This document summarizes USAID's efforts to help Kazakhstan design and implement an emissions trading system (ETS). It outlines key elements of ETS programs in the US, EU, and California as examples for Kazakhstan. USAID aims to build government and business capacity to administer, comply with, and adopt emissions reductions policies. Activities include recommending ETS design changes, training ETS staff and businesses, and assessing energy auditors. The goal is to help Kazakhstan establish a functional ETS and transition to a green economy.

1. Smart Green Businesses – The
Case of Designing An Emissions
Trading System in Kazakhstan
Michael A. Trueblood
Director, USAID/CAR Economic Development Office
Astana Economic Forum
21 May 2014

2. Presentation Outline
• Experience developing pollution permit
systems – lessons for Kazakhstan
• How USAID’s is helping to implement the
emission trading system in Kazakhstan

3. Key Elements of a Green Economy
• Reduced carbon use intensity
• Natural resource conservation
• Sustainable agricultural practices
• Improved environmental practices

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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

10. How USAID is Helping
Kazakhstan to
Implement the ETS

11. 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

12. 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

13. 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

14. 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

15. 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

16. 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

17. Find out more at
www.Facebook.com/USAIDCentralAsia
Thank you!