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eu signs a deal with kazakhstan: the future of the green hydrogen hub

EU signs a deal with Kazakhstan: The future of the green hydrogen hub

Author:Caspian Policy Center

Nov 15, 2022

Image source: Ministry of Foreign Affairs of the Republic of Kazakhstan

Svevind Energy Group’s Chief Executive Officer Wolfgang Kropp and Kazakhstan’s  First Deputy Prime Minister Roman Sklyar signed an investment agreement for the construction of a green hydrogen production and distribution hub in the Mangystau Region worth $50 billion, President Kassym-Jomart Tokayev’s office announced on October 27 in Astana.

On October 27, President of the European Council, Charles Michel visited Astana and discussed the hub construction project with President Tokayev. “Strong cooperation between Central Asian countries is key to the security and development of the region. Today’s meeting is much more than just a policy dialogue between two regions. It is a powerful symbol of our reinforced cooperation and a strong signal of the EU’s commitment to this region,” said Michel.

The President emphasized that Kazakhstan's foreign policy priority remains establishing a strategic partnership with the European Union (EU), with Kazakhstan being the only country in Central Asia to sign the EU's Enhanced Partnership and Cooperation Agreement. Highlighting the importance of strengthening relationships and technological cooperation, Tokayev noted:

“Your visit provides an excellent opportunity to celebrate significant achievements across the spectrum of the partnership between Kazakhstan and the EU. Next year we will celebrate the 30th anniversary of the establishment of diplomatic relations. We consider your official visit to Kazakhstan as evidence of mutual interest in bringing our relations to a new level.”

The EU Enhanced Partnership and Cooperation Agreement was signed the same day. As of October 27, Hyrasia One, Svevind Group’s subsidiary, plans to reduce two million tons of green hydrogen annually. It aims to start production by 2030 and become 20% of the EU’s 2030 target for green hydrogen imports. As part of the project, a desalination plant with a daily capacity of 255,000 cubic meters, a 40 GW wind and solar power station, and a 20 GW water electrolysis plant will be constructed and operated. The meteorological conditions and skills base in Western Kazakhstan are ideal for the project, Kropp commented.

It is expected that the project implementation will create as many as 3,500 jobs during the construction phase and as many as 1,800 jobs during the phased commissioning of the facilities. Also included is a provision for cooperation between German and Kazakhstani universities in order to train personnel in the region. In addition to building infrastructure, the investor plans to pay particular attention to the socioeconomic development of the region.

The logistics of the project will be highly dependent on the Trans-Caspian International Transport Route (TITR) instead of traditional routes via Russia. Considering the current geopolitical challenges, Tokayev and Michel stressed the importance of expanding existing and developing international transport corridors between Europe and Central Asia to aid and ease supply chains and overall global production. Furthermore, they discussed the role of other transport connections in the region as well as the opportunities presented by TITR and the potential for its development.

Earlier in June, Kazakhstan has set out an ambitious clean energy transition plan Being dependent on domestic coal, having a lack of flexible generating capacity, and generating more than 70% of its electricity from its abundant resources of coal, Kazakhstan is facing a long-term risk from the decline in global demand for fossil fuels. Yet, it aims to achieve its first goal within the transition plan by reducing the country’s greenhouse emissions to 15% by 2030, and reaching carbon neutrality by 2060. New electricity capacities within this plan include solar, wind, and hydro energy.

The new project between Kazakhstan and Svevind Energy Group establishes a long-term commitment and framework which creates an avenue for a definition on land access, permission processes, taxes, and no restrictions on trade and capital movements, according to Rene Pforte, Chief Business Development officer at Svevind. Kropp said the parties will finalize and sign a strategic partnership agreement by the end of November for sustainable raw materials, batteries, and green hydrogen.

“The next ten years are crucial for the success of the energy transition worldwide. What we don’t achieve in this time could simply be too late. We want to make a powerful contribution with Hyrasia One,” said Wolfgang Kropp.

A deal was signed between the European Commission and Kazakhstan on November 7 to develop green hydrogen and raw materials, as well as create wind turbines and batteries for electric cars. By doing so, the EU Enhanced Partnership and Cooperation Agreement with Svevind can be developed and become more efficient.

As the European energy crisis continues into winter, diversifying both energy producers and supplying 'green' energy will be vital to the EU's ability to mitigate Russian energy warfare. As Kazakhstan is already a major oil and gas producer, this is an important development in its emerging renewable energy sector. With Kazakhstan's enhanced role in European energy security, now increasingly incorporating renewables, Europe is signaling a shift in its approach to Central Asia.

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