copy the linklink copied!1. Understanding financial flows for Kazakhstan’s green economy transition

This chapter recaps recent economic developments in Kazakhstan on its transition to a green economy. This includes new and amended environmental policies adopted since independence, as well as other strategic documents. It identifies the objectives of this report, including three research questions to move the country towards more robust and comprehensive regular measurement of green finance flows. It estimates investment needs for achieving such a green transition. This leads to discussion on why Kazakhstan should measure green finance flows and improve its statistical system for this purpose. The chapter also identifies important sources of finance that are excluded from the report, while recognising the need for future work to capture them.


copy the linklink copied!Developing policies for green economy transition

The Republic of Kazakhstan (Kazakhstan), a land-locked country with the ninth largest land area in the world, has made remarkable economic progress since its independence. In 2006, Kazakhstan moved from a lower middle-income to an upper middle-income country. The global financial crisis of 2008 had a sharp, but brief, effect on the country’s economy. In 2010 and 2011, its gross domestic product (GDP) grew by 7.3% and 7.4% respectively, a growth rate that remained stable until 2013. More than half of the country’s export income is related to the hydrocarbon industry (US Department of Commerce, 2018[1]). This makes the economy highly dependent on world oil prices. In 2014, mainly due to the decline in international commodity prices, GDP growth started to decline, dropping to 1.2% in 2015 and then to 1.1% in 2016. GDP growth recovered in 2017 to 4.1% and continued at a similar level in 2018. The recovery from the 2014-16 collapse in oil prices in Kazakhstan has been supported by higher than expected production in the Kashagan oil field and strong domestic demand (World Bank, 2019[2]).

Kazakhstan has consistently developed new and amended environmental policies since its independence. The key environmental legislative acts in Kazakhstan, specified in the 2007 Environmental Code1, were amended 62 times between 2007-17 (UNECE, 2019[3]). Among other reasons, these amendments sought inclusion of the regulation and assessment of greenhouse gas (GHG) emissions and capture, waste management and environmental audit, and more recently, better compliance with the polluter pays principle (UNECE, 2019[3]).

Kazakhstan has also adopted various strategic documents on sustainable development and transition to a green economy. The Message of the President on 14 December 2012 delivered a national-level strategy, Kazakhstan-2050, as the key development vision of the country. The strategy establishes, among others, a target for Kazakhstan to become one of the 30 most developed countries by 2050. It also includes the task to make Kazakhstan a global player in environmentally clean agricultural production (UNECE, 2019[3]).

In 2013, the country adopted the Concept on Transition to Green Economy (Green Economy Concept) and its action plan for 2013-20. It provides an important foundation for how Kazakhstan should move forward with its green growth agenda (Government of Kazakhstan, 2013[4]). The priority tasks defined under the Concept span wide areas. These areas include increasing efficiency of resource use, modernising and building infrastructure, improving well-being of the population and environmental quality, and strengthening water security.

The Strategic Plan for Development until 2025, adopted in 2018, also includes the issue of green growth and environmental protection as one of its seven pillars. The strategic plan also includes two indicators on the energy intensity of GDP and the share of renewable energy sources that relate specifically to the country’s green economy and environmental protection agenda (UNECE, 2019[3]). All those policy documents explicitly or implicitly indicate the importance of investments in necessary actions on climate change, environmental protection and rational use of natural resources.

copy the linklink copied!Objectives of this study

The Committee on Statistics of the Ministry of National Economy (Committee on Statistics) has been working on the quantitative and qualitative characteristics of indicators to monitor progress towards the country’s green economy transition. Kazakhstan’s statistical system collects certain information on financial flows, such as investment and current (or operational) expenditures for environmental protection. Various bodies are committed to strengthening the country’s statistical system: the Committee on Statistics; the Ministry of Energy; and the Ministry of Ecology, Geology and Natural Resources (as of July 2019, the Ministry of Ecology).

