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Addressing Industrial Air Pollution in Kazakhstan

Reforming Environmental Payments Policy Guidelines

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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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Executive summary

Kazakhstan’s impressive economic growth since its independence on the backbone of oil exploration, extensive mining and increasing industrialisation has led to significant air pollution. The main air pollutants of concern are particulate matter (PM), sulphur dioxides (SOx) and nitrogen oxides (NOx). SOx emissions per capita in 2014 were almost five times those of OECD Europe. More than half of Kazakhstani citizens have a low level of satisfaction with the air quality of their country. Power generation combined with district heating alone generate 40% of SO2 emissions and 60% of NOx. This is due to an overreliance on low-quality coal, inadequate pollution control equipment and old generating infrastructure. This level of air pollutants is not sustainable, putting at risk the country’s development ambitions. At the same time, new international agreements add urgency to the need to reduce greenhouse gas emissions. Furthermore, Kazakhstan has not yet acceded to any of the protocols of the Convention on Long-Range Transboundary Air Pollution, even though it has been a party since 2001.

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