The production of green hydrogen plays an important role in the energy transition. This fuel is used in heavy industry and transportation. Green hydrogen is produced using renewable energy sources and electrolysis. Central Asian countries such as Kazakhstan have great potential for the production of green hydrogen. This is an important opportunity for the region, both economically and ecologically. This is because the use of green hydrogen offers an emission-free fuel.
With this in mind, the Ankara Center for Crisis and Policy Studies (ANKASAM) brings you the views of Nicholas Pome, Founding Managing Director of AngloKazakh Limited, on the assessment of Kazakhstan’s green hydrogen production.
- What do we mean by Energy Transition and can you tell us something about the meaning of this term?
Energy transition refers to the global paradigm shift from fossil-based (crude oil, natural gas and coal) energy production and consumption systems to renewable and sustainable energy sources such as wind, solar, hydropower and biomass. This is a process of reducing carbon dioxide emissions and emitting fewer greenhouse gases into the atmosphere by using zero-carbon energy sources.
The energy transition is driven by the climate change crisis and the goal of limiting global warming to below 2°C (preferably 1.5°C) by the end of this century. This goal is in line with the international agreement signed at the COP21 Conference in Paris in 2015, hence the so-called “Paris Agreement”. In recent years, geopolitical events have accelerated the energy transition as countries and regions seek to secure their energy supplies. Despite scientific evidence, there are many skeptics of climate change. It is important to emphasize that hydrocarbons are finite resources. These resources will eventually run out. It therefore makes sense to transition to sustainable technologies now, rather than waiting until hydrocarbon resources are completely depleted because we already have the technology.
The significance of the term energy transition is that it is a transition, not a single digital event. The world we live in is, and will be for the foreseeable future, heavily dependent on hydrocarbons, and not just for energy. As a result, overnight changes are impractical.
2. In your opinion, what is the strategic importance of the energy transition for the Central Asian countries?
The energy transition is particularly important for the Central Asian region for three main reasons. Firstly, five countries in the region (Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan) are among the countries most affected by the effects of climate change worldwide. Secondly, three of these five countries (Kazakhstan, Uzbekistan and Turkmenistan) are major hydrocarbon producers whose economies are heavily dependent on these industries. Thirdly, the entire region has serious energy security problems, mainly due to outdated and disinvested infrastructure from the Soviet- era infrastructure.
The good news is that Central Asia has significant renewable energy resources and can safely realize the energy transition through cross-border energy cooperation. The governments of all five countries recognize the need and benefits of the energy transition. However, they need to move faster. Renewable energy use should be significantly increased, resources should be shared across countries, alternative fuels such as hydrogen should be adopted, policies should be developed and implemented, and incentives should be provided for industry to adopt green technology.
The energy transition in the Central Asian region faces many challenges, not least the levels of investment required. But it is realistic and achievable. Every country in the region can have a clean and reliable energy supply and an economy that is not entirely dependent on hydrocarbons.
3. What is the production of green hydrogen? Can you tell us something about the potential of green hydrogen in Kazakhstan?
Hydrogen is a fuel that can accelerate the energy transition. It is not a universal solution, but it is particularly suitable for hard-to-reduce sectors such as heavy industry (e.g. cement, steel, chemicals) and transport (e.g. shipping, heavy transport and aviation). Hydrogen can be produced in several ways: grey hydrogen, which is produced from natural gas or methane through a process called steam reforming; blue hydrogen, where the carbon is captured and removed during the steam reforming process; and green hydrogen, which is produced using renewable electricity (e.g. wind, solar, hydroelectric and biomass) and electrolysis to split water molecules into their hydrogen and oxygen components. When green hydrogen is used as a fuel, the only emission is water. Green hydrogen is therefore the only truly sustainable and emission-free hydrogen fuel source.
With its large area, Kazakhstan is also a country that is rich in natural resources and has considerable potential for renewable energy sources. However, when considering the economic viability of green hydrogen projects, several additional factors need to be taken into account: Availability of water resources, market demand, supply chain, logistics and government support. In no particular order;
- The challenges associated with water resources in Kazakhstan and the wider Central Asian region are well documented. President Mr. Kassym Jomart Tokayev recently announced the creation of a dedicated Ministry of Water Resources and Irrigation to address these challenges. It is clear that this poses challenges for the production of green hydrogen. But the utilisation of wastewater can solve this problem, with the added benefit of improving the environment.
- Hydrogen is currently only used to a limited extent in Kazakhstan, mainly in oil refineries and as a derivative of ammonia for the production of fertilisers. The development of a local hydrogen economy is therefore crucial to support green hydrogen production. Hydrogen exports appear to have limited potential. Transporting hydrogen over long distances is quite difficult and requires significant investment due to the lack of suitable infrastructure. This would make the cost of green hydrogen exported from Kazakhstan extremely expensive.
- Although Kazakhstan has a strategically favourable geographical location, imports of green technology (e.g. wind turbines, solar panels, electrolysers, etc.) mostly come from well-established production centres in Europe and China. There is currently little or no local production of green technology in Kazakhstan. As a result, the investment costs (CAPEX) for green hydrogen projects in Kazakhstan are significantly higher than for similar projects near a production centre. It is also questionable whether the project can be classified as green if hydrocarbon-fuelled transport is used to import the green technology. Clearly, local production to support green hydrogen production should be seriously considered today.
- In his 2023 State of the Nation Address, President Mr. Tokayev stated that the development of hydrogen production is necessary. However, the Government of Kazakhstan continues to publish a hydrogen strategy, which should clearly set out a roadmap for the role of hydrogen in Kazakhstan’s energy transition. This strategy will ensure that all government ministries, including the new Ministry of Water Resources and Irrigation, are aligned on hydrogen use and policy, and will help develop a domestic hydrogen economy to help Kazakhstan’s energy transition. It is also necessary to align the hydrogen strategy with incentives for industrial users to adopt green hydrogen. We have observed that such measures have recently been introduced in Europe.
Kazakhstan has significant potential for green hydrogen production and use and could become a leading green hydrogen hub for the Central Asian region. However, as I mentioned above, there are significant hurdles to overcome before this can realistically be achieved.
Nicholas Pomeroy
Nicholas Pomeroy is a senior business executive with over 20 years’ experience in Kazakhstan’s energy sector. He is the Founder and Managing Director of AngloKazakh Limited, a consultancy service for British and Kazakhstan businesses in the energy sector.
An Electrical Engineer by profession, Nicholas moved to Kazakhstan in 2003 and has held senior regional leadership roles in various international energy, engineering, construction and consulting companies. He has led the establishment of a joint venture with Kazakhstan’s state oil and gas company KazMunayGas (KMG) and recently signed a Framework Agreement with the Government of Kazakhstan for the development of a portfolio of green hydrogen projects. Nicholas holds a first class Master of Engineering (MEng) degree from the University of Southampton. He is a Chartered Electrical Engineer (CEng) and will soon begin his Doctor of Philosophy (PhD) studies in Central Asian Energy Policy.
