Clean Household Energy Consumption in Kazakhstan: A Roadmap

The Republic of Kazakhstan (Kazakhstan) is one of the world’s coldest countries. In most of its regions, the heating season lasts more than six months, varying from 143 to 231 days, and the annual average temperature ranges from 2°C in the north to 13°C in the south. Heating is therefore a basic survival need. Despite the country having a 100% electrification rate, solid fuels are widely used for heating owing to their availability and affordability, and because other alternatives such as natural gas and district heating are not universally accessible. According to the Household Survey on Fuel and Energy Consumption conducted by the Bureau of National Statistics, Agency for Strategic Planning and Reforms, 30% of Kazakh households used coal and/or firewood in 2018. Coal is burned mostly in dwellings at low efficiency, significantly reducing outdoor and indoor air quality and severely affecting health.

Small-scale residential coal burning is one of the most important sources of air pollution in Kazakhstan. In 2018, household coal combustion created 99% of residential sector particulate matter 2.5 (PM2.5), carbon monoxide (CO), sulphur oxide (SOx) and non-methane volatile organic compound (NMVOC) emissions, and 88% of nitrogen oxide (NOx) emissions.1 Particulate matter pollution in Kazakhstan causes approximately 2 800 premature deaths per year (according to 2011 data) and costs the economy more than USD 1.3 billion annually (or 0.9% of GDP) through increased healthcare costs (World Bank and Ministry of Environment and Water Resources, 2013). High rural consumption of solid fuels is a factor that limits economic development in these regions and contributes to migration from rural to urban areas (Stoyak, Kumyzbayeva and Ibragimova, 2017).

Kazakhstan has a Nationally Determined Contribution (NDC) with an unconditional target to reduce greenhouse gas emissions (GHG)2 by 15% by 2030 from 1990 levels. The household sector is one of the important sources of GHG emissions, amounting to 8% of national total CO₂ emissions in 2018 (UNFCCC, 2020). The residential sector is the fastest growing sector in terms of energy consumption, with the residential share of consumption increasing from 9% of total final consumption for Kazakhstan in 2000 to 27% in 2018 (IEA, 2020).

Many countries have either completely banned or severely restricted the household use of coal (especially in large cities) to curb emissions and reduce deaths from air pollution, and some have even launched special programmes and subsidies to replace coal stoves with cleaner alternatives. Although Kazakhstan has enlarged gas network access in some of its regions in recent years, network gas is still unavailable in many areas. Carefully targeted and co‑ordinated policy actions that focus on rural and remote areas could certainly speed Kazakhstan’s energy transition.

This study’s primary aim is to explore ways to reduce heating-related residential sector emissions using a scenario analysis approach as the basis of a roadmap for Kazakhstan. The purpose of this roadmap is to help Kazakhstan formulate a policy framework and conditions to enable a household energy-use transition. It is intended to support and guide key government authorities as well as other stakeholders.

This report analyses primary data from the 21 000 households that participated in the household survey (conducted by the Bureau of National Statistics, Agency for Strategic Planning and Reforms in 2018)3 to estimate national residential energy consumption, highly disaggregated according to fuel, region, house type and urban/rural divide. Four scenarios were designed to study the effects of additional measures – in comparison with no such measures – on energy consumption and emissions. The aim of the measures explored in these scenarios was primarily to reduce emissions of pollutants (and greenhouse gases) from the households sector. Although the government’s present plan to expand the gas network is a step in the right direction, greater effort may be needed for a more effective, full (i.e. covering all regions) and fair energy transition. Under current policies, progress in improving energy efficiency in buildings and adopting clean heating technologies is likely to be slow. The scenarios were therefore designed to test the implications of additional actions such as accelerated fuel switching, energy efficiency interventions, and targeted aid to purchase alternative sources of heat.

As the supply side of heat generation and heating networks falls outside the scope of this study, analysis is limited to energy efficiency measures and clean heating options at the level of residential buildings.

Section 2 of this report presents historical household solid fuel consumption based on data from the household survey. While Section 3 presents scenario assumptions and Section 4 addresses results (including policy implications), Section 5 summarises the roadmap’s timeline. The methodology, including a description of the household survey, is explained in the Annex.

