This week, the media in the region focused on developments at the COP 29 summit in Baku. They reported on several crucial green energy agreements concerning Central Asia, including the new green energy deal between Kazakhstan, Uzbekistan, and Azerbaijan, which will see the three countries cooperate to export green energy to Europe. They highlighted other deals, such as those between Kazakhstan, Uzbekistan, and the UAE-based company Masdar to construct several new wind farms throughout the region. Several outlets also noted the Islamic Development Bank’s $1.15 billion investment in Kazakhstan’s water infrastructure. They also reported on the ADB’s new “Glaciers to Farms” initiative to help preserve Central Asia’s melting glaciers. Lastly, multiple sources emphasized Russian companies' increasing difficulties in transferring money through Kazakhstani banks.
The leaders of Kazakhstan, Azerbaijan, and Uzbekistan sign Green Energy agreement. Source: Akorda
Investment
Uzbekistan and Saudi Arabia’s ACWA Power have signed a $1.1 billion agreement to construct electricity storage systems with a capacity of 2000 megawatt-hours at COP 29 (Kun). The project will help improve the country’s electricity network and help balance electricity loads. The various systems will be located across the country, creating over 1000 new jobs. ACWA has also partnered with Ipoteka Bank to build a new $1 billion combined-cycle gas turbine power plant in Uzbekistan (Daryo). The plant will produce 1500 megawatts (MW) of electricity. Employing the latest JAC turbines, the plant will consume 40% less natural gas compared to older plants, thus lowering emissions by around 200000 billion cubic meters annually. Ipoteka Bank will provide a $40 million working capital facility for the project. Other lenders involved include The European Bank for Reconstruction and Development (EBRD), The Asian Infrastructure Investment Bank (AIIB), and the OPEC Fund for International Development.
Uzbekistan’s Energy Ministry and the UAE company Masdar have concluded a deal to build a 1000 MW wind farm in the Uchkuduk district of Navoi region at COP 29 in Baku (UZ Daily). Once operational, the new plant will create hundreds of jobs and produce 3.5 billion kilowatt-hours (kWh) annually. In recent years, Uzbekistan has faced a shortage of natural gas as it had to contend with growing domestic demand and meeting its export commitments. However, this new plant will save roughly one billion cubic meters of natural gas. It will also reduce carbon dioxide emissions by 1.4 million tons, thus helping Uzbekistan meet its emissions targets. Uzbekistan has a long history of cooperating with Masdar, with the company having previously constructed wind plants in Zarafshan and solar plants in Karmina, Gallaorol, Katakurgan, Guzar, Alat, and Sherabad. Overall, these investments form part of Uzbekistan’s efforts to produce 18000 MW of solar and wind energy annually by 2030 (Daryo).
Uzbekistan partners with UAE’s Masdar to construct new wind farm. Source: Daryo
Kazakhstan’s Energy Ministry confirmed the country concluded several green energy deals worth $3.7 billion at COP 29 (Kursiv). These agreements include a $2 billion deal with China and a $1.5 billion agreement with Masdar to develop a wind power plant in Zhambyl region. Kazakhstan’s Minister of Energy Almasadam Satkaliyev stated that Kazakhstan aimed to further expand cooperation in the green energy sector with several key partners, including ACWA Power, the Eurasian Economic Commission, the Asian Development Bank (ADB), and the UN. He also noted that Kazakhstan was reforming its legal framework and regulations to make the renewable sector more appealing to investors.
The Islamic Development Bank has agreed to invest $1.15 billion in Kazakhstan’s water infrastructure, the single most significant investment in the bank’s history (The Astana Times). Overall, the investment will pay for building four new reservoirs, reconstructing four others, and repairing 3450 kilometers of canals, guaranteeing sustainable water supplies to over 332000 hectares of farmland. The project will also involve several assessments of Kazakhstan’s water and river basin management strategies and the implementation of early response systems for the Information and Analytical Center for Water Resources. Kazvodkhoz will also be provided with new equipment and an automation center to improve water management.
The European Bank for Reconstruction and Development (EBRD) is considering co-financing the China-Kyrgyzstan-Uzbekistan railway, according to the Uzbekistani Ministry of Transport (24.kg). The First Deputy Minister of Transport, Mamanbiy Omarov, met with the Director for Eurasian Infrastructure, Ekaterina Miroshnik, to discuss the implementation of the project. Kyrgyzstan and Uzbekistan have a 24.5% share in the venture, while China has a 51% share. In June 2024, all parties signed an agreement to construct the 454-kilometre railway. Kyrgyzstan also pledged roughly $131 million towards the construction. In October 2024, construction of the railway commenced.
QazaqGaz plans to conclude a $5.6 billion agreement with PetroChina International Alashankou Company Limited (Kursiv). Earlier this year, QazaqGaz reported assets of $7.7 billion. Overall, this means the company aims to sell more than 50% of its assets by signing this additional agreement.
Energy
The leaders of Kazakhstan, Uzbekistan, and Azerbaijan have signed a new green energy pact on the sidelines of the COP 29 summit in Baku (The Astana Times). The agreement concerns the production and transfer of green energy. Ultimately, it will help integrate the countries’ energy systems and establish reliable corridors for exporting green energy to Europe and other markets. Each leader emphasized their country’s commitment to the green transition. Kazakhstani President Kassym-Jomart Tokayev noted, “Kazakhstan has reached agreements with foreign partners on green projects with a total capacity of 43 gigawatts (GW).” Meanwhile, at the European Economic Days event in Tashkent, the Uzbekistani Deputy Energy Minister, Umid Mamadaminov, stated that Uzbekistan aimed to export 10-15 billion kWh of electricity to Europe annually by 2030 (The Times of Central Asia).
