VZCZCXRO6944
OO RUEHAG RUEHAST RUEHBI RUEHCI RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW
RUEHLA RUEHLH RUEHLN RUEHLZ RUEHNEH RUEHPOD RUEHPW RUEHROV RUEHSR
RUEHVK RUEHYG
DE RUEHTA #2225/01 3150214
ZNR UUUUU ZZH
O 100214Z NOV 08
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3789
INFO RUCNCIS/CIS COLLECTIVE 0785
RUCNCLS/SOUTH AND CENTRAL ASIA COLLECTIVE
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 0184
RUEHKO/AMEMBASSY TOKYO 0894
RUEHBS/USEU BRUSSELS
RUEHVEN/USMISSION USOSCE 2040
RUCNDT/USMISSION USUN NEW YORK 2018
RUEHNO/USMISSION USNATO 2352
RHEBAAA/DEPT OF ENERGY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEAIIA/CIA WASHDC
RHEFAAA/DIA WASHDC
RHEHNSC/NSC WASHDC 0349
RUEKJCS/SECDEF WASHDC 0266
RUEKJCS/JOINT STAFF WASHDC
RHMFIUU/CDR USCENTCOM MACDILL AFB FL
RUEHAST/USOFFICE ALMATY 0883

UNCLAS SECTION 01 OF 02 ASTANA 002225 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SCA/CEN, OES 
 
E.O. 12958: N/A 
TAGS: PGOV PREL ENRG EINV SENV KZ
SUBJECT:  KAZAKHSTAN:  PUSH ON RENEWABLE ENERGY, KYOTO PROTOCOL IS 
MOTIVATOR 
 
ASTANA 00002225  001.2 OF 002 
 
 
¶1. (U) Sensitive but unclassified.  Not for public Internet. 
 
¶2. (SBU) SUMMARY:  A Presidential Administration official told us on 
October 31 that a draft law on renewable energy currently in 
Parliament is expected to be passed before the end of the year.  The 
Ministry of Energy will create a new subdivision responsible for 
renewable energy and energy savings.  Kazakhstan's concern over 
energy security and sustainability has led to this increased focus 
on renewable energy.  Kazakhstan has a huge renewable energy 
capacity in small hydro, wind, and solar, and there are many 
sectors, especially agriculture in remote areas, where these 
technologies have ready application.  It will take time to renovate 
and rebuild electricity capacity installed during the Soviet period, 
so there is now an opportunity to build small renewable energy 
systems and integrate them into the electrical grid.  The Kyoto 
Protocol is a motivator for action on renewable energy.  Kazakhstan 
is the only Kyoto Protocol Non-Annex I country to subsequently 
request to join Annex I -- i.e., to join the group of countries 
subject to binding commitments on emissions.  Kazakhstan ranks 
fourth in the world in carbon emissions per dollar of GDP and wants 
to improve this ranking.  Kazakhstan expects to benefit from the 
Kyoto Protocol's carbon trading system to get additional investment 
funds for renewable energy.  END SUMMARY. 
 
FORWARD MOVEMENT ON RENEWABLE ENERGY LAW 
 
¶3. (SBU) Presidential Administration Consultant for Energy and 
Environmental Issues Kanat Baigarin told the Regional Environmental 
Officer (REO) on October 31 that a draft law on renewable energy now 
under consideration in Kazakhstan's Parliament is expected to be 
passed before the end of the year.  He promised to give REO a copy 
as soon as possible.  Baigarin said an earlier version of the draft 
law had included provisions requiring oil and coal companies to buy 
certificates in renewable energy projects, as is the case in Great 
Britain.  He opposed this scheme, because "it would have destroyed 
the power market in Kazakhstan."  Forcing oil and coal companies to 
support their competitors would violate normal market relations, he 
said, and companies would quickly find a way to get around this 
requirement, with corruption not far behind.  Baigarin believes the 
government must create an integrated plan for renewable energy in 
the context of Kazakhstan's total energy balance and support it 
directly with government financing.  When renewable energy reaches 
one to two percent of total energy output, then Kazakhstan can 
consider moving to a certificate scheme, he argued. 
 