Heating represents around 60% of household end-use energy demand in Kazakhstan (UNDP, 2012). District heating systems based on co‑generation4 and heat-only boilers (HOBs) are common in most cities, while in the areas where district heating is not available (e.g. rural), households rely on either natural gas or coal, depending on infrastructure availability (i.e. gas network access).

Kazakhstan has rich coal resources that, at the current level of production (~100 million tonnes per year [Mt/y]), should last more than 200 years. While coal is used widely for large-scale power and heat generation (through co‑generation and HOBs), it also serves small-scale household purposes. Household coal use was very common historically, mainly for heating purposes in areas lacking access to other alternatives (e.g. gas, district heating) owing to its availability and relatively low price.

Coal-burning in household heating appliances – frequently inefficient stoves – releases hazardous pollutants such as SO_X, NO_X, black carbon (BC), polycyclic aromatic hydrocarbons (PAHs), PM and CO into both the indoor and outdoor environments (Zhao et al., 2018). Among the many cases of CO poisoning and fires caused by coal stoves every winter in Kazakhstan, one that had a strong impact occurred on 4 February 2019, when a fire from a coal stove destroyed a house and took the lives of five children in the capital city of Nur-Sultan (formerly Astana). There are unfortunately no studies that quantify the amount of indoor pollutants in homes with coal stoves and the number of deaths related to their use.

Household coal combustion is one of the reasons for high levels of winter air pollution in Kazakhstan (see picture). According to the analysis of data from 29 monitoring sites for 2010‑12, 10 out of Kazakhstan’s 11 cities failed to meet minimum EU air quality standards (World Bank and Ministry of Environment and Water Resources, 2013). Concentrations were many times above EU annual limits, suggesting very high citizen exposure to ambient air pollution. It is clear that high levels of air pollution occur more frequently in the winter due to coal-fired heating.

In 2018, the residential sector was responsible for 30% of Kazakhstan’s total final energy consumption – the second-largest consumer after industry (IEA, 2020). On average, buildings in Kazakhstan consume two to three times more energy per surface area than those in northern parts of Western Europe (UNDP, 2013). Long and cold winters, dilapidation of the housing stock and heat losses through building envelopes contribute to high energy consumption for heating. At the level of the buildings themselves, energy savings of 40-55% could be achieved through the installation of individual automatic heat supply stations, heat insulation of the building envelope elements, and thermal insulation of pipes (UNDP, 2013).

Several authorities are responsible for different aspects of the residential sector.

The Ministry of Industry and Infrastructure Development has overall responsibility for the industry sector. It is also responsible for: energy efficiency and energy-saving; architectural, urban planning and construction activities; housing relations, communal services and municipal waste management; the water supply and sewerage; and the heat supply. The Committee for Construction and Housing and Communal Services, an agency under the Ministry of Industry and Infrastructure Development, is responsible for control and implementation in the fields of architecture, urban planning and construction activities, housing relations, communal services and municipal waste management. The Committee for Industrial Development and Industrial Safety of the Ministry of Industry and Infrastructure Development is in charge of energy efficiency and energy saving policy and regulation.

The Ministry of Energy formulates and implements state policy in the energy sector, including for power and heat generation, gas pipelines, gas supplies and renewable energy sources. The Department of Renewable Energy Sources of the Ministry of Energy is responsible for state policy concerning the development of renewable energy sources.

The Ministry of Ecology, Geology and Natural Resources is in charge of (among other things) environmental protection, development of a "green economy" and waste management.

The Ministry of National Economy holds responsibility for strategic planning, tax and budget policy, and regional development. The Committee for Regulation of Natural Monopolies of the Ministry of National Economy is tasked with controlling and regulating activities in the area of natural monopoly and socially significant markets, including price regulation of entities of socially significant markets. The Bureau of National Statistics, Agency for Strategic Planning and Reforms formulates and implements state policy on statistics.

The Kazakhstan Center for Modernization and Development of Housing and Communal Services is a state-owned company that aims to help implement state policy on the modernisation and development of housing and communal services by improving the legal and regulatory framework and providing information and analytical services.