The leaders of Kazakhstan, Azerbaijan, and Uzbekistan sign green energy agreement. Source: Akorda
At COP 29, the Kazakhstani Vice Minister of Energy, Sungat Yessimkhanov, announced that Kazakhstan had joined the declaration to triple global nuclear energy production by 2050 (Kazinform). He noted that increasing nuclear energy would help reduce emissions and keep global temperature rises below 1.5 degrees Celsius. So far, 25 other countries have also signed the declaration. Earlier this year, 71% of Kazakhstanis voted to construct their country’s first nuclear power plant. Since then, the Kazakhstani government has been working towards establishing a consortium to build the plant.
Environment
The ADB and Kazakhstan’s Energy Ministry have signed a memorandum of understanding to cut greenhouse gas emissions (Kursiv). They aim to cut emissions by decommissioning several coal-fired power and heating plants early. The ADB will aid Kazakhstan in conducting a feasibility study of which plants are suitable for early decommissioning or repurposing under the bank’s Energy Transition Mechanism (ETM). Kazakhstan is the eighth largest consumer of coal globally, with coal plants accounting for roughly 70% of its electricity production. Heating and power plants are also responsible for 80% of the country’s emissions. As of 2024, renewables only comprise 6% of Kazakhstan’s energy mix.
The ADB has unveiled its new “Glaciers to Farms” initiative to promote sustainable water use and food security in Central Asia (The Times of Central Asia). ADB will conduct several assessments of glacial melt in Azerbaijan, Kyrgyzstan, Tajikistan, and Uzbekistan as a basis of the program with the support of the Green Climate Fund. The region's average temperature is expected to increase by 6 degrees by 2100. At COP 29, Bahodur Sheralizoda, the Chairman of Tajikistan's Committee for Environmental Protection, noted that Central Asia could lose a third of its glaciers by 2050 (Asia Plus). The loss of glaciers will disrupt ecosystems, hydropower generation, and agriculture. The initiative aims to allocate $3.5 billion from the Green Climate Fund, the ADB, and various governments to improve the sustainability of water and agricultural infrastructure (The Times of Central Asia). The UN has designated 2025 the year of Glacier Preservation, with Tajikistan expected to hold a significant international conference on the matter next year. Tajikistani President Emomali Rahmon also proposed establishing a Regional Coordination Centre for Glaciology in Dushanbe.
Addressing COP 29, Kyrgyzstani President Sadyr Japarov called on the intentional community to step up support for mountainous countries which are some of the most vulnerable countries to climate change despite contributing minimally to climate change (Interfax). He noted that due to climate change mountainous countries are facing extreme weather conditions, natural disasters, damage to infrastructure, and low agricultural productivity. He stated, "Today, climate change is having a particularly negative impact on our glaciers, water resources, agriculture, and people's day-to-day life in general.” He elaborated that Kyrgyzstan’s glaciers have decreased in size by 1,262 square kilometers, or 16% of their total area, over the past 50-70 years. He urged other countries to join the Declaration on Climate Change, Mountains, and Glaciers to draw attention to the issue.
Addressing COP 29 in Baku, Uzbekistani President Shavkat Mirziyoyev elaborated on his country’s climate targets. He stated that Uzbekistan aims to reduce greenhouse gas emissions by 35% by 2030 (Kun). To do this, Uzbekistan will increase its share of renewable energy to 40% of its electricity mix. He also said that Uzbekistan will invest in green hydrogen clusters and the rolling out of electric vehicles. Before concluding his remarks, he noted that climate change is one of the main threats facing the world and that developing countries need assistance if they are to meet their targets and keep the rising temperatures below two degrees Celsius this century.
Uzbekistani President Shavkat Mirziyoyev addresses COP 29 conference in Baku. Source: Uzeng.hz
Finance
As several Central Asian states continue to struggle with budget deficits, the ADB announced it will provide Kyrgyzstan with $50 million in budget support (AKIpress). Kazakhstan has also taken two loans from the AIIB and the ADB, valued at $680 million, to shore up its finances (Kursiv). This year, the budget deficit grew to $7.2 billion or 2.7% of GDP due to decreasing state revenues. The Ministry of Finance also transferred $11.2 billion from the National Fund and issued several euro bonds to make the difference. While the deficit is expected to decrease to 1.9% by 2027, it will increase in 2025 to $9.6 billion. Overall, Kazakhstan already spends 15% of the state budget servicing its debt.
Kazakhstani banks have dramatically increased the time it takes for payments from Russian companies to be processed (Kursiv). According to the Russian RBC news agency, Russian companies report that payments to Kazakhstani entities can take two months. Overall, processing times have increased by 24% since July. They believe this is due to enhanced risk assessments and other checks, as Kazakhstani entities strive to avoid secondary sanctions. Russian entrepreneurs also noted that several banks requested more documents regarding the payer, the recipient, and the company’s activities. As a result, several Russian businesses have even ceased using Kazakhstani banks. Similar difficulties were reported in July, with Kazakhstani banks allegedly rejecting 30% of payments, while others took as long as two weeks to complete. However, several Kazakhstani banks denied these allegations at the time. In May, money transfers from Russian companies through Kazakhstani banks to China had ceased after the Bank of China stopped accepting them. This week, it was also reported that the Bank of China no longer accepts yuan payments from Russia’s list of friendly countries, including several Central Asian states. The exceptional caution of Chinese financial institutions can be traced to enhanced risk assessments as Chinese banks endeavor to avoid secondary sanctions (Kursiv).
