To Be Or Not To Be? Hydrogen Project In Kazakhstan

• Published date: 31 August 2023
• Subject Matter: Environment, Energy and Natural Resources, Energy Law, Environmental Law, Oil, Gas & Electricity, Renewables
• Law Firm: Unicase Law Firm
• Author: Raushana Chaltabayeva

Introduction

The spotlight on low-carbon hydrogen has intensified since the adoption of the Paris Agreement. Currently, over 70 nations worldwide have charted strategic trajectories in the realm of hydrogen-based energy. Among these trailblazers is Kazakhstan, which has embraced a game-changing initiative - the Republic of Kazakhstan's Carbon Neutrality Strategy, aimed at attaining carbon neutrality by 2060. The nation has embarked on a resolute journey toward this ambitious goal.

In a landscape where direct legal regulations are yet to crystallise, hydrogen production in Kazakhstan operates within the contours of existing overarching legislative norms. These norms span the gamut of regulations governing the energy sector, encompassing not only conventional sources but also renewables (hereafter referred to as "RE").), as well as domains pertinent to land use, ecology, water resources, and subsoil use insofar as they apply. This approach to regulating hydrogen energy within the existing legislative framework resonates with a global trend, as the formulation of new legislation is inherently resource-intensive and time-consuming.

Kazakhstan's foray into hydrogen energy has been scrutinised from both production and institutional points. However, the labyrinth of legal parameters shaping the hydrogen energy landscape remains relatively unexplored. This article delves into the important phases and requirements for the initiation of a hydrogen project based on the legal framework of the Republic of Kazakhstan. Given the scattered nature of prevailing legislation, it becomes imperative to clarify select norms and harmonise national regulatory standards. This harmonisation aims to confer lucidity and predictability to the intricate process of developing hydrogen projects.

Kazakhstan Adopts Carbon Neutrality Strategy by 2060

In a significant move, Kazakhstan has embraced the Carbon Neutrality Strategy for the year 2060 (hereafter referred to as "the Strategy"). This ambitious strategy charts a course towards achieving carbon neutrality through a phased substitution of coal with alternative and renewable energy sources, electrification of energy consumption across all economic sectors, transitioning to hydrogen, biofuels, and synthetic low-carbon fuels, and the deployment of carbon capture and storage technologies.

State and quasi-state sector companies have initiated decarbonisation projects aligning with the nation's goals of attaining carbon neutrality. The national enterprise, "KazMunayGas," has adopted an internal low-carbon development policy, supplementing it with projects focused on active integration of H2 production technologies, carbon capture and storage, and an active offset strategy (climate project development). As part of the low-carbon development programme, the "KazMunayGas" company has established a Centre of Competence for hydrogen energy, dedicated to research in eco-friendly fuels and the implementation of technologies associated with low-carbon energy, including hydrogen and renewables.

The onset of strategic goals has ushered in the signing of a Framework Agreement outlining foundational principles for renewable energy projects and "green" hydrogen production in the Mangystau region (referred to as "the Agreement"). Within the scope of this Agreement, plans are underway for the construction of solar and wind parks, set to generate 40 GW of electricity. This power will be directed to a hydrogen production plant through electrolysis utilising desalinated water.

The measures undertaken and initiatives launched as part of the Strategy underscore Kazakhstan's commitment to achieving carbon neutrality. However, given the nascent nature of the industry, numerous regulatory questions remain unresolved. For instance, some experts argue that the identification of...