Kazakh exchange and EEX agree to support one-year-old emission market

The European Energy Exchange and Kazakh exchange Caspi JSC signed an agreement to bolster exchange-based trading of carbon permits, supporting Kazakhstan’s emissions market, Reuters reported on Wednesday (May, 28).

Caspi JSC is the official exchange platform for trading and auctioning allowances in Kazakhstan. The units, called KZQs, correspond to a tonne of carbon dioxide equivalent each and were handed out for free to participating firms from the energy, oil, gas, coal and industrial manufacturing sectors.

The country launched a pilot phase for the national emissions market in early 2013. According to analysis by Reuters Point Carbon, in the first year of activity the Kazakh government  handed out 158.1 million allowances to 145 emitting firms, leading to an oversupply of 2.8 million.

A two-year second phase started in 2014 and it will cover 166 firms. Allowances will continue to be handed out for free, but new entrants will be required to buy their quotas. Kazakh government’s expert presenting the scheme at the Carbon Expo conference in Cologne said all firms had fulfilled their obligations for 2013 and in the second phase  penalties have been slashed to 37 euros per tonne from 73 euros in 2013.

According to Kazakh government’s plan, a third trading phase could run from 2016 to 2020, during which the number of permits handed out for free could be limited and the quotas be determined by industry efficiency levels.

In 2012 the fossil fuel rich nation pledged to cut emissions by 10 percent below 1990 levels during the 2013-2020 second commitment period of the Kyoto Protocol.