AIFC proposes reforms to enhance Kazakhstan’s carbon market
The Astana International Financial Centre (AIFC) has released a report recommending key reforms to enhance Kazakhstan’s carbon regulation system. These reforms include the paid allocation of carbon allowances, expanding emissions trading platforms, and creating a carbon fund.
According to the report published on Feb. 17, international experience shows that emissions trading systems (ETS) in developed and industrially emerging countries operate on a model of partial distribution of allowances through auctioning, which helps establish a market price for carbon.
Kazakhstan’s ETS, known as Kaz ETS, was launched in 2013 and covers 47% of emissions from 135 energy, mining, and manufacturing companies. However, currently, all allowances are allocated for free, resulting in a low carbon price of approximately $1 per unit, compared to $90 in the European ETS in 2023.
Carbon trading in Kazakhstan has been suspended since 2022, which has limited incentives for decarbonization. The report emphasizes the potential of the AIFC Carbon Platform, which aims to facilitate carbon credit trading in the medium term and serve as a marketplace for emissions allowances within Kaz ETS in the future. The platform could also become a regional hub for Central Asia and the Caucasus.
Developing Kazakhstan’s carbon market is crucial for achieving carbon neutrality by 2060 and meeting the country’s international commitments to reducing greenhouse gas emissions. It is essential for Kazakhstan to implement these key reforms to strengthen its carbon regulation system and move towards a more sustainable and environmentally friendly future.
