Opting out of Blueprints? The fate of Emissions Trading in Kazakhstan as a lesson for international climate policy

Abstract

Emissions trading system (ETS) as an instrument to induce emission reductions in the private sector are largely favoured by economic literature and financed by international organizations. National ETS is the first step towards international emission trading, and it allows to report fix amounts of future reductions in worldwide climate scenarios and climate treaties. However, an ETS is not the only option to cope with emission reduction, and blueprints do not fit them all. Kazakhstan, which in 2013 was the first country among the post-Soviet states to implement an ETS, suspended ETS in February, 2016. Considering the challenges of the ETS in Kazakhstan in country context, we argue that a carbon tax could be a better option. A tax provides price certainty for business, less transaction costs, and a potential double dividend for the environment and the economy if revenues are wisely spent. National autonomy and international obligations are not inconsistent, as the experience of other countries shows.