Can Kazakhstan Escape Its Coal Dependence and Build a Cleaner, More Affordable Heating Future?

An Asian Development Bank study warns that Kazakhstan needs up to $50 billion to modernize its ageing heating infrastructure, reduce energy losses and cut dependence on coal. The report calls for cleaner technologies, stronger regulations, better investment planning and affordable heating reforms to improve reliability, energy security and environmental sustainability.

Kazakhstan faces a major challenge in modernizing its ageing heating infrastructure while reducing dependence on coal, improving energy efficiency and ensuring affordable heating for millions of households. A new study by the Asian Development Bank (ADB), conducted under the Joint Government of Kazakhstan and ADB Knowledge and Experience Exchange Program with technical contributions from Dornier Power and Heat GmbH, warns that the country's heating sector urgently needs investment, stronger regulations and better planning. Published in October 2026 under the title Key Performance Indicators for Kazakhstan's Heat Sector: Pathways to Decarbonization, the report estimates that modernizing the heating system will require approximately $40 billion to $50 billion. It highlights how deteriorating infrastructure, excessive energy consumption and weak financial incentives threaten heating reliability, economic stability and Kazakhstan's climate commitments.

Ageing Heating Networks Put Millions at Risk

Kazakhstan generates approximately 60% of its heat from coal, 35% from natural gas and associated petroleum gas, and the remaining 5% from other sources. Renewable heating technologies contribute very little, leaving the country heavily dependent on fossil fuels. This dependence creates environmental challenges while exposing households and businesses to inefficient heating systems and rising maintenance costs.

A diagnostic assessment covering 20 regions, including Astana, Almaty and Shymkent, revealed substantial differences in heating performance. Efficiency at combined heat and power plants ranged from 23% to 85%, while heat losses in distribution networks varied between 1.3% and 44.6%. These figures show how significant amounts of energy are wasted before reaching consumers.

The report identifies poor building insulation, ageing pipelines, outdated equipment and inadequate monitoring as major weaknesses. Although emergency repairs following heating failures in Ekibastuz have improved some infrastructure, researchers warn that temporary interventions cannot solve long-standing problems.

Kazakhstan has introduced modernization programs aimed at reducing average heat network deterioration from 53% to 40% and upgrading 1,607 kilometers of pipelines. However, the study stresses that replacing damaged infrastructure must be accompanied by improvements in efficiency, reliability and long-term investment planning.

Can Cleaner Heating Reduce Kazakhstan's Energy Costs?

The study identifies heating as an important opportunity for reducing greenhouse gas emissions without imposing high economic costs. An assessment in Kokshetau estimated that modernization could reduce annual emissions by approximately 41,000 tonnes of carbon dioxide equivalent at a cost of around $6 per tonne.

Despite this potential, national projections suggest that district heating emissions could increase from approximately 23.1 million tonnes in 2025 to 24.4 million tonnes by 2030. The report argues that Kazakhstan needs clearer emission reduction targets and stronger policies encouraging cleaner heating technologies.

International experience from Germany, Denmark, Sweden, Finland, France, Italy and Poland demonstrates that heating systems can become more efficient through renewable energy, financial incentives and coordinated municipal planning.

Technologies such as large-scale heat pumps, geothermal energy, solar thermal systems, industrial waste heat recovery and thermal energy storage could help Kazakhstan reduce its dependence on coal. However, researchers emphasize that technology choices must reflect local climate conditions, infrastructure requirements and economic feasibility.

Improving building insulation and reducing unnecessary heat consumption could also deliver substantial savings. Lower demand would reduce fuel requirements, limit infrastructure investment needs and improve affordability for consumers.

New Heating Targets Could Transform Public Services

Kazakhstan's 2024 Law on Heating provides a legal foundation for modernizing the sector, but the report warns that legislation alone cannot guarantee improvements. Effective implementation requires measurable performance targets, reliable monitoring and clear responsibilities for government institutions and heating companies.

The researchers recommend introducing key performance indicators covering heating reliability, production efficiency, distribution losses, energy consumption and environmental performance.

The proposed framework selects fewer than 40 core indicators from more than 300 possible monitoring measures. Recommended targets include heating source reliability above 90% and eliminating avoidable interruptions caused by system failures.

Regional differences are particularly important because heating requirements vary considerably across Kazakhstan. Colder regions require more energy, making locally adjusted consumption targets essential for fair and realistic performance assessments.

Under the new legal framework, municipalities must prepare comprehensive heating development plans by the end of 2027. These plans should compare modernization options, evaluate investment costs and identify technologies capable of providing reliable heating while reducing emissions.

However, limited technical expertise, inadequate information and weak coordination between government institutions could delay implementation.

The $50 Billion Challenge: Who Will Pay for Reform?

Financing remains one of the biggest obstacles to transforming Kazakhstan's heating sector. The estimated $40 billion to $50 billion investment requirement places substantial pressure on government budgets, utilities and potential investors.

The report recommends linking public financing, concessional loans and international climate funding to measurable improvements in heating reliability, efficiency and environmental performance.

Tariff regulation presents another difficult challenge. Heating companies need sufficient revenue to maintain infrastructure and attract investment, but higher prices could create financial pressure on households.

Researchers recommend transparent pricing mechanisms, targeted assistance for vulnerable consumers and stronger financial incentives for efficient investment.

The study also calls for improved technical training, better monitoring systems, stronger cooperation between national and local authorities, and greater public participation in heating reforms.

Ultimately, the report concludes that Kazakhstan must move beyond emergency repairs and adopt a coordinated national heating strategy. Successful reforms could reduce pollution, improve energy security, lower long-term operating costs and provide more reliable heating. However, achieving these benefits will depend on whether policymakers can turn legal commitments into practical investments, accountable institutions and measurable improvements for consumers.