Concept Transition of the Republic of Kazakhstan to Green Economy

1. Concept Transition of the Republic of Kazakhstan to Green Economy Ministry of Environment and Water Resources of the Republic of Kazakhstan April 10-12, 2014

2. Existing key sectors of economy targets extended with transition to the Green Economy Additional targets Sector Description of the target 2020 2030 2050 • Liquidation of water sources deficiency at national level Provide the population with water by 2020 Provide the farming sector with water by 2020 Solve the water supply issues on permanent base • Water Resources • Liquidation of water deficiency at basin levels Maximum reduction of basins deficiency (by 2025) No deficit in basins by 2030 • Agricultural efficiency Increase by 3-4 times • Agriculture • Crop capacity, wheat (ton/ha) 1,4 2,0 2,0 • Water consumption for irrigation (m3/t) 450 330 250 • Reduced energy intensity of GDP against the level of 2010 25% (10% к 2015.) 30% 50% • Energy efficiency • Share in power generation: • Alternative sources Solar and wind: not less than 3% by 2017. ~30% 50% • Energy • Gas Power Stations • Regions gasification 20%2Akmola and Karaganda Regions 25%2 Northern and Eastern Regions 30% • Reduction against the current level of СО2 emissions in power energy Level of 2012 -15% -40% • Air pollution • SOX, NOXemissions in air European level of emissions • Waste disposal per person 100% 100% • Waste disposal • Sanitary waste storage ~95% 100% • Share of treated wastes 40% 50% 1 SPP, WPP, HydroPP, NPP 2 Shifting the HPPsin big cities to gas SOURCE: Work Group Analysis

3. Energy consumption in different scenario mln ton per year Scenario Energy efficiency actions would reduce power consumption before 2050 against the “business as usual” scenarioby 30-40% • “Frozen" • Theoretical scenario • No actions on energy efficiency are being taken • Energy intensity per product unit in every sector remains on the same level • Energy intensity of GDP changes due to GDP structure changes • Basic • The most probable energy consumption scenario • Changes in energy efficiency level are possible due to natural replacement of stock of buildings, production capacities and transport pool • No introduction of new principles to energy use • “Green" • Scenario containing additional actions increases the energy efficiency in comparison with basic scenario • Energy effective actions are reasonable due to implemented green economy strategy (ensuring the compliance with multiple energy use principles, development of additional elements to the policy) “Frozen" Basic “Green " 225 -28% -41% -19% -26% 162 162 132 132 119 60 2010 2030 2050 Source: Work Group Analysis

4. Actions recommended for any energy sector development scenario Component Main actions and targets • Existing power plants • Audit of all exiting power plants completed by 2020 to set a modernization schedule and to determinate the generating assets’ residual service life. • Modernization of the existing coal power plants with gas treatment station to screen the following emissions: SOx, NOx: up to 8,3 GW before 2020 (which is 100% of the existing coal power plants that will be still operating after 2020) • Renewable energy sources • Implementation of preliminary small-size renewable energy sources projects (wind and solar power plants) to accumulate the network integration-based experience: • 3% of WPP’s share in total volume of power generation or approximately 1,2 GW of installed capacity of the WPP by 2017. • 10% of WPP’s and SPP’ share in total volume of power generation or approximately 4,6 GW of the installed capacity WOO and 0,5 GW of installed capacity of SPP before 2020. • Shift to the comprehensive RES after achieving the level competitive with tradition sources (expected before 2020-30) • Alternative sources’ sharein total volume of power generation equal to 50% (WPP, SPP, HydroPP, NPP) • Gas infrastructure and gas generation • Diversification of energy sector owing to investments into the gas infrastructure • Changing the coal power plants to gas in major cities1to improve air quality • Gasification of Astana and Karaganda by 2020, building gas capacity (approximately 2,5 GW) in the cities (new construction + change of coal power plants to gas) • Gasification of the eastern and northern regions by 2030 (Pavlodar, Petropavlovsk, Semey, Ust-Kamenogorsk) • Nuclear power • Diversification of energy sector owing to investments into nuclear energetic industry including promotion of fair competitiveness in the sector and competitiveness of uranium mining industry. • 8% share of NPP in total volume of power generation or approximately 1,5 GW of installed capacity of NPP achieved by 2030. Source: Work Group Analysis