RENEWABLE ENERGY OPPORTUNITIES ABOUND 
 
¶4. (SBU) Baigarin said the government's concern over energy security 
and sustainability has led to an increased focus on renewable 
energy.  The Ministry of Energy will soon create a new subdivision 
responsible for renewable energy and energy savings.  Even though 
things look good for now as far as coal, oil, and natural gas are 
concerned, the government is looking ahead and sees the need to 
diversify its energy sector.  Baigarin explained that Kazakhstan has 
a huge renewable energy capacity in small hydro, wind, and solar, 
and there are many sectors, especially agriculture in remote areas, 
where these technologies have ready application. 
 
¶5. (SBU) Baigarin said in the past there was no real opportunity to 
consider renewable energy, but now Kazakhstan has the financial 
resources, technical capacity, and economic incentives to develop 
renewable energy in some sectors of the economy.   He cited the 
persistent problem of inadequate power supply in southern 
Kazakhstan, especially in rural agricultural areas, where wind 
generators and small hydro stations can complement the electrical 
grid.  To illustrate the existing potential demand, he noted that 
officials closed down more than 500 small hydro power stations in 
the 1970s because the government decided they were not efficient and 
chose instead to rely on large hydropower plants in Kyrgyzstan and 
Tajikistan.  Given the current problems with energy and water 
 
ASTANA 00002225  002.2 OF 002 
 
 
distribution and management in Central Asia, it makes good policy 
sense from an energy security perspective to reconsider developing 
renewable energy sources in that region as an additional option. 
 
¶6. (SBU) Baigarin said that Kazakhstan is currently using its entire 
installed electricity-generating capacity built during the 1970s. 
The system now needs to be renovated and rebuilt, and that will be 
very costly and cannot be done over a short period of time.  There 
is now an opportunity to build small renewable energy systems and 
integrate them into the electrical grid.  As an example, Baigarin 
said companies could build small gas turbine systems in western 
Kazakhstan that use the gas that is associated with oil production. 
Baigarin said the drive for renewable energy may actually push small 
and medium enterprises to participate in building these power 
systems and tap into alternative power sources.  Many communities 
are at the end of the grid line, and if they could resort to 
renewable energy sources, this would make their energy supply more 
stabile and reliable. 
 
KYOTO PROTOCOL MOTIVATES RENEWABLE ENEGRY PUSH 
 
¶7. (SBU) Baigarin, who was Kazakhstan's lead negotiator for the 
Kyoto Protocol, reminded REO that Kazakhstan has signed but not 
ratified the Kyoto Protocol.  However, he expects Parliament will 
finally ratify it before the end of the year.  The fact that the 
ratification process has taken so long is a result of the concern 
among some that Kazakhstan would not be able to meet its annual 
greenhouse emissions targets if the economy were to develop as 
planned.  (NOTE:  While Russia, Belarus, and Ukraine were in Kyoto's 
Annex I from the start, Kazakhstan, together with the other CIS 
states, was a Non-Annex I member -- which meant that it initially 
had no binding commitments on greenhouse gas emissions.  Baigaran 
explained that under "pressure" from its poorer Central Asian 
neighbors, which believed Kazakhstan had gotten a free ride, but 
also with a sense of responsibility, Kazakhstan applied to join 
Annex I in 2000 -- a request that member countries accepted the 
following year.  Kazakhstan is the only Non-Annex I country that has 
moved to Annex I, he noted.  END NOTE.) 
 
¶8.  (SBU) Baigarin said that the Kyoto Protocol now has more support 
in Kazakhstan because it is seen as an excellent opportunity to 
encourage development of renewable energy resources and promote 
energy conservation.  He explained that, according to UN data, 
Kazakhstan ranks fourth in the world in carbon emissions per dollar 
of GDP.  Kazakhstan acknowledges this is a problem and wants to 
improve its ranking.  In addition to government plans to fund some 
renewable energy projects, Kazakhstan expects to benefit from the 
Kyoto Protocol's carbon trading system.  The base year for 
calculating greenhouse gas emissions under the Protocol is 1990, the 
year before the collapse of the USSR.  Because of the initial steep 
drop in economic production -- and thus greenhouse gas emissions -- 
in the CIS states following their independence, Kazakhstan's 
emissions are even now 35 percent below 1990 levels.  Conversely, 
Japan, for example, is annually exceeding its base year emissions by 
approximately 15 percent, as a result of which it needs to buy 
carbon credits from other countries, such as Kazakhstan.  Baigarin 
said the government intends to use the windfall from selling carbon 
credits to invest in renewable energy projects. 
 
HOAGLAND