Carbon pricing in Central Asia: Opportunities and barriers in the Kyrgyz Republic

As the consequences of climate change intensify, a global effort to implement mitigation strategies is urgently needed. Carbon pricing stands out as a crucial mitigation tool, with carbon taxes and emissions trading schemes (ETS) emerging as the primary instruments. This study examines carbon pricing in the Kyrgyz Republic by examining both the opportunities and barriers.
The results show a total carbon cost for 19 economic sectors over 564 million USD, with an average price of 50 USD per ton of CO2. This study aims to develop an understanding of the economic costs and barriers associated with implementing carbon pricing and identify the sectors that will predominantly bear these costs. The findings indicate that a carbon tax is currently a
more promising and administratively feasible option than an ETS, largely because of its simpler implementation and lower administrative burden. Nevertheless, the successful introduction of either carbon pricing mechanism requires the development of a robust carbon infrastructure.
Furthermore, integrating carbon pricing into the country’s long-term vision and economic development strategies is crucial. These results indicate that high carbon costs are associated with the energy supply sector, while implementing a carbon tax in the mining and trade sectors has high revenue-generating potential. As this study shows, the overall consensus is that a carbon
tax could gain support and help generate additional revenue to address climate change in the Kyrgyz Republic. However, evidence is lacking to support a clear understanding of what introducing a carbon tax would imply for the private and public sectors, as well as challenges related to the virtual absence of the required normative and legal frameworks.