Coal-based generators’ corporate response to an emissions trading scheme in Kazakhstan

Abstract

The power industry remains a central focus of modern climate mitigation policies because of its significant contribution to global GHG emissions and increased global electricity demand. This paper examines Kazakhstan's coal-based power-generation companies' responses to a national emissions trading scheme (ETS) regulation introduced in 2013 by applying corporate climate strategy and sociotechnical systems frameworks. The in-depth case study is based on 20 interviews with managers of the six largest Kazakhstan coal-based generators and ten interviews with independent industry experts. The empirical data indicate that Kazakhstan's ETS has impacted the country's generators. The companies have responded in the form of non-compliance (i.e., application for additional free allowances), compliance (i.e., purchase of allowances from the ETS), and compliance-plus activities (i.e., exploring investment into renewable energy and fuel switching to natural gas). At the same time, Kazakhstan's generators continue the business-as-usual approach by investing in modernizing their coal-generating assets. Therefore, Kazakhstan may consider complementing its ETS regulation with additional policy reforms to support its ambitious objective to achieve carbon neutrality by 2060.