Analysis of Environmental Policy in Kazakhstan

Lyazzat Nugumanova

No 9175, EcoMod2016 from EcoMod

Abstract: Kazakhstan has one of the highest CO2 emissions per GDP in the world. Kazakhstan has taken a leadership role in the Central Asian region in terms of climate change policies and greener economy. Kazakhstan has ratified Kyoto Protocol in 2009. Kazakhstan has committed to reduce emissions by 15% below 1992 GHG levels by year 2020. In 2013 by decree of President of Kazakhstan a concept of Green Growth was adopted. Environmental regulations in Kazakhstan inherited from the planned economy need to be modified to correspond to current economic situation and climate change goals. Carbon tax and emissions trading are two of the main instruments to curb GHG emissions. There is an ongoing debate regarding which policy instrument is the most optimal towards reduction of emissions. The main difference between the two instruments are levels of uncertainty with regards to the carbon price and thus emissions reductions. Carbon tax provides more carbon price certainty, while emissions trading carbon prices are more volatile. Carbon tax mechanism is more easily to implement and operate, than ETS. Kazakhstan has opted and implemented emissions trading scheme in January 2013.. The ETS covers 55% of total CO2 emissions in Kazakhstan, and includes energy, mining and chemical industry. The average price of allowances was KZT 406 (US$2). Carbon tax in Kazakhstan would provide stability of carbon price, moreover carbon tax is easier to implement and monitor. The objective of this paper is using computable general equilibrium (CGE) model evaluate macroeconomic and environmental impacts of different carbon tax levels in Kazakhstan. Standard multiregion, multisector static CGE model, GTAP is used to simulate the impact of different carbon tax levels in Kazakhstan. GTAP is a standard CGE model based on assumptions of perfect competition and constant returns to scale. GTAP data base with latest version 9 is used in this study. The base year of the data base is 2010. The data base for the purpose of this study is aggregated to 11 sectors, out of which six are energy sectors, and six regions. Six regions are Kazakhstan, Russia, Belarus, China, EU and Rest of the World. Three sets of scenarios are simulated where carbon tax is priced at US$5, US$10 and US$20 per tCO2. Carbon tax is implemented in the CGE model as ad valorem equivalents. Carbon tax is implemented for all energy sectors and chemicals and heavy manufacturing sectors. Initial findings show macroeconomic effects of carbon tax in Kazakhstan. Preliminary findings allow to identify sectors which would benefit or loss from the implementation of carbon tax in Kazakhstan. It is expected that in all scenarios CO2 emissions will reduce, though magnitude of CO2 emissions reductions is expected to differ.

Keywords: Kazakhstan; Energy and environmental policy; General equilibrium modeling (CGE) (search for similar items in EconPapers)
Date: 2016-07-04
New Economics Papers: this item is included in nep-cis, nep-cwa, nep-ene and nep-env
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