No single body currently has overall responsibility for the residential sector’s energy transition. As the government’s primary focus is currently on supply-side infrastructure and district heating systems, energy use by individual homes in rural areas remains poorly covered. The responsibilities of the various authorities therefore need to be clearly defined. 

Despite the residential sector being one of the major sources of pollutant and greenhouse gas (GHG) emissions, no specific support measures are in place to facilitate an energy transition, especially in areas lacking gas pipelines and district heating. Supports for clean energy in Kazakhstan consist mainly of supply-side measures in the power and heat sector and the extension of gas pipeline infrastructure.

Rural development is envisaged by the State Programme for Development of Regions for 2020‑2025 (adopted in 2019) through a higher level of “provision of social benefits and services to rural settlements in accordance with the system of regional standards”. State funds are therefore being allocated to developing and repairing the social and engineering infrastructure of selected “backbone” villages. According to the programme, only 17% of rural settlements had access to pipeline natural gas in 2016, and the situation has not changed fundamentally since then. The state programme includes measures to improve the quality of life in rural settlements, but does not contain specific indicators and targeted measures to facilitate a household energy transition from coal to cleaner alternatives.

The Environmental Code of the Republic of Kazakhstan, adopted in 2007 (with amendments in 2020), is a piece of primary legislation that provides a framework to create an environment favourable to human life and health. Unfortunately, household coal combustion is considered the “general use” of natural resources, so emissions from the residential sector have not been regulated – and even under the Code they remain generally unrecognised, unaccounted for and neglected by government policies. Although a new draft Environmental Code was being discussed in October 2020 (expected to enter into force in 2021), residential sector emissions will continue to be unregulated.

Extension of the gas pipeline network is one goal of the state policy for infrastructure development. Construction of the gas network was funded by the state budget and state-owned company KazTransGas joint stock company (JSC), and the number of settlements connected to the gas network increased from 730 to 1 320 during the 12 years up to 2018. Domestic gas consumption has increased considerably in the past decade as a result, amounting to 13.8 billion cubic metres (bcm) in 2017 – more than 2.5 times the consumption in 2000 (5.4 bcm) (State Programme for the Development of Regions until 2020, 2018).

Natural gas is currently available in ten of the country’s regions, leaving six without access. In 2018, former President N. Nazarbayev ordered construction of the Saryarka gas pipeline to provide gas to Nur-Sultan, as well as to central and northern Kazakhstan by 2023. Pipeline construction began in November 2018, and in October 2019 the first stage from Kyzylorda to Nur-Sultan was complete (Sputniknews, 2019). The capacity of the pipeline will be 2.2 bcm per year, supplying 171 settlements in the central regions with natural gas sourced from domestic fields in Karachaganak, Tengiz and Kashagan.

Coal consumption is expected to fall by 650 thousand tonnes (kt) per year (Inbusiness, 2019), which should improve the air quality of the capital. Even though further gas network expansion to northern Kazakhstan (the North Kazakhstan and Pavlodar regions) was initially considered under the Saryarka pipeline scheme, the timeline for extension to these regions is uncertain. Thus, three remote regions (North Kazakhstan, Pavlodar and East Kazakhstan) will probably still lack gas access in 2030. 

As state heating policy in Kazakhstan focuses mainly on houses with district heating, the 2019 State Programme for Housing and Communal Development "Nurly Zher" for 2020-2025 includes measures for capital repairs and renovations to multi-apartment buildings (MABs). Repair work to MABs is covered by funds collected from apartment owners in buildings that were previously repaired with allocations from the state budget in 2011-15. Funds collected from apartment owners for capital repairs are used by authorised organisations to repair other MABs, and according to the Programme, 826 houses will have been repaired by 2025 (222 in 2020; 444 in 2021; 40 in 2022; 40 in 2023; 40 in 2024; and 40 in 2025). Thus, the number of repaired MABs is expected to represent a very small proportion of the total housing stock. Additional measures are therefore required to advance heat insulation of houses.

The installation of metering devices for heating has accelerated in recent years. According to the Law on Energy Saving and Energy Efficiency Improvement, whether consumers pay for the actual cost of heat energy depends on the presence of a metering device. As of 2019, 60% of houses had metering devices for heating (State Programme for Housing and Communal Development "Nurly Zher" for 2020-2025, 2019), with 100% expected by 2025.