This report examines how Kazakhstan can further improve its national statistical system to better measure and understand financial flows that contribute to the country’s green economy transition. These improvements would, at the same time, minimise the risk of creating an undue reporting burden on the private and public sectors. The report examines methodologies for measuring the flows of green finance2 within Kazakhstan. In so doing, it intends to build on Kazakhstan’s national statistical system. This system has been developed in line with the System of Environmental-Economic Accounting (SEEA) and was still in the process of further convergence as of March 2019 (OECD, 2019[5]).

This report attempts to answer multiple research questions to enable robust and comprehensive regular measurement of green finance flows within the country:

  • How does the statistical system work in Kazakhstan?

  • What do available data show us about green finance?

  • What are areas for improved measurement of green finance flows?

  • How can a range of relevant international and national finance tracking initiatives help Kazakhstan improve the statistical system?

This report first reviews data collection in Kazakhstan. It analyses the statistics on investment and current (or operational) expenditures for environmental protection, which the Committee on Statistics has already collected and made public. Such an exercise aims to better understand the state of affairs on (part of) green finance flows in Kazakhstan. It also aims to identify possible data gaps and ways to improve collecting, collating and reporting the information.

The report then reviews recent development of various international classifications and methodologies. These provide useful insights and a theoretical basis to enhance the quality and comprehensiveness of statistical information on green finance flows in Kazakhstan. It also reviews definitions of green finance in and outside the country, aiming to clarify reporting expectations on green finance for Kazakh entities. These reviews can inform the country’s effort for improving methodologies to measure green finance flows more efficiently. They can also make outcomes of the tracking more relevant to developing policy that supports the country’s green economy transition.

Based on the abovementioned analyses, this report recommends ways to strengthen the quality of statistical information related to expenditures for actions towards the country’s green economy. Improvement of the statistical system should also be linked to overall policy development by relevant Kazakh ministries on the green economy. Such information may also help the government move towards low-carbon, climate-resilient and environmentally responsible budgeting, as well as an effective monitoring and evaluation system for implemented policies. Indeed, linking expenditures and green economy policy objectives can provide insights into the distribution of resources across these policy objectives, at national and sub-national levels. It may also help identify gaps between resource allocations and investment needs to achieve policy objectives for Kazakhstan’s green economy transition (see also, for example, (UNDP, 2015[6])).

This report examines finance flows from republican and local governments, state-owned entities (e.g. Development Bank of Kazakhstan, Damu Fund, Samruk Kazyna), and private-sector entities. Consequently, it excludes some important sources of finance due to its intention to build on the national statistical system, while recognising the need for future analytical work to capture them. First, this report does not discuss foreign direct investments or multilateral and bilateral development finance (public sector) (see Box 1.1). The scope also excludes finance by households and parts of private-sector entities that are currently not recorded on the business registry of Kazakhstan.

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Box 1.1. Financial flows outside the scope of the study

Foreign direct investment (FDI) and household spending can be important sources of green finance, but are outside the scope of this study due to unavailability of data. The National Bank of Kazakhstan (the central bank) collects data on FDI. However, to date, FDI data have not been systematically disaggregated between those that target activities for green economy or environmental protection and those that do not. The statistical system does also not collect household expenditures for environmental protection or resource management (e.g. for energy efficiency at residential buildings).

Development finance to Kazakhstan is also not within the scope of this study. However, it is reviewed in an earlier OECD publication (OECD, 2016[7]) and more updated data are also available (OECD DAC, 2018[8]). The OECD Development Assistance Committee’s Creditor Reporting System (CRS) publishes annual detailed information from bilateral and multilateral providers of development co-operation on individual activities that target the global environmental objectives (i.e. climate change mitigation and adaptation, biodiversity and desertification) (OECD DAC, 2018[8]). Activity- or project-level data from CRS are available on a commitment base, but not a disbursement (expenditure) base. Some reporting entities registered under the Kazakhstan’s business registry may use developing finance for their investments in environmental protection or resource management activities. As such, they may report such finance as environmental protection or resource management expenditures.

