Determination of optimal CO₂allowance prices for stimulation of investments in CCS, RES and other carbon-clean technologies in Kazakhstan

Notable decrease of CO2 emissions is an extremely hot topic on the agenda of the world community. The Intergovernmental Panel on Climate Change (IPCC) has presented a report claiming that it is possible to limit global warming by 2°C, only in case of abatement of carbon emissions (IPCC, 2013). Most of the UN countries, as a part of their effort, set policies that stimulate the use of technologies based on renewable energy sources (RES) that also contribute to a reduction of carbon emissions (IPCC, 2014). In the case of Kazakhstan, the government is conducting various programmes to switch to a “green economy”. While there are efforts to promote RES in Kazakhstan by introducing an additional price margin for electricity produced from renewables, the situation with current carbon releases is rather vague. There is uproar in the media regarding “decarbonisation”; however, the movement lacks real momentum. It is clear that decarbonisation is currently too expensive to conduct, due to the development phase of the associated technologies as well as high investment costs. It is necessary to point out that the launch of cleaner technologies is restricted by competition in the world market, and it will remain infeasible unless there is enforced help to overcome this barrier. Such help could be established by organising an emissions trading system or setting specific emission limits for each emitter as well as by introducing emission taxes. In this chapter, we propose a study of the CO2 allowance price and its impact on the penetration of carbon capture and storage (CCS) and RES technologies in Kazakhstan's energy sector.