This chapter assesses Kazakhstan’s policy framework for sustainable infrastructure planning, delivery and financing. It examines national strategic planning, sectoral frameworks in energy, transport and industry, and mechanisms for sustainable finance mobilisation. The chapter analyses Kazakhstan’s climate policy architecture, including its long-term low-emission development strategy (LT-LEDS), Nationally Determined Contribution (NDC 3.0), emissions trading system and green finance ecosystem. It explores infrastructure investment needs, financing gaps and the role of state-owned enterprises and private capital. Particular attention is given to carbon-intensive energy systems, coal dependency, renewable energy development, regional connectivity and climate resilience. The chapter also reviews governance, institutional co-ordination, infrastructure evaluation tools and integration of environmental, social and gender considerations in infrastructure decision-making.
Accelerating Sustainable Infrastructure Investments
Abstract
This chapter assesses Kazakhstan’s national policy framework for sustainable infrastructure planning, delivery and financing. It consolidates analytical work undertaken by the OECD and its partners under SIPA that targets or covers Kazakhstan and complements this with desk research. The chapter begins with an introduction that discusses the main national sustainable infrastructure challenges, setting the context for SIPA’s work in the country. The assessment of national infrastructure policies is then structured according to SIPA’s pillars, highlighting key achievements and remaining misalignments in (i) the national strategic and planning framework; (ii) sectoral conditions for the development of sustainable infrastructure projects; and (iii) sustainable finance mobilisation.
Kazakhstan’s national strategic plans place infrastructure at the heart of its economic development agenda. The acceleration of regional connectivity efforts, catalysed by Russia’s war of aggression against Ukraine, has injected new momentum into the country’s longstanding objectives of expanding trade links and advancing economic diversification. Meeting Kazakhstan’s energy security needs, shaped by dynamic demographic trends and plans for industrial export-led growth, necessitates the renewal of an ageing energy infrastructure while ensuring its transformation towards long term sustainability.
At the same time, the adoption of a comprehensive set of climate and environmental policies over the past decade is driving the need for a vast transformation of infrastructure to ensure alignment with sustainability commitments. Over the past decade, Kazakhstan has been a regional pioneer in climate policy adoption. It established the region’s first long-term low-emission development strategy, under which the country lays out plans to reach carbon neutrality by 2060, calling for a profound transformation of energy, transport and industry systems. Kazakhstan has developed a set of enabling conditions for this transformation. For example, it put in place the first national Emissions Trading System (ETS) of Central Asia, and it has become a hub for green finance through the creation of the Astana International Financial Centre (AIFC) and its Green Finance Centre (GFC).
The expansion of renewables, energy efficiency and decarbonisation are emerging as policy priorities, with implications for energy, connectivity and industrial export development. The government has advanced sustainability through concrete policy measures, including the 2021 Environmental Code and the Strategic Development Plan 2024–2029, which prioritises decarbonisation, renewable energy deployment, sustainable waste management and biodiversity conservation, alongside progress in environmental, social and governance (ESG) disclosure requirements, a green taxonomy, green bond and RBC frameworks to support sustainable investment in infrastructure. This policy trajectory was further reinforced in 2025 with the adoption of Kazakhstan’s updated Nationally Determined Contribution (NDC 3.0), which sets an unconditional target of reducing economy-wide greenhouse gas emissions by 17% below 1990 levels by 2035 and a more ambitious target of 25% conditional on international support.
Despite these advances, critical implementation challenges persist. Infrastructure investment remains far below the required levels, with limited private sector participation and constrained climate‑aligned financing through PPPs and capital markets. Kazakhstan continues to grapple with its historic dependency on fossil fuels, including coal, which cuts against its climate objectives and delays transition efforts. Institutional capacity gaps, fragmented policy co-ordination, and insufficient integration of environmental and social considerations, including gender, hinder the sustainability of infrastructure project pipelines. The slow pace of energy transmission modernisation and transport infrastructure development, coupled with the need for robust coal phase-out plans and effective mitigation measures for vulnerable populations, further complicate the path toward decarbonisation. A critical barrier remains the lack of sufficient incentives to drive decarbonisation: artificially low energy prices, the continuing prevalence of fossil fuel subsidies (FFS), and insufficiently ambitious greenhouse gas (GHG) thresholds in key climate policies and instruments, including the Emissions Trading System (ETS), all weaken the economic signals needed to accelerate the shift towards sustainable infrastructure. Finally, challenges in implementing and enforcing sustainability standards and methodologies, as well as in mobilising private capital at scale, underscore the need for comprehensive capacity-building and reforms to ensure successful infrastructure transformation.
Looking ahead, Kazakhstan’s decarbonisation and infrastructure renewal efforts present an opportunity to reshape its growth model towards a more diversified, resilient and inclusive economy. Achieving this transition will require policy changes to remove barriers and set incentives for the mainstreaming of sustainability across the infrastructure development cycle, along with institutional capacity-building. Priority actions below draw on the analysis presented in this chapter.
