Kazakhstan aims to become among the 30 most advanced countries in the world by mid-century. At the same time, it wants to shift from a resource-intensive growth model to one that is cleaner, more innovative and more diversified. Reaching those goals will require further substantial reforms to promote greener growth, more openness and ultimately more equal access to good employment and economic opportunity.

On 21 November 2018, the government of Kazakhstan and the Organisation of Economic Co-operation and Development (OECD) signed a Memorandum of Understanding that will run until end-2022. It provides a framework for further co-operation and reflects the commitment of both parties to build on the success of the Country Programme across a number of policy areas.

In March 2018, Kazakhstan launched an ambitious process of amending the 2007 Environmental Code. This process was underpinned by a multi-stakeholder Working Group chaired by the Committee on Environmental Regulation and Control. A Concept Note on the revisions of the Code was adopted in July 2018 and subjected to inter-ministerial consultations. Completion of the drafting process of the new Code and amendments to some of the legislative acts on environmental issues was expected by September 2019, in view of an approval by the parliament in 2020.

Since July 2018, the government of Kazakhstan has asked OECD’s assistance to accelerate the transformation of its system of environmental payments to become a more effective economic mechanism for environmental pollution management. This joint project, overseen by the Committee on Environmental Regulation and Control, focuses on reforming environmentally related taxes levied from industrial air pollutants. These taxes take the form of environmental payments (taxes, monetary penalties and compensation for damage). This complies with the Polluter-Pays Principle, as recognised by OECD in its Recommendation of the Council of 14th November 1974 [C(74)223].

This report reviews Kazakhstan’s opportunities to reform these economic instruments, drawing on a previous analysis in 2017. This earlier analysis highlighted how the structure of the system of environmental regulation, permitting and payments impedes faster progress in improving energy efficiency and pollution control. The present report suggests possible directions both for short-term reforms – some quite technical in nature – and directions for more ambitious amendments and future OECD work with Kazakhstan. The OECD is committed to continue working with Kazakhstan on policies needed to deliver cleaner growth over the decades to come.

Payments related to waste management are the focus of a separate report that draws on the OECD’s recent work on the circular economy. In particular, it focuses on schemes for Extended Producer Responsibility under the auspices of the Working Party on Resource Productivity and Waste.

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