Hydrogen energy
in Kazakhstan:status quo and perspective
Dr. Eng Saule Zholdayakova
Department of Alternative Energy(Hydrogen Energy Competence Center)/Hydrogen Technology Research Laboratory
LLP “KMG Engineering”, Kazakhstan

January, 2023 Tokyo1Outline••••

Introduction– Energy transition in Kazakhstan– About our center
Why does Kazakhstan need hydrogen?
– Decarbonization in Kazakhstan– Carbon regulation and hydrogen– Export potential
Establishing hydrogen technologies in Kazakhstan– Low-carbon hydrogen production– Hydrogen storage & transportation– Hydrogen utilizationConclusion– Recommendations for establishing hydrogen economy in Kazakhstan– Plans for our center2Introduction•

Kazakhstan is a major fossil energy exporter:– 9th largest coal exporter– 9th largest crude oil exporter– 12th largest natural gas exporter•

Kazakhstan is a major fossil energy consumer:– Fossil fuel-dominated energy generation– Economy is driven by energy-intensive
extracting and processing of naturalresources•

Figure 1. Power generation in KZ as of 2020 (Source: KazEnergy 2021)

Kazakhstan recognizes the importance of the climate agenda– The power capacity by RES is increasing in Kazakhstan (1.47 GW capacity as of––2020)
But RES is not a solution to all emission sectors
The development of hydrogen and CCS/CCUS3

Introduction– National Company “KMG”/ KazMunaiGas/ Kazakh Oil and Gas– Subsidiary KMG Engineering →research, technical and engineering support for the processes of oil and gas production,transportation and processing of oil and gas in the country.

•AstanaAtyrauAktau▪
▪
▪

12th of December 20132019г. – rebranding into KMG Engineering.
Branches in Aktau and Atyrau were established
50 years ago

Hydrogen Energy Competence Center
functionates since April 2022
– Was opened at subsidiary (KMGEngineering) of National Oil Company(KazMunaiGas or KMG)
– Hydrogen thinktank and R&D supportwith laboratory– One of our core tasks is «Developmentof a concept for hydrogen economy inKazakhstan»4Outline••••

Introduction– Energy transition in Kazakhstan– About our center
Why does Kazakhstan need hydrogen?
– Decarbonization in Kazakhstan– Carbon regulation and hydrogen– Export potential
Establishing hydrogen technologies in Kazakhstan– Low-carbon hydrogen production– Hydrogen storage & transportation– Hydrogen utilization
Conclusion– Recommendations for establishing hydrogen economy in Kazakhstan– Plans for our center
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Existing areas of production and use of hydrogen

Gray hydrogen is used in
the oil and gas andchemical industries

5.2% and 0.5% of total
GHG emissions

2 refineries and 1
ammonia plant inKazakhstan(hydrocracking at therefinery, feedstock for theammonia plant)▪ Low carbon hydrogen in refineries or ammonia plants can be produced using CCUS on existing

SMR plants or using green hydrogen.
▪ In the case of CCUS, the captured CO2 can be stored in geological structures or used forenhanced oil recovery (EOR).
▪ The geography of CO2 storage sites and potential areas for enhanced oil recovery is locatednear the same refinery and ammonia plant (Abuov et al. 2020).

Why does Kazakhstan need hydrogen?
We studied the experience of other countries: Japan, Australia, Germany, Russia

Driver 1: Export potential
Two main markets - China and Europe

Driver 2: Carbon tax
CBAM, ETS

Driver 3: Decarbonization
Current decarbonization measures inKazakhstan are insufficientDriver 1: Export potential••••••Hydrogen production in the world amounted to 90 Mt in 2020
39 countries have adopted a hydrogen strategy
Construction of an enterprise for the production of green hydrogen in the Mangistau region bySvevind
Kazakhstan and the European Union signed a memorandum of understanding and strategic
partnership in the renewable hydrogen chain
660 Mt demand expected in 2050 (Hydrogen Council & McKinsey 2020)
Expected the largest markets are:
– China (200 Мt)– Europe (95 Мt)

