Following the outbreak of Russia’s war against Ukraine in 2022, the EU was compelled to look for alternative suppliers of energy. This task has been complicated by the bloc’s commitment to its net-zero targets. Against this backdrop, Kazakhstan has declared its ambitions to become the EU’s key supplier of green hydrogen, as well as critical metals used in nuclear power generation.

German company Svevind Energy Group has committed to developing a $50b mega-project aimed at producing up to 2mt/yr of green hydrogen—almost 20% of the EU’s 2030 target for green hydrogen imports—in Kazakhstan’s Mangystau region.

With production expected to start in 2027, full-scale operational capacity will be reached in 2030, potentially turning Kazakhstan into one of the EU’s largest suppliers.

2mt/yr – Potential output

Europe’s growing interest in Kazakhstan as a supplier of green hydrogen rests on the country’s competitive advantages.

The first of these is climate and geography. The Mangystau region has one of the strongest winds on the continent and has abundance of sun—about 300 sunny days per year. This renewable power resource can support the Svevind Energy mega-project, which includes construction of a desalination plant with a daily capacity of 255,000cm, a 40GW wind and solar power station, and a 20GW water electrolysis plant.

Also, Kazakhstan’s geographic location—albeit challenging under certain circumstances—offers comparatively short passage to European markets. Thus, production of green hydrogen in Kazakhstan could ensure the EU’s ability to access to a relatively inexpensive, abundant and geographically more proximate source of green energy.

While Kazakhstan is neither a fully fledged democracy nor completely free of domestic security-related risks, the country is more stable and has fewer risks compared with other potential exporters from North Africa or east-central Europe.

Second, Kazakhstan offers an export-oriented business model that meets the needs of prospective customers. According to Ainur Tumysheva, director of investments at Hyrasia Energy, a subsidiary of Svevind, Kazakhstan will primarily concentrate on exports in developing its green hydrogen potential.

Meanwhile, the country’s own energy needs will be met by existing electricity-generating capacity. Kazakhstan has ambitions to construct a new nuclear power plant within a decade.

In the meantime, Kazakhstan will not have to search for sponsors ready to cover hydrogen-related expenses and customers willing to purchase the end product. In fact, Germany—which by 2030 plans to consume 95–130TWh of green hydrogen annually—is understood to be ready to meet some of the costs associated with establishing hydrogen infrastructure, as well as purchasing the final product.

Challenges

However, the county’s competitive advantages are not absolute. Under certain circumstances, they could either be eroded or turn into disadvantages.

First, Kazakhstan’s geography could become a problem. Its position and history make it dependent on two powerful actors: China and Russia. While the former is unlikely to have any objections related to Kazakhstan’s interest in strengthening economic ties with the EU, the latter most likely would.

Kazakhstan’s complex relationship with Russia—which on the one hand includes abstaining from following the West’s sanctions regime, while on the other hand refusing to join BRICS—might deteriorate depending on Kazakhstan's choices.

The country’s only access to major shipping routes suitable for transportation of green hydrogen to European end-users is the Caspian Sea, which is permeated by numerous geopolitical issues and regional rivalries.

Availability of water for electrolysis also poses a challenge. Production of green hydrogen, coupled with Kazakhstan’s other projects, such as the construction and operation of a new nuclear power plant, will result in a massive overconsumption of water.

Kazakhstan’s largest consumer of water, its agricultural sector, is unlikely to decrease consumption given climactic changes in Central Asia. According to the UN Environment Programme, by 2040 Kazakhstan may face significant shortfalls amounting to 50% of its needs.

Dr. Sergey Sukhankin is a senior fellow at the Jamestown Foundation and the Saratoga Foundation (both Washington DC) and a fellow at the North American and Arctic Defence and Security Network (Canada). He teaches international business at MacEwan School of Business (Edmonton, Canada). Currently, he is a postdoctoral fellow at the Canadian Maritime Security Network.

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Author: Sergey Sukhankin