Kazakhstan is the first country in Asia to launch an economy-wide system to cap emissions from industry
The European Bank for Reconstruction and Development (EBRD) hosted a workshop in Astana, on the practical implications of dealing with carbon budgets, in cooperation with the Ministry of Environmental Protection of Kazakhstan. The workshop aimed to prepare businesses that are subject to the Kazakh emissions trading scheme (ETS) for implementing the scheme’s requirements.
Kazakhstan is the first Asian country that has launched a nationwide ETS, which came into effect on 1 January 2013, and which caps the emissions of its biggest emitters in the energy, coal, oil and gas extraction sectors. The Kazakh ETS started earlier this year, with a one-year pilot phase, to be followed by one or two compliance periods starting in 2014 and running until 2020. Under the Kazakh ETS, 147 million emission allowances (or “emission rights”) will be allocated for 2013. The allocation is based on each participant’s emissions in 2010, and each allowance represents one tonne of CO2 equivalent (tCO2e). A first batch of allowances is expected to be issued to companies’ accounts in the next few weeks.
During the workshop, management, as well as environmental compliance and trading departments of companies operating in Kazakhstan, heard about the knowledge, skills and expertise involved in implementing such schemes. The EBRD collaborated in the workshop with the International Emissions Trading Association (IETA), whose members shared their emissions trading experience and know-how, most importantly under the European Union Emissions Trading System (EU ETS), which is the world’s largest emissions trading scheme.
The adoption of an ETS will help Kazakhstan achieve its five per cent emission reduction target (compared to 1990 levels) as agreed as part of the second Kyoto Protocol commitment period, which runs from 2013 to 2020.
The ETS is part of the Kazakh government’s green agenda which the EBRD supports. “Kazakhstan has a vast potential to reduce emissions, including energy efficiency, gas flaring reduction and development of renewable energy resources, and we are looking for opportunities to help by investing in those projects,” said Janet Heckman, the EBRD’s Director for Kazakhstan.
As part of the Bank’s Preparedness for Emissions Trading in the EBRD Region (PETER) initiative, the EBRD commissioned a study outlining cap-and-trade options for Kazakhstan. The initiative’s second phase would focus on opportunities for linking the Kazakh ETS with other emissions trading schemes, such as the EU ETS.