Source: Zholdayakova et al. 2022 (data from Hydrogen Council & McKinsey 2020)

Driver 2: Carbon tax•

External carbon tax poses financial risks for Kazakhstani exporters– EU Carbon Border Adjustment Mechanism (CBAM) from 2026
– $80/t CO2 (2021)– Losses from export earnings in Kazakhstan may amount to more than

$1 billion annually•

Canada and the US are also considering the deployment of cross-border carbon
regulation → the geography of the carbon tax will only grow•

There is also an internal carbon tax in Kazakhstan– Emission Trading System (ETS) $1 (2013)•The use of hydrogen can significantly reduce the carbon footprint ofmanufactured export productsDriver 3: Decarbonization•Regulatory documents to reduce GHG emissions in Kazakhstan:– Concept of green economy (2013)– Paris agreement (2016)– Carbon neutrality (2020)

Source: Abuov et al. 2020•

Current decarbonization measures(RES, gasification) are not sufficientto achieve the stated goals → GHG
emissions continue to grow•The use of hydrogen can significantly
reduce GHG emissions from thesectors of heavy industry (metallurgy,chemistry and oil and gas) andtransport in Kazakhstan

Outline••••Introduction– Energy transition in Kazakhstan– About our center
Why does Kazakhstan need hydrogen?
– Decarbonization in Kazakhstan– Carbon regulation and hydrogen– Export potential
Establishing hydrogen technologies in Kazakhstan– Low-carbon hydrogen production– Hydrogen storage & transportation– Hydrogen utilization
Conclusion– Recommendations for establishing hydrogen economy in Kazakhstan– Plans for our center
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Establishing hydrogen technologies in Kazakhstan: Production•Great potential exists for blue hydrogen production– Cheap natural gas and coal
– Current gas production is tightly used, but the resource base can be expanded– Abundant coal resources for gasification– Plenty of CO2 storage sites to launch hydrogen with CCUS•

Great potential exists for green hydrogen production– Kazakhstan has rich renewable resources (both solar and wind)– Installed RES capacity is tightly used for power generation– Green hydrogen projects should rely on the off-grid renewable power supply(Svevind, etc.)•

The potential limitation– Kazakhstan might experience water scarcity in the future– Both blue and green hydrogen require water feedstock: the availability of water
resources for low-carbon hydrogen should be investigated12

CO2 sources in West Kazakhstan•There are large CO2 emitters in West Kazakhstan•

Emitters are obliged to decrease their GHG emissions
as part of carbon-neutrality plan of Kazakhstan•

Blue hydrogen can be a part of these emissions

Motives for hydrocarbon producers• “CCUS as service” is a next business of Oil & Gas• Oil & Gas can provide CCUS services tolarge CO2 emitters in region or beyond• CCUS can prolong oilfield’s lifetime for another 50-60 years• Being decarbonization leader in regionKPO and large CO2 emitters in West Kazakhstan (Source:Abuov et al. 2020)13

Establishing hydrogen technologies in Kazakhstan: Production

Gray, blue and green hydrogen production technologies (data from IEA 2020 and Hydrogen Council 2020 )Hydrogen color
Production
technology
Resources
estimate forKazakhstan
Carbon intensity(kg CO2 eq/kg H2)*
Water footprint(kg water/kg H2)**
Production cost
(USD/kg H2)*

Gray hydrogen
Coal
SMR
gasification
Tight natural
gas supply,
Abundant
but resource
coalbase can beresources
expandedBlue hydrogen
Green hydrogen
CoalSMR
Water electrolysis
gasification
Tight natural
Abundant renewable
gas supply, but
Abundant coal energy resources, butresource baseresources
installed RES capacity
can beis limited
expanded

