Kazakhstan plans to impose carbon tax on high-emitting companies

The Kazakh government plans to take further measures to limit carbon dioxide emissions from industrial enterprises starting in 2022, reducing the total annual free carbon emission quota for enterprises from the current 169 million tons to 125 million tons, Eurasia.com reported on December 28.



According to the national Plan for 2022-2025 drawn up by the Ministry of Ecology, Geology and Natural Resources, the measures will raise the cost of carbon emissions for Kazakhstan's industrial enterprises from $2 million to $44 million. By 2025, the total carbon emission quota will be cut by 5.4% annually. A total of 128 companies in the oil and gas, mining, metallurgy, chemical, power and building materials industries are under supervision. Companies that emit more carbon than the free quota can buy additional quotas through exchanges or directly from other companies with surplus quotas. In 2021, most of the additional quotas were purchased by thermal power plants. The surge in power demand is largely due to the rapid growth of the cryptocurrency "mining" industry. A ban on cryptocurrency "mining" in China has led to a massive shift of many "miners" to Kazakhstan, propelling it to become the world's second largest cryptocurrency mine with more than 18% of the global market share.



Kazakhstan's carbon reduction plan is in line with the country's commitment under the Paris Agreement to reduce greenhouse gas emissions by 15 percent from 1990 levels by 2030, which has been written into the new Ecological Code, which will take effect on July 1, 2021. Historically, ecological issues have not been a priority in Kazakhstan's national development. Kazakhstan is one of the top 30 carbon emitters in the world, ranking among the top 10 in per capita carbon emissions. Kazakhstan's carbon emissions mainly come from the energy sector, accounting for 82%. Carbon emissions from Kazakhstan's energy sector rose by 4% in 2018 compared with 1990, according to ernst & Young. Currently, carbon reduction efforts only target high-emitting enterprises, which account for about 43 percent of the country's total emissions. In 2021, the number of unused carbon allowances fell from the previous year.



The reason for kazakhstan's industrial "green transformation" is that about 40% of its domestic goods are exported to the EU. The European Unio plans to impose a tax on goods with a high "carbon footprint" from 2023. Consumers end up havin to foot the bill as producers pass on carbon taxes and other costs of introducing "green technologies".