Make the Carbon Neutrality Strategy the top priority guiding document and ensure that all major infrastructure strategies and programmes align with its objectives and timelines. Align short- and medium-term measures of LT-LEDS and NDC to the long-term trajectory, and create mechanisms to revise national and sectoral targets as evidence and modelling improve. Consolidate infrastructure projects that are directly derived from or aligned with the Carbon Neutrality Strategy and the recently adopted NDC 3.0.
Establish quantified sectoral pathways and robust targets to reach net-zero in energy, transport and industry, and include them in the Implementation Roadmap of the Low Carbon Strategy. Define economy-wide and sector-specific milestones and indicators linked to interim goals for 2030, 2040, and 2050. Link price signals and incentives, such as emissions trading, fossil fuel subsidy and carbon pricing reforms, to these sectoral pathways to strengthen signals for private investment in clean energy, electrification, energy efficiency and low-carbon solutions while preventing fossil fuel lock-in. Commit to coal-phase out plans as part of this Roadmap.
Provide regular trainings for government officials at national and regional levels and develop adequate tools and approaches to support sustainability integration into infrastructure plans, policies and programmes. Enforce the use of Strategic Environmental Assessments (SEAs) and mainstream resilience and gender considerations, beginning with the development of appropriate data, standards, and indicators. Make high-quality Environmental Impact Assessments (EIAs) mandatory for major infrastructure projects, publish practical guidance and timelines, digitalise submissions and disclosure, and standardise methodologies that value externalities and avoided risks in energy and transport sectors. Require both financial and societal net-benefit cases for project selection and budgeting, ensuring that sustainability considerations are embedded in delivering, operating, maintaining, and decommissioning infrastructure.
Advance energy and carbon pricing reforms to mobilise clean energy and low-carbon technology investment and safeguard vulnerable populations. Remove harmful fossil fuel subsidies while introducing mitigation measures such as direct cash transfers to vulnerable households based on income or consumption levels. Reform the Emissions Trading Scheme (ETS) by establishing a carbon price floor in the short term, along with a carbon price trajectory for the next 5 years. Transition to auction of allowances in the longer term, and earmark revenues from ETS for climate action and supporting offset mechanisms that can help drive decarbonisation investment across the energy, transport and industrial sectors.
Integrate region-specific measures, skills and reskilling programmes, and social dialogue into infrastructure and energy transition plans, especially for coal-dependent regions, to maintain public support for reform. Undertake pilot studies to assess the local impact of coal phase-out and the opportunities for new activities such as renewable energy and critical minerals mining. Develop comprehensive plans to drive industrial decarbonisation, particularly in hard‑to‑abate sectors, including innovative low-carbon solutions, robust MRV systems, and financing solutions to discourage GHG emissions and support decarbonisation investments.
Incorporate connectivity, decarbonisation and resilience in all regional transport and logistics infrastructure development and financing plans. Enhance sustainable connectivity through expansion of multimodal networks, modernisation of rail infrastructure, and advancement of digital trade solutions for seamless integration. Decarbonise transport infrastructure by adopting electrified rail for freight and increase resilience via investment in ports and waterways to address environmental risks such as Caspian Sea level decline.
Strengthen the institutional and regulatory framework for sustainable and green finance to unlock the potential of innovative financing instruments for private capital mobilisation, such as green bonds, sukuk and loans. Strengthen the design of the Green Taxonomy and remove barriers to its effective implementation. Leverage Responsible Business Conduct standards, first and foremost by embedding them into public procurement practices and promoting adoption in the SOE sector.
Maintain a regional dialogue with other Central Asian countries, encouraging peer learning and integration of tools such as standards, taxonomies and methodologies that can help cross‑border co-operation in infrastructure project development and financing.
Kazakhstan stands at a pivotal moment where its leadership in Central Asia on climate mitigation policy intersects with the immense challenge of transforming ambition into action, placing infrastructure at the heart of this transformation. As the first country in Central Asia to adopt climate policies such as a long-term low-emission development strategy (LT-LEDS), and a national Emissions Trading System, and by developing innovative green capital market instruments, it has positioned itself as a regional leader in steering investments into low‑carbon, resilient and socially sustainable infrastructure. At the same time, Kazakhstan continues to be the region’s largest emitter of greenhouse gases, with a carbon-intensive energy system and heavy reliance on extractive industries – including coal-, shaping a more challenging decarbonisation pathway than many of its peers. Its infrastructure base, much of it aging and nearing the end of its operating lifespan, requires substantial renewal and expansion to sustain economic growth, meet the needs of a growing population and support an ambitious agenda for future industrial exports.
The success of the transformation will rely on the government’s ability to accelerate public and private investment in energy, transport and industrial infrastructures that align with climate and broader sustainability goals. Overcoming the geographic, social and economic challenges of such investments necessitates an ambitious agenda for reforms spanning investment, innovation and climate policy. It also requires the strengthening of institutional capacity for better infrastructure programme and project planning and delivery. Putting in place the right conditions and incentives at all stages of infrastructure development will be pivotal, as will be discussed throughout this chapter.