920

120

14-17

41-86

13-17

41-86

9-18

1.0-1.9

1.6-1.8

1.4-2.4

2.0-2.2

2.5-6.6

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Establishing hydrogen technologies in Kazakhstan: Storage & Transportation•Kazakhstan is a landlocked country– Long distances: pipeline or railways– Short distances: all transportation methods– Shipping is available only to export transit countries via Caspian Sea (Azerbaijanand Iran)•Hydrogen transportation infrastructure– The joint effort of interested stakeholders(green & blue hydrogen developers, transit countries and hydrogen importers)– Similar infrastructure exits for crude oil export (Caspian Pipeline Consortium)

Hydrogen transportation options for Kazakhstan
Transportation type
Pipelines
Railways
Trucking
Shipping

Distance, km
1000-5000
500-5000<1000
500-1000

Cost*, USD/kgH2
0.6-3.3
Not evaluated
0.2-3.3**<2.2Phase
Gas
Gas, liquid and solidGas, liquid and solid
Liquid15

Establishing hydrogen technologies in Kazakhstan: Utilization•Emission sectors in KZ ETS and transport sectors were considered for hydrogenutilization––––––•

Power and heat
Metallurgy
Oil and gas
MiningProduction of construction materials
Transport (not regulated by KZ)

Hydrogen utilization areas were identified in each sector and were classified as
below– Existing (gray hydrogen use)
– Near-term utilization areas– Long-term utilization areas
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Establishing hydrogen technologies in Kazakhstan: Utilization

Hydrogen utilization perspectives in Kazakhstan emission sectors
Regulatedsectors

Emission’sshare*, %Metallurgy

8Construction
materials

1.9Chemicals

0.5Mining2

Power and heat25.7

Oil and gas

5.2

Non-regulated
GHG emissions

56.7

Target hydrogenutilization area
- Direct reduction in ironproduction- Heating in cement kilns- Ammonia production- Heating and drying- Tracks on fuel cells- Seasonal power storage- Residential and industrial
heating

Decarbonization effect from Perspectives inhydrogen utilization
Kazakhstan
Major

Near-term-Unknown-Existing (grayhydrogen)Unknown

Minor

Long-term- Oil refining (Hydrotreating)

Minor

Existing (grayhydrogen)- Transport (FCEVs,hydrogen stations)

Major

Long-term

Major17Outline••••Introduction– Energy transition in Kazakhstan– About our center
Why does Kazakhstan need hydrogen?
– Decarbonization in Kazakhstan– Carbon regulation and hydrogen– Export potential
Establishing hydrogen technologies in Kazakhstan– Low-carbon hydrogen production– Hydrogen storage & transportation– Hydrogen utilization
Conclusion– Recommendations for establishing a hydrogen economy in Kazakhstan– Plans for our center18

Conclusion

The role of hydrogen– clearly defined in the long-term energy and decarbonization strategy– identify target utilization sectors (steel, chemicals, oil&gas, transport,etc.) for the coming decades and quantify the amount of hydrogen– carbon regulation (especially CBAM may force Kazakh exporters)
Potential of export– the two largest hydrogen markets – the EU and China present an
opportunity to develop hydrogen export with a priority for low-carbonhydrogenR&D investment
Appropriate regulations

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Conclusion

Hydrogen Production• Blue hydrogen in Kazakhstan may have low carbon intensity and low cost
• Green hydrogen production (high Capex is expected)• The effects of hydrogen export on the water security
Hydrogen Storage and Transportation• pipeline and railways (land-locked country )Hydrogen Utilization (Stimulation at a local scale)• Near-term utilization areas for low-carbon hydrogen in existing industrial clusters(ammonia plants, refineries and iron/steel factories)• Long-term utilization areas are energy storage in the power sector, residential
heating and transportation.

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Plans/Collaboration
Analysis of Possibilities of Hydrogen Production in Kazakhstan• Green Hydrogen• Blue Hydrogen
Experiment Hydrogen Storage• Preparation of Metal hydride• Scale-up project

Thank you for yourattention!

•••••

Rakhmet!

Founding, investment for pilot projects
Formation of the hydrogen market
Possibilities of export
Research of hydrogen standards, regulations
R&D system

ご清聴ありがとうございます。

s.zholdayakova@kmge.kz
s.zholdayakova@niikmg.kz
Saule Zholdayakova

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