Can Energy Transition Become a Driving Force for Economic Diversification in Central Asia?

Talk by Roman Vakulchuk (Norwegian Institute of International Affairs, Oslo) as part of the Research Seminar Series of the IOS Economics Department.

The presentation will discuss opportunities and barriers to promoting economic diversification in Central Asia in light of the energy transition and explore the role of external actors in the process. Since 1991, the Central Asian countries have adopted numerous reform measures aimed at diversifying their economies away from fossil fuels. Yet, most of the attempts have failed and the region still heavily relies on fossil fuels exports. As a result, there has been only limited economic diversification and an underdeveloped manufacturing base in Central Asia, leaving the region heavily dependent on oil price fluctuations and external economic shocks. The ongoing global energy transition presents a new opportunity for countries like Kazakhstan, Turkmenistan and Uzbekistan to diversify their economies through the extraction of critical raw materials (e.g., lithium, cobalt, copper, chromium), needed in the production of clean energy technologies, and the development of decentralized renewable energy in the region. At the same time, it also poses a risk that the energy transition will create a new source of raw material dependence resulting in limited economic diversification in the region.