Development finance from bilateral and multilateral providers still play an important role in Kazakhstan. This is especially the case for implementing technical assistance projects and catalysing private-sector investments in environmental protection and resource management. Multilateral and bilateral providers of finance have supported such investments by, for instance, reducing project risks, providing seed funding and debt funding, and extending credit lines through local financial institutions.

Sources: (OECD, 2016[7]),; (OECD DAC, 2018[8]),

copy the linklink copied!Understanding financial needs for green economy transition

Finance is a crucial enabler to achieve the targets under key policy documents, such as Kazakhstan’s Strategic Plan for Development, and the Green Economy Concept and its action plans. The government recognises that a range of international and domestic financial sources is already delivering “green finance” to, for instance, industry, households and sub-national governments within the country. While there are different definitions of “green finance”, in the context of Kazakhstan the term means finance from public and private sources that supports greening of the country’s economy. Further, green finance should promote long-term and inclusive economic growth, while avoiding negative impacts of economic activities on communities in Kazakhstan.

Achieving the ambitious targets under the Green Economy Concept is likely to require further scaling-up of such finance from levels in Table 1.1. Using a macroeconomic model, the scale of gross investment needs for implementation of the Concept would be about USD 119.9 billion between 2014 and 2049 (or USD 3.4 billion annually) in 2010 prices Table 1.1 (Government of Kazakhstan, 2013[4]). These estimates are disaggregated into several key sectors covering energy supply and demand, water, air pollution, waste management and efficient agriculture practices. This figure accounts for 1.8% of GDP between 2020-24, and about 1% of GDP for the entire implementation period. The estimate assumes the private sector will provide most of the finance (Government of Kazakhstan, 2013[4]).

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Table 1.1. Investment needs for implementation of the 2013 Concept on Transition to Green Economy








Funding needs as percentage of GDP








Average annual funding needs for period

(USD billion in 2010 prices)








Total over the period

(USD billion in 2010 prices)








Source: Adapted from (Government of Kazakhstan, 2013[4]), .

An in-depth analysis of how Kazakh public- and private-sector entities are using financial resources for action on environmental protection, resource management and climate change would provide evidence to identify investment gaps. It could also help the government explore the size of these gaps and how the needed investment could be mobilised for underfunded activities or sectors. Participants in the First Kazakhstan GREEN Action Policy Dialogue held in Astana in 2016 also raised issues related to the information gap (OECD, 2016[9]).


[4] Government of Kazakhstan (2013), CONCEPT for transition of the Republic of Kazakhstan to Green Economy Astana 2013 2 Contents, approved by Decree of the President of the Republic of Kazakhstan on 20 May 2013 #557,

[5] OECD (2019), Agreement between the government of the Republic of Kazakhstan and the Organisation for Economic Co-operation and Development for the realisation of the project “Implementation of the System of Environmental Economic Accounting”: Interim Report, OECD, Paris.

[7] OECD (2016), Financing Climate Action in Eastern Europe, the Caucasus and Central Asia, Green Finance and Investment, OECD Publishing, Paris,

[9] OECD (2016), Kazakhstan GREEN Action Platform, (accessed on 16 January 2019).

[8] OECD DAC (2018), “OECD DAC Creditor Reporting System (CRS) 2018”, (database) (Accessed on 08 February 2019),

[6] UNDP (2015), A Methodological Guidebook: Climate Public Expenditure and Institutional Review (CPEIR), UNDP Bangkok Regional Hub,

[3] UNECE (2019), Third Environmental Performance Review of Kazakhstan, United Nations Economic Commission for Europe, Geneva,

[1] US Department of Commerce (2018), Kazakhstan Country Commercial Guide - Oil and Gas, (accessed on 29 April 2019).

[2] World Bank (2019), “World Development Indicators GDP Growth (annual %)”, (database), (accessed on 18 January 2019).


← 1. Codes in Kazakhstan have a higher legal value than laws, which brings an indisputable value to this codification effort.

← 2. See “Defining green finance” section of Chapter 2 for further details of what green finance may mean in Kazakhstan

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