This section sets the stage by exploring Kazakhstan’s sustainable infrastructure needs and examining economic and environmental challenges, looking at how these are shaping national infrastructure development priorities. The remainder of this chapter evaluates the national policy framework for planning, delivering and financing the infrastructure needed for achieving resilient and sustainable economic growth. This evaluation is structured around the three key pillars of the SIPA framework.
2.1.1. Meeting Kazakhstan’s infrastructure needs for sustainable economic development requires prioritising high-impact projects and diversifying sources of financing
Recent government plans highlight Kazakhstan’s investment needs for priority infrastructure. The National Infrastructure Plan 2024–2029 (NIP) sets out USD 80 billion of priority projects across energy, transport, digital and water sectors, equivalent to about USD 13.33 billion per year (Government of Kazakhstan, 2024[1]). Based on 2024 GDP levels, this represents a spending requirement of 5 to 6% of annual GDP, which aligns with international benchmarks for infrastructure spending requirements in emerging economies, even though this figure can vary significantly depending on national contexts (Oxford Economics, 2017[2]).
National infrastructure investment needs are even greater when considering sustainability goals and long-term climate commitments. The government’s Strategy for Carbon Neutrality by 2060, adopted in 2023, estimates the cost of the low-carbon transition at an annual USD 16 billion, much of which is directly linked to sustainable infrastructure development, notably in the energy sector. In addition, the cost of implementing the NDC 3.0 plan (2026-2035) is estimated at an annual USD 17.56 billion (USD 12.85 billion for mitigation and USD 4.7 billion for adaptation).
Other estimates shed more light on spending requirements in infrastructure upgrade and expansion in the coming years (Table 2.1). Analysis by EconomyKZ estimates that meeting Kazakhstan’s 2030 climate target – a 15% (unconditional) or 25% (conditional) reduction in GHG emissions – will require USD 20.7 billion in investment, mainly for sustainable infrastructure. Of this, USD 9.1 billion has been identified from the state budget, domestic private investment, foreign direct investment, and international development aid, leaving a financing gap of USD 11.6 billion (i.e. an annual USD 1.66 billion) (EconomyKZ, 2025[3]). The World Bank estimates that decarbonising infrastructure between 2025 and 2060 will require USD 6.57 billion per year in addition to the USD 26.29 billion in annual investment needed to replace and upgrade existing infrastructure under a scenario with no new climate policies (World Bank Group, 2023[4]). This corresponds to an additional investment equivalent to 1% of GDP, on top of the 5% of GDP already required to maintain and upgrade existing infrastructure.
Note: Differences in estimated investment needs reflect variations in underlying methodologies, assumptions and scenarios across sources, and limit direct comparability of figures.
Direct government investment represents a modest share of the national gross fixed capital formation (GFCF), a proxy for infrastructure investment,1 highlighting the importance of other sources of financing for infrastructure development. In 2010-2024, government GFCF averaged 3% of national GDP, meaning that direct government spending into infrastructure is below this figure, as GFCF includes expenditure that does not fall under the definition of infrastructure (Figure 2.1). An ADB assessment, on the other hand, finds that nearly half of Kazakhstan’s 169 SDG targets receive no state budget funding, with particularly acute gaps for energy and climate goals (ADB, 2022[7]).
GDP in billion constant 2015 USD (left axis) and government gross fixed capital formation (GCFC) as a percentage of GDP (right axis)
Source: Author calculations based on Kazakhstan’s official statistics website (Statistics of national accounts - Agency for Strategic planning and reforms of the Republic of Kazakhstan Bureau of National statistics) and the World Bank Sustainable Development Indicators (GDP (constant 2015 US$) - Kazakhstan | Data).
The State-Owned Enterprise (SOE) sector plays a pivotal role in infrastructure financing, meaning that its mobilisation is key to ensuring that the fixed assets developed today are compatible with long-term sustainability objectives. Given their systemic importance, often operating at the core of strategic sectors, controlling large shares of national investments and shaping infrastructure, SOEs are central to driving economy-wide decabonisation pathways. SOEs generally play a critical role in the national economy, particularly in sectors such as energy, transport, information and communications technology and mining, and make up an important share of investments, including in infrastructure. They largely benefit from financial support from the government, including through concessional financing for infrastructure investment (OECD, 2024[8]). In 2024, Samruk-Kazyna, Kazakhstan’s largest state-owned enterprise, managed a portfolio of more than 130 projects worth a total of USD 116 billion (Samruk-Kazyna, 2025[9]). While Samruk-Kazyna has expanded sustainable investments in its portfolio, notably in renewable energy generation, it continues to be a major investor in status quo, emissions-intensive infrastructure and activities, with portfolio companies representing close to 15% of national CO2 emissions. Half of these emissions are linked to electricity and heat generation, and close to one-third to hydrocarbon exploration, production, transport and refining.