In accordance with the 2012 Law on Energy Saving and Energy Efficiency Improvement, designed and constructed buildings must comply with energy saving and energy efficiency requirements. The design documentation of buildings should contain a section on energy saving and energy efficiency, including the building’s estimated energy efficiency class. Rules adopted in 2015 determine five classes of buildings based on how much the calculated (actual) value of the energy efficiency indicator deviates from the “standard” value. According to the Law, new and renovated buildings must have minimum class C energy efficiency level (class D or E buildings fail to comply). However, information on the number of newly constructed buildings that meet the requirements is not publicly available.

Under the Law on Support of the Use of Renewable Energy Sources (2009), the state provides individual consumers with targeted assistance of up to 50% of the cost of installations to use renewable energy sources (with a total capacity of up to 5 kilowatts [kW]). An individual consumer is defined as an individual or legal entity that consumes electricity and/or thermal energy from renewable energy sources, operating autonomously in non-electrified settlements and/or settlements where a centralised power supply is economically impractical. Only renewable energy installations fabricated in Kazakhstan are eligible for this support scheme. In addition, an individual consumer cannot sell electricity and/or thermal energy generated from this installation to other consumers. Even though this support measure was introduced into the law in 2014, it has not been widely exploited by households, possibly because of the narrow eligibility requirements (i.e. installations produced in Kazakhstan only, and stand-alone use).

In September 2020, the European Bank for Reconstruction and Development (EBRD) announced that it had launched a USD 30-million Green Economy Financing Facility (GEFF) in Kazakhstan to support green investments (EBRD, 2020). A microfinance organisation (KMF) will open a credit line of up to USD 5 million for households and small and medium-sized enterprises (SMEs) to invest in energy efficiency, climate change mitigation and adaptation projects. Loans of around USD 1 500 will be provided for investments in thermal insulation, solar photovoltaic (PV) panels, geothermal heat pumps and water-efficient irrigation systems (EBRD, 2020).

Coal combustion by households contributes to air quality deterioration in Almaty, one of the most polluted cities in Kazakhstan. In August 2020, second-tier Halyk Bank announced its plans to provide support in the form of free connection to gas networks for residential buildings inhabited by “socially vulnerable groups of the population” (Halyk Bank, 2020). Households not considered socially vulnerable have access to interest-free loans to connect to the gas supply system.

Meanwhile, the Kazakhstan government and the United Nations Development Programme-Global Environmental Finance (UNDP-GEF) unit are implementing the Derisking Renewable Energy Investment project during 2018‑22, with a total budget of USD 4.5 million (UNDP, 2020). The goal of the project is to help the Kazakh government improve the country’s investment climate to encourage renewable energy sites nationwide. In its analysis of small-scale renewable facilities with a capacity of 1 kW to 1 000 kW, the project estimated that Kazakhstan has 5 907 such facilities with total electrical capacity of 17.8 megawatts (MW) and heat capacity of 54.1 MW. Most (96%) were installed by individual enterprises, and 97.5% are solar power stations. Barriers to the wider use of small-scale renewables in Kazakhstan are: insufficient support measures for the population; complicated grid connection procedures; and insufficient support for SMEs. The government was advised to: i) subsidise capital expenditures for small-scale renewables; and ii) adopt simple, easy-to-understand conditions for grid connection and operations. Household subsidies for 60-80% of the cost of a renewable energy facility with a capacity of up to 20 kW were suggested. A number of other recommendations were also made to the government within the framework of the project, particularly several amendments to the Law on Support of the Use of Renewable Energy Sources (2009), including:

• Separate legal regulation of small-scale renewables (less than 400 kW) intended primarily to meet the owner’s own needs.
• Subsidies (at the initial stage) to stimulate the local services and production market for small-scale renewables (solar collectors, heat pumps, Astana solar).
• Exclusion of the existing support-mechanism requirements that installations must be fabricated in Kazakhstan only and that beneficiaries must reside in non-electrified areas only, as Kazakhstan now has an electrification rate of nearly 100%.