5. Emissions of coal power plants in Kazakhstan1 in comparison with maximum indicators set for Europe for the existing coal power plants with installed capacity over 200 MW mln g/mn3 Current emission standards in power sector are higher than in Europe Current indicators of Kazakhstan Kazakhstan standards for the existing coal power plants with installed capacity over 200 MW Europeanstandards for the existing coal power plants with installed capacity over 200 МВт Max Min Average 2 100 902 2000 - 3000 1 436 645 600 1 381 1200 - 16002 5003 1 020 400 339 530 310 50 - 1002 • Solids • NOx • SOx • Current emissions are higher than maximum indicators of Europe • Solids – more than 10 times • Nitrogen oxide – more than 20% • Sulfur oxide – more than 2,5 times • The relevant standards matching the European rquirements, as a minimum, are required. 1 Average for Karaganda: Karaganda HPP-3; ТЭЦ-2 AlNPP JSC; HPP-3 AlNPP JSC ; Ust-Kameogorsk HPP; Pavlodar HPP-3; Ekibastuz HydroPP-2“; HPP-2 Astana Energia JSC 2 Depending on ash content in coal /sulfur content 3 from January 1, 2016 - 200 Source: EBRR; Ministry of Environment of the UK: LPCD (Large Combustion Plant Directive) ; МООС; Work Group Analysis

6. For efficient waste management multiple initiatives are required • Detailed audits of all major solid domestic wastes (SDW) landfills and setting the actions on their rehabilitation are required. • Development of strategic SDW management plan is required covering the following aspects: • Defined targeted level of SDW treatment (50% by 2050) and storage at sanitary landfills (up to 100%by 2050) • Defined methods for calculating the tariffs ensuring the operation costs and investments included with specific level of profitability • Development of the investments attracting mechanism (i.e. state-private partnerships in major cities and municipal formations in rural areas) to develop the industry and to establish the state-funded formations, if required. • Defined sizes of subsidies for the most vulnerable population stratum in case if tariffs are changed • Development and update of standards for SDW operations, treatment and storage (using new technologies – separate collection from consumers, anaerobia, composting, biogas) • Distinct distribution of the responsibilities between the state agencies (Ministry of Regional Development, Ministry of Environmental Protectionare toset the permit issuance strategies and principles and regional authorities should be involved in their implementation) regarding their work in the field of SDW • Control over the SDW management Source: Worldbank; Eurostat; ADB

7. For efficient waste management multiple initiatives are required Improve the competitiveness and state of the environment, public health through reduction of industrial wastes and tailings with the help of the following initiatives: • Inventory of all major landfills to detect any content of useful substances and to check compliance of 100% of wastes with ecological safety standards. • Complete the wastes classification rules and synchronize with the European norms to reflect a real state of landfills. • Technical and economic studies on all major landfills to be undertaken to define economic feasibility for wastes processing as well as to define investment requirements to bring them into compliance with the standards • Determine options for toxic wastes processing /disposal (100% of wastes) • Prioritization of specific wastes landfills for further processing purposes (economic effect, ecological effect) and finding required finance sources and stimulations (i.e. each deposit/plant is to have a tax exemption system to stimulate the processing and safe storage projects to be fulfilled for 100% of tailings and wastes) • Development of specific mechanism of interaction between different ministries, agencies to develop the polices and provide control over industrial wastes Source: Worldbank; Eurostat; ADB

8. Long-term Green Economy Plan for the RK • Outlook3: 2030-50. • \Green Economy Outlook 1: 2013-2019Improvement of the existing situation Outlook 2: 2020-2030 Transition economy: transit to the third industrial revolution • Water resources • Irrigation efficiency improvement program • Introduction of water accounting and management system, quotes and controls • Building the first-class water sources management system based on water reservoirs, optimization of water-supply equipment • Final solutions in the field of water resources use • Farming • Launch of lands rehabilitation and agricultural crops range management (+ irrigation efficiency increase – see above) • Increasing the farming efficiency through the advanced methods • Transformation of agriculture into the sector contributing in long-term values. • Power sector • and energy • efficiency • Optimization of coal generation, reduction of local pollution level • Preferential investing in construction of gas-based capacities and facilities • Adequate actions on energy efficiency increase are to be taken • Development of alternative energy • Optimization of energy consumption and development of energy accumulation systems • Efficient use of wind and solar power plants with gas infrastructure support • Transport • Development of electric transport infrastructure • Setting the targets associated with electromobiles and fuel elements. • Fuel efficiency standards for road transport • Fuel standards for the companies involved in retail sales of energy resources • Shift to the alternative energy transport means. • Wastes disposal • Landfill management to eliminate leakage and pollution outspread • Disposal of wastes accumulated in past • Establishment of recycling • infrastructure • Final transition to the economy and industry based on products’ multiple use • Expansion of the Smart City Concept /high priority development areas • Cities / integration • 1-2 pilot projects on building ecologically safe regions /high-priority development regions • Using the EXPO to demonstrate the achievements • Transformation of one of the cities based on the Green Economy principles