cite EBRD, World Bank, ЕС/TACIS, UNDP, USAID, ADB and others.
Today, there is the only targeted credit line developed by EBRD for financing of energy efficiency and renewable energy projects – KAZSEFF (Kazakhstan Sustainable Energy Financing Facility). This Programme was initiated in September 2008 and operates through local partner banks, namely, JSC Bank CenterCredit and JSC ATFBank. The total volume of financing amounts to US$ 75 million; up to US$ 7 million can be credited to an enterprise with a medium- and long-term maturity of the loan.
Other sources can be represented by various international institutions, such as the International Monetary Fund, the World Bank, UNDP/Global Environmental Facility and governmental and non-governmental agencies established by developed countries for assistance to the developing ones, etc.
The main resource of financing is the own sources of industrial, transport and service sector enterprises, most of which are in private ownership and independently determine the ways of the most effective use of their resources and energy-efficient development. In housing sector, the primary financial resource is also accumulated by housing owners.
Information provided in this part is limited to those projects in industry which were financed or developed under KAZSEFF project of EBRD.