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Addressing Industrial Air Pollution in Kazakhstan

Reforming Environmental Payments Policy Guidelines

image of Addressing Industrial Air Pollution in Kazakhstan

Kazakhstan has recorded impressive economic growth rates since its independence, driven mainly by export of commodities and high rate of energy use. These rates are not sustainable and are generating significant air pollution, in particular from industrial stationary sources. This is putting at risk the country’s development ambitions to become one of the top global economies by 2050 and converge towards OECD living standards. Building on OECD previous analysis, this publication shows that Kazakhstan’s environmental payments (environmentally related taxes, non-compliance penalties and compensation for damage regulation) for industrial air pollutants, as currently applied, impede energy efficiency and pollution abatement with heavy-handed non-compliance responses and focus on rising revenues. They also add to the cost of doing businesses in the country with limited environmental benefit. In the spirit of the Polluter-Pays Principle, much more reforms of regulation of environmental payments are needed. This report provides guidelines for reform drawing from air pollution regulations in OECD member countries and the results of the analysis of the system in Kazakhstan carried out by the OECD in close co-operation with the Government of Kazakhstan.

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What are the issues?

Kazakhstan’s impressive expansion on the backbone of the extractive industry (oil and metals) relies on high rates of energy use, resulting in significant air pollution. In line with an ambitious aim to become one of the top global economies by 2050, much remains to be done to green the economy and converge towards OECD living standards. Further review of the regulatory framework regulating industrial emissions will be essential. Building on OECD previous analysis, this chapter analyses the system of environmental regulation and assessment for industrial emissions. It underlines how the design and implementation of the economic instruments (the environmentally related taxes) are primarily focused on raising revenues. This is contrary to the intention of the Polluter-Pays Principle. The chapter then turns to how these instruments impede energy efficiency and pollution abatement with heavy-handed non-compliance responses. Drawing from air pollution regulations and environmentally related taxes in OECD member countries, the final section offers some suggestions for reforms, which are then treated in detail in the following chapters.

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