The government expects the private sector to play a key role in financing sustainable infrastructure in the future. It considers that more than half of the USD 610 billion needed to realise the plan to Carbon Neutrality by 2060 can be mobilised by redirecting existing investment flows away from carbon-intensive industries. Over USD 220 billion in additional resources are still required, however, and expected to come from the private sector (Government of Kazakhstan, 2023[5]). Yet, in practice, private and external contributions remain modest relative to needs. Between 2017 and 2024, Kazakhstan attracted a modest USD 0.26 billion annually of private investment in infrastructure, mostly in renewable energy and sustainable transport projects (World Bank, 2025[10]). Similarly, climate-related development finance flows averaged just USD 0.29 billion per year in 2014–2023, with the overwhelming majority coming from multilateral development banks and a much smaller share from bilateral sources (OECD, 2025[11]).
2.1.2. Filling the financing gap and achieving the transformation of Kazakhstan’s infrastructure is needed to meet climate and sustainability commitments
Over the past decade, Kazakhstan steadily advanced toward increasingly ambitious climate commitments. Kazakhstan ratified the Paris Agreement in 2016, setting GHG emission reduction targets that were later raised to 17% compared to 1990 levels by 2035 and up to 25% conditional on international support. Its Strategy to Carbon Neutrality by 2060 and recent NDC 3.0 plan contain adaptation objectives, and a national adaptation plan is currently under development. Additionally, the authorities have incorporated the Sustainable Development Goals (SDGs) into state planning and monitoring frameworks, adopting 88 indicators across ministries and regions (UNDP, 2024[12]).
A significant transformation of Kazakhstan’s national energy infrastructure is needed to deliver on climate and broader sustainability commitments. Although Kazakhstan’s overall contribution to global emissions remains modest at around 0.6%, and despite a progressive, albeit decelerating, decoupling of GDP and GHG emissions in the past 20 years, the country ranks among the highest worldwide in per‑capita and per-GDP emissions, far above the OECD average (Figure 2.2).
Kiloton of CO2e per USD 1 million of GDP, 1990-2022
Fossil-fuel based power generation and transport infrastructure is responsible for 75% of total GHG emissions (Figure 2.3). Kazakhstan's fossil-fuel based, aging and inefficient energy infrastructure is a significant source of GHG emissions and a major obstacle to the country's energy transition. Electricity and heat production accounted for 54.4% of total energy-related CO2 emissions in 2023 (IEA, 2025[14]). Much of the country’s energy infrastructure, including power plants and electric grids, suffers from severe wear and tear, with over a third of power plants operating at 70–90% degradation (The Astana Times, 2025[15]) and most grids, built during the Soviet era, exceeding 60% wear. This results in substantial energy losses, limits the integration of new renewable energy facilities and contributes to regional challenges such as grid overloads, particularly in Mangystau and Almaty, restricting development and investor confidence (EconomyKZ, 2024[16]). Transport infrastructure, on the other hand, represents about 10% of total GHG emissions, with the majority coming from road transport.
GHG emissions in kilotons of CO2e, 1990-2023
Note: Excludes land use, land-use change and forestry (LULUCF). IPPU = industrial processes and product use.
Coal-based power and heat generation stand at the centre of national GHG emissions (see Figure 2.4). Coal provides 66% of electricity and 80% of residential heat (Agora Energiewende and Qazaq Green, 2024[18]). Coal phase-out, combined with accelerated investment in and rapid deployment of low‑carbon power generation options, is therefore identified as the most critical lever at Kazakhstan’s disposal to reduce greenhouse gas emissions and achieve climate goals. In recent years, the government has intensified efforts to diversify the country’s energy mix with plans to expand renewable energy, natural gas and nuclear power. Plans also continue to expand coal capacity, however, as discussed in section 2.2.3, while diversification into natural gas, nuclear and even, to a certain extent, renewables, raise questions regarding alignment with mitigation, climate resilience, and water and biodiversity goals.
Electricity generation by source in GWh, 1990-2023
Source: (IEA, 2025[19]).
Beyond GHG emissions, reliance on coal causes severe air pollution in industrial regions and monotowns, undermining both health and productivity. The World Bank estimates that air pollution from fossil fuel combustion causes between 6 000 and 9 360 premature deaths annually and results in USD 7.1 billion in welfare losses (World Bank, 2021[20]).
Investing in climate-resilient infrastructure is becoming increasingly urgent as climate risks intensify. Kazakhstan faces mounting environmental and climate pressures, from intensifying floods and water scarcity to the degradation of major ecosystems, with consequences for local development and the national economy. Climate-related disasters, resource depletion and pollution are eroding resilience and imposing heavy fiscal and welfare burdens. The Caspian Sea’s water level is projected to decrease to as much as 21 meters by 2100, reducing its surface area by 37% and endangering biodiversity, maritime transport and coastal industries (Court et al., 2025[21]). Subsequently, port operations, oil terminals and desalination facilities are facing rising adaptation costs. This offers a compelling illustration of the criticality of planning and financing climate resilient infrastructure.
