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Smart Green Businesses – The Case of Designing An Emissions Trading System in Kazakhstan
Michael A. TruebloodDirector, USAID/CAR Economic Development Office
Astana Economic Forum21 May 2014
Presentation Outline
• Experience developing pollution permit systems – lessons for Kazakhstan
• How USAID’s is helping to implement the emission trading system in Kazakhstan
Key Elements of a Green Economy
• Reduced carbon use intensity
• Natural resource conservation
• Sustainable agricultural practices
• Improved environmental practices
Basics of Emission Trading Systems (ETS)
• ETS rely on market incentives
• Government sets pollution targets
• Firms are initially allocated so many permits of
pollution (or allowances), not to exceed a limit (“cap”)
• If a firm wishes to exceed the cap, it must purchase
(“trade”) additional permits from more efficient (less
polluting) firms
United States ETS System
• A cap and trade ETS system implemented in 1995
– Targeted sulfur dioxide (SO2), nitrogen oxides that
contribute to acid rain
– Permits traded on the Chicago Board of Trade
– Target : reduce overall emissions by 50% of 1980 levels
• Program was successful
– Pollution targets were met, acid rain was reduced
U.S. Reductions of SO2 Emissions
Source: US Environment Protection Agency, Acid Rain Progress Report 2009.
Clean Air Act of 1990 passed
New ETS system started
European Union’s ETS System
• Up until 2008 the EU had program called the “Climate and Energy Package 20-20-20”
– ETS started in 2005
– Largest program in the world with 11,000 participating firms
– Trading was limited to the country level
• In March 2013, EU made changes to program
– Trading expanded to EU level, should be more effective
– Targets reduction of greenhouse gases (GHG) by 40 percent of
1990 levels by 2030
California’s (State Level) ETS System
• California passed Global Warming Solution Act (2006)
– Reduces GHG emissions to 1990 level by 2020
– It took a few years of debate how to design new program
• CA cap and trade program just started in 2013
– All allowances were sold at five auctions
– Since January 2014, the program has been linked with
Quebec’s ETS for greater flexibility and cost-effectiveness
• By 2015 CA ETS will cover 85 percent of all GHG
Kazakhstan’s ETS System
• Government committed to developing new “KazETS”
system in 2011 as part of green economy vision
• A pilot KazETS program was tested in 2013
combining features of other ETS systems in world
• New full KazETS opened in March 2014
– Government is currently debating penalties for firms that do
not comply with standards
USAID Goals
• Improve Government capacity to administer and enforce GHG mitigation policies and measures
• Strengthen the business community’s ability to comply with and implement GHG reduction policies
• Expand capability of GHG and energy professionals to conceive and implement GHG abatement and energy efficiency measures
USAID Activities for Government
• Improve the capacity of the Government of Kazakhstan (GOK) to implement and enforce GHG-reducing policies and measures
• Enhance Government capability to implement Law on Energy Savings (LES), other energy saving policies
• Strengthen Government coordination and analytic facility on climate change and energy policy
USAID Activities for Businesses
• Expand corporate capacity to assess, develop and implement GHG and energy reducing measures
• Improve corporate-level GHG and energy data measurement, reporting and verification
• Strengthen capabilities of audit and verifier community
USAID Early Successes With Government
• Made recommendations on
changes to Ecological Code
for KazETS design,
management and operation
• Conducted on-the-job training
for key ETS staff
• Developed priority actions to
increase energy efficiency
KCCMP official launch, 23 January 2014
USAID Early Successes With Businesses
• Trained businesses on making GHG calculations
• Reviewed GHG management systems used by enterprises in Kazakhstan
• Assessed capacity of accredited energy auditors via meetings and feedback from Government and businesses
How USAID Is Helping Kazakhstan in Other Areas
• Promoting resiliency to climate change for agriculture
• Training entrepreneurs for more diverse economy
• Strengthening economic governance, oversight
• Promoting more dynamic trade sector, regional trade
• Support more integrated regional power market
• Strengthening governance and rule of law