ASTANA – The Astana International Exchange (AIX) Marks a Significant Milestone in Kazakhstan’s Green Finance
The Astana International Exchange (AIX) marked a significant milestone in Kazakhstan’s green finance efforts with the launch of International Renewable Energy Certificates (I-REC) trading in February. Valor Carbon, a London-based climate finance firm, completed the first transaction, purchasing 1,000 I-RECs from Samruk Green Energy, a state-owned company.
Valor Carbon’s Motivation and Outlook
In an interview with The Astana Times, Valor Carbon’s leadership explained their reasoning behind this purchase and their long-term plans for Kazakhstan and Central Asia. With offices in London, Astana, and Bishkek, the company is positioned strategically to influence the region’s carbon markets.
The Use of Carbon Markets
Carbon markets allow for the trading of credits for greenhouse gas emissions. Valor Carbon CEO Rocco Huesch emphasized the lack of transparency in over-the-counter (OTC) carbon market transactions. He praised the AIX’s effort to move I-RECs to an exchange, which could lead to greater market liquidity and visibility.
Regional Director Nurzhan Aspandiyar believes this sets a precedent for trading other environmental commodities in Kazakhstan, while also expressing a desire to bring transparency and price discovery to the market.
Kazakhstan’s Emissions Trading System (ETS)
Kazakhstan’s ETS, operational since 2013, now covers 47% of emissions from 135 companies, primarily in energy, mining, and manufacturing. Despite this, carbon units in the ETS cost around $1 due to free allocation of allowances, a sharp contrast to the European ETS where prices hit $90 in 2023.
Valor Carbon acknowledges the push for reform in Kazakhstan’s ETS, but Huesch stresses the need for a balance that supports both net-zero goals and economic growth.
Harnessing Carbon Credits
A promising area for growth is the integration of domestic carbon credits into the ETS. Huesch suggests that supporting domestic projects could help funnel ETS revenue into positive environmental initiatives, similar to systems in the U.S. and Singapore.
Article 6 of the Paris Agreement
Huesch also discussed Article 6 of the Paris Agreement, which allows countries to trade carbon credits earned by reducing emissions. While its application in Kazakhstan remains uncertain, Valor Carbon is optimistic about the potential for carbon markets in the country.
Compliance and Voluntary Markets
Huesch explained the distinction between compliance markets, regulated under national or international regimes, and voluntary markets, which operate without direct government oversight. The voluntary market could be worth up to $50 billion by 2030.
Projects and Initiatives
Valor Carbon is invested in projects with measurable carbon removal outcomes, prioritizing nature-based solutions. They recently presented a project in Kyrgyzstan aimed at securing $180 million in climate finance to plant over 10 million trees and create carbon credits.
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