There is a window of opportunity for Kazakhstan to take decisive action and accelerate investment in more, better, more sustainable infrastructure. As ageing infrastructure is reaching the end of its serviceable life, a sizeable opportunity exists to replace outdated assets with cleaner, more efficient technologies. Nearly 39% of installed generation capacity is over 40 years old and 64% exceeds 30 years, far beyond their intended service life, while electricity and heat distribution networks are increasingly inefficient, losing up to 35 percent of transmitted energy in some regions (UNFCCC, 2023[22]). The state of obsolescence of power plants and transmission grids means that large expenditure will be necessary regardless of decarbonisation measures.
Putting sustainability at the core of infrastructure investment does not only respond to a climate imperative: it also makes economic sense. The incremental cost of building low-carbon and climate-resilient infrastructure is relatively modest compared to the overall investment required, amounting to just 1% of GDP in additional spending on top of the 5% already needed, as discussed above. Moreover, these costs are declining as clean technologies mature, while the cost of inaction can be far greater if developed infrastructure becomes stranded, or does not withstand climate-induced and other external shocks. Investment in sustainable infrastructure, meanwhile, yield substantive economic, environmental and social benefits which can be quantified with the proper tools, as discussed in section 2.2.4.
2.1.3. Developing sustainable infrastructure represents a strong opportunity for Kazakhstan’s long-term economic diversification and competitiveness
Clean energy development can support the national diversification agenda and enhance economic resilience. For the past 35 years, the economy has relied on exports of highly energy-intensive commodities. The oil, gas and raw materials sector represented 16.3% of GDP in 2024, with oil revenues alone representing 5.8% of GDP (around 26.3% of total government revenues) (IMF, 2025[23]). Hydrocarbons and minerals consistently account for the largest share of export revenue (Figure 2.5), exposing the national economy to external shocks and global commodity price fluctuations. Scaling-up clean energy infrastructure, along with energy efficiency and low-carbon solutions, offers a real chance at reducing the carbon footprint of exporting industries and ensuring long-term competitiveness in the context of global efforts towards net-zero and emerging climate-related trade regulations such as the carbon border adjustment mechanisms (CBAM).
Export revenue in USD billion (left axis) and exports from non-resource sectors as a percentage of total exports (also left axis), 2013-2023
Source: Observatory of Economic Complexity (2024), Observatory of Economic Complexity Database, https://oec.world/en.
Kazakhstan is increasingly recognising the strategic role of renewable energy in ensuring long-term energy security. The country is facing a rapidly increasing electricity demand that is outpacing its supply. Electricity consumption rose from approximately 83.9 TWh in 2020 to 90.9 TWh in 2024 and is projected to reach around 111 TWh by 2035 (GlobalData, 2025[24]). Supply growth has not kept pace, and in 2024, electricity generation fell short of demand by approximately 2.4 billion kWh – one of the largest deficits in recent years – and the gap is expected to widen to 3.3 billion kWh in 2025 (The Times of Central Asia, 2025[25]). In response, the Ministry of Energy plans to add around 26 GW of new generating capacity by 2035, drawing on a diversified mix of gas-fired thermal plants, hydropower, renewables and nuclear energy (Government of Kazakhstan, 2025[26]).
Further scope exists to leverage the country’s potential for renewables development to address disparities in access to energy. Kazakhstan’s position, 89th out of 120 countries in the 2024 Energy Transition Index, highlights challenges in ensuring universal energy access and in financing clean energy technologies (WEF, 2024[27]). While the electricity system ranked 19th globally in 2022 (World Bank, 2024[28]), stark spatial disparities remain, with 41% of the population living in rural areas where essential infrastructure is poorly developed (Government of Kazakhstan, 2020[29]).
Integrating climate considerations in the transport and regional connectivity agenda will be decisive for ensuring that future transport systems are resilient and contribute to GHG emission reduction targets. Despite USD 35 billion in infrastructure investment over the past 15 years, the country still ranks only 79th of 139 in the 2023 Logistics Performance Index, reflecting persistent gaps in capacity, modal integration and corridor efficiency (AIFC, 2024[30]). While Kazakhstan aims to position itself as a major transit hub – especially along the Trans-Caspian Corridor, where volumes have surged since disruptions to northern routes – it faces delays, capacity constraints and fragmented modal links that disrupt trade, raise costs and undermine its role in the Middle Corridor (OECD, 2023[31]). Government strategies to 2030 envision multi-vector investment in roads, rail, air and maritime infrastructure, cross‑border hubs and fleet modernisation (OECD, 2024[32]), but climate risks, including floods and declining Caspian Sea levels, further threaten infrastructure reliability. Without reducing logistics costs and strengthening resilient, seamless connections to global markets, Kazakhstan’s transit ambitions and export potential will remain limited. Mitigating the effects of planned urban and regional transport infrastructure expansion on GHG emissions trajectories will also require careful planning and policymaking, as discussed in section 2.3.2.
Kazakhstan has articulated a broad vision for sustainable growth and net-zero by 2060 through the Kazakhstan 2050 Strategy, the Green Economy Concept, the National Infrastructure Plan (2024–2029), and the Carbon Neutrality Strategy. The recent decree on strategic planning makes the Carbon Neutrality Strategy the key strategic document for Kazakhstan, along with Kazakhstan 2050. Yet, further consolidation is needed at the national strategic planning level, and gaps remain between strategy and implementation. Addressing these challenges require strengthening alignment across national and regional development plans, particularly in the energy sector, mainstreaming the use of long-term modelling in decision making processes, and further integrating the use of Strategic Environmental Assessments (SEAs) across plans, policies and programmes. Undertaking such efforts would help increase the credibility of climate ambitions and send strong signals to financiers and investors. To build on existing foundations and align infrastructure pipelines with climate and resilience goals, Kazakhstan could:
Make the Carbon Neutrality Strategy a top priority document in practice. Screen and update for consistency all major strategies and programmes (National Infrastructure Plan 2024–2029, Strategic Development Plan 2024–2029, sectoral concepts) with the objectives and timelines of the Carbon Neutrality Strategy. In particular, align short- and medium-term measures (2025–2035) of the LT-LEDS and the NDC with the long-term trajectory and create a mechanism to revise national and sectoral targets as modelling and implementation evidence improve. Consolidate a list of infrastructure projects directly derived from or aligned with the Carbon Neutrality Strategy and NDC 3.0 plan.
Strengthen the impact of the Carbon Neutrality Strategy and ensure effective implementation by adopting a target scenario of reference with quantified sectoral pathways towards net-zero. In the Implementation Roadmap of the Low Carbon Strategy, include economy-wide and sector-specific targets, milestones, and indicators linked to interim (2030/2040/2050) goals.
Align price signals and incentives with the transition outlined in the reference scenario. Specifically, link emissions trading and carbon pricing reforms to clear carbon price trajectories and sectoral pathways to strengthen signals for private investors, accelerate low-carbon infrastructure development, and prevent fossil fuel lock-in.
Develop a framework to systematically integrate climate and sustainability criteria in policy planning. Enforce the use of Strategic Environmental Assessments (SEAs) across policy planning. Mainstream resilience and gender into strategic planning, starting with the development of adequate data, standards and indicators.
Make high-quality EIAs mandatory for major projects; publish practical guidance and timelines; digitalise submissions and disclosure. Standardise the use of methodologies that value externalities and avoided risks (e.g. SAVi) for priority projects in energy, transport, buildings and water; require presentation of both financial and societal net-benefit cases in selection and budgeting.
Develop regular training programmes for governmental officials at national and regional levels together with the development of adequate strategic planning tools and approaches including policy and project-level sustainability assessments.
Integrate region-specific measures, skills and reskilling programmes, and social dialogue into infrastructure and energy transition plans to support coal-dependent regions and maintain public support for reform. Consider undertaking a study in a pilot region, involving analytical assessments and robust stakeholder consultations, to understand the local impact of coal phase-out and opportunities associated with new economic activities such as renewable energy development and mining of critical minerals.
Aligning infrastructure investments with economic, social and environmental sustainability outcomes requires that the national strategic framework in place provides clear qualitative and quantitative objectives for sustainable infrastructure development. The national strategic planning framework includes (i) governance and strategic policy frameworks, i.e., the processes, systems, and practices through which infrastructure decisions are made, as well as strategic plans, policies and programmes driving infrastructure planning; (ii) long-term planning tools backed by robust modelling, scenario-building and foresight capabilities; (iii) credible national sustainability and climate commitments; (iv) specific tools, methods and capabilities for mainstreaming sustainability into infrastructure planning and project-level appraisals. In addition, this section explores specific tools addressing the need to mainstream resilience and gender considerations into infrastructure planning.
2.2.1. National governance and strategic framework for sustainable infrastructure development
Kazakhstan’s governance system for infrastructure planning and budgeting
The President and his Office play an important role in the infrastructure governance system, determining its processes and endorsing every key decision. The OECD Public Governance Scan of Kazakhstan highlights that, in contrast to OECD countries, Kazakhstan differentiates between “state planning and strategic planning”. The “strategic planning system,” defined in the Government Decree on the State Planning System, encompasses high‑level national strategies such as the National Development Plan and the National Security Strategy and falls under the exclusive authority of the President, who further elaborates these through annual State of the Nation addresses (OECD, 2025[33]). The “State Planning system,” entrusted to the government, translates this long‑term vision into operational plans for ministries, sub‑national authorities, and national companies, creating an interconnected set of plans, principles, and methodologies to deliver results (OECD, 2025[33]). While concrete development of national infrastructure plans falls under the “State planning system”, as described below, presidential priorities set in high-level national strategies have a direct impact on these plans. This was notably illustrated in the way that the presidential authority played a key role in determining the contents of the Strategy for Achieving Carbon Neutrality by 2060, a Strategy with a direct impact on future infrastructure development, as discussed in section 2.2.2.
The Prime Minister’s Office plays a pivotal role in aligning national plans with presidential priorities, and its influence in steering the green transition agenda is likely to increase in the future. The Prime Minister and his Office (“Government Apparatus”) ensure that all national plans align with presidential priorities and directions through the dissemination of implementation roadmaps and steering and co-ordinating of cross-cutting issues (OECD, 2025[33]). The OECD Public Governance Scan of Kazakhstan notes that the Government Apparatus may need to increase its capacity to co-ordinate and steer the green transition agenda, and that OECD experience may help in this regard (OECD, 2025[33]).
The strategic planning of national infrastructure involves several ministries and is generally well-co-ordinated. The Ministry of National Economy (MNE) centrally co-ordinates and strategically plan infrastructure governance, overseeing long-term development strategies, investment programming and fiscal planning, in collaboration with the Ministry of Finance, the Ministry of Industry and Construction (MIC) and other sectoral ministries. The MNE ensures that infrastructure investments align with the Concept of Investment Policy 2024-2029, which the Ministry is responsible for, and the National Infrastructure Plan 2024-2029 (NIP), led by the MIC (Government of Kazakhstan, 2024[1]; The Astana Times, 2025[15]). The MIC plays a critical role in national infrastructure planning, as developer and leader of the NIP, which aims at creating a sustainable national infrastructure base. In addition to its central policy planning and co-ordination role, the MNE also leads the co-ordination of SDG-related planning and budgeting through joint initiatives with the Ministry of Finance and UNDP (UNDP, 2020[34]).
Recent governance reforms have aimed to simplify administrative structures and improve policy coherence, which can contribute to the strengthening of infrastructure planning and its alignment with national priorities, including with regards to sustainability. The Concept for the Development of the Public Administration until 2030 transferred more than 500 functions from the Presidential Administration to line ministries and subnational authorities. The transformation of the Prime Minister’s Office into a Government Apparatus introduced clearer mandates for economic policy management and oversight, bringing the structure closer to those found in OECD countries (OECD, 2025[33]). These measures are intended to consolidate strategic planning, clarify responsibilities and strengthen performance monitoring across institutions (Government of Kazakhstan, 2021[35]). Kazakhstan has also enacted a new decree and practices to further unify and optimise its strategic planning framework, ensuring that governance structures align with national priorities while promoting policy co-ordination at all levels. The adoption of a new constitution after a referendum held on 15 March 2026 may affect the strategic planning system. On paper, the change has the potential to streamline institutional arrangements and clarify mandates at the centre of government, but its concrete impact will depend on subsequent implementation.
Despite recent advances, Kazakhstan’s institutional framework for infrastructure planning could benefit from greater co-ordination and stability of staff and institutional arrangements. Overlapping mandates among central ministries and weak co-ordination between national and subnational levels continue to undermine consistency in implementation (ADB, 2023[36]). Limited co-ordination and staff turnover across institutions weaken implementation capacity (OECD, 2025[33]). In addition, capacity constraints and insufficient methodological support, particularly at the local level, limit the ability of regional authorities to align infrastructure project proposals with national priorities.
Prioritising sustainable infrastructure projects requires strengthening analytical capacities within the infrastructure governance system. Infrastructure proposals are assessed for alignment with strategic plans, budget feasibility and readiness, before inclusion in government-approved investment programmes. Despite progress, such as the objective to develop ESG assessment and reporting methodologies stated in the Investment Policy Concept 2024-2029, sustainability criteria, including environmental and climate considerations, remain partially integrated into project appraisal frameworks, while monitoring systems remain under development. Stronger integration of sustainability criteria requires to strengthen capacity and tools within analytical functions. The training and pilot assessments provided through SIPA (see section 2.2.4) could usefully be scaled up in the future.
Applying the OECD Infrastructure Governance Indicators (IGIs) would enable Kazakhstan to assess the quality of its institutional framework and identify practical steps to enhance infrastructure governance (Box 2.2). The IGIs evaluate governance performance across key areas such as strategic planning, fiscal sustainability, project appraisal, procurement and transparency, providing an evidence base to guide reform and align national practices with international standards.
Under SIPA, the OECD held a series of consultations and capacity-building sessions with national planning agencies in Indonesia, the Philippines, and Thailand, who responded to a pilot survey based on the OECD IGIs. Findings from the survey highlight strong foundations in long-term planning and sustainability commitments across the three countries as well as identify areas for improvement.
Indonesia has strong long-term planning frameworks and integrates climate considerations but lacks project-specific benchmarks and independent project review.
The Philippines systematically assesses affordability and uses detailed benchmarks and climate data but lacks a framework to evaluate procurement against green and social objectives.
Thailand promotes green procurement and environmental standards but does not require early-stage stakeholder consultation or independent review of major projects.
The national strategic framework for sustainable infrastructure development
The national strategic framework for sustainable infrastructure development encompasses several high-level national planning documents and sectoral plans. Following a short discussion of key documents and their alignment with climate and sustainability objectives, Table 2.2 below provides an overview of the 10 most essential programmes and plans driving national infrastructure planning.
The Kazakhstan 2050 Strategy defines the overarching objective of positioning the country among the world’s top 30 economies by mid-century through industrial upgrading, innovation and modern infrastructure (Government of Kazakhstan, 2012[39]). It identifies renewable energy expansion and low-carbon growth as strategic priorities, targeting at least a 50% share of alternative and renewable sources in total energy consumption. However, the Strategy provides limited operational guidance or measurable milestones, which complicates implementation and co-ordination among ministries (AIFC, 2019[40]).
The Concept for the Transition towards a Green Economy, adopted in 2013 as the main cross-sectoral framework for green growth, anchors Kazakhstan’s policy foundation for a sustainable transition. The Concept outlines priority areas for energy efficiency, renewable energy, water and waste management, and air pollution reduction, and sets a renewable energy target of 50% of power generation by 2050. It estimates investment needs of USD 3 to 4 billion annually, largely from private sources directed to energy efficiency, renewable power and gas infrastructure (Government of Kazakhstan, 2012[39]). While the Concept offers a structured roadmap linking infrastructure development with green investment, implementation and monitoring remain weak (OECD, 2017[41]; World Bank Group, 2023[4]).
The National Infrastructure Plan 2024-2029 sets national infrastructure priorities, focusing on electricity and heating networks and setting a medium-term goal of reaching a 12.5% renewable energy share in power generation (Box 2.3). Developed with international partners, the Plan promotes sustainable infrastructure development across energy, transport, water and sanitation, and underscores the importance of mobilising private finance to meet Kazakhstan’s climate and development ambitions (Government of Kazakhstan, 2024[1]). However, it remains insufficiently aligned with the 2060 carbon neutrality objective and the Updated Nationally Determined Contribution (NDC 3.0).
The National Infrastructure Plan 2024–2029, developed by the Ministry of Industry and Construction, defines 204 priority projects across four key sectors – energy, transport, water and sanitation, and digital infrastructure – divided into List A (high priority) and List B (subject to financing and readiness). Total investment is estimated at KZT 40.1 trillion (over USD 80 billion), with about 90% expected from non-budgetary sources, underscoring the central role of private capital and PPPs.
Energy accounts for 46 projects focused on modernising generation and transmission networks and raising the renewable share of power generation to 12.5 % by 2029. The 59 transport projects include major corridors and logistics upgrades, aiming for 98 % of national roads to meet technical standards and 1 700 km of rail lines to be rehabilitated. 89 projects in water supply and sanitation target new reservoirs, upgraded pipelines and universal service access, while 10 digital projects aim to achieve full broadband coverage in rural areas by 2027.
The Plan forecasts KZT 24.6 trillion (about USD 52 billion) in added economic output, roughly equivalent to a four-point increase to annual GPD growth over four years, and the creation of 150 000 jobs, of which about 27 000 will be permanent. While the Programme represents Kazakhstan’s most comprehensive infrastructure pipeline to date, its success will depend on timely financing, effective project appraisal and closer integration of climate and sustainability criteria into investment planning.
Source: (Government of Kazakhstan, 2024[1]).
The Strategic Development Plan 2024-2029 emphasises decarbonisation, renewable energy deployment, sustainable waste management and biodiversity conservation. It highlights a shift from direct state financing toward leveraging private capital through green bonds, sustainability-linked instruments and pension fund participation (Government of Kazakhstan, 2024[1]; OECD, 2025[42]). This marks a more integrated approach to strategic and financial planning, aligning infrastructure investment with the goals of Kazakhstan’s low-carbon transition. This diversification of financing instruments represents a more integrated approach to linking strategic and financial planning for Kazakhstan’s low‑carbon transition.
The 2021 Environmental Code, which harmonises national regulations with OECD and EU standards, strengthens the policy framework for sustainable infrastructure development. The Code introduces stricter controls on industrial emissions, mandates the adoption of best available techniques in high-pollution sectors, and advances a circular economy approach to waste management (Government of Kazakhstan, 2021[43]). Together with the Strategy to Achieve Carbon Neutrality by 2060 and the Updated NDC 3.0, it forms the core of Kazakhstan’s climate policy architecture. The Carbon Neutrality Strategy estimates investment needs of around USD 610 billion, primarily through redirecting capital from fossil fuels to green sectors (Government of Kazakhstan, 2022[44]). However, independent assessments indicate that current measures are not yet sufficient to meet emission targets (Climate Action Tracker, 2025[45]), underlining the need for stronger policy co-ordination and better alignment of infrastructure investment with decarbonisation pathways.
Sectoral strategies further shape Kazakhstan’s sustainable infrastructure agenda. The Fuel and Energy Development Concept 2014-2029 seeks to modernise the energy system by expanding gas use, improving efficiency and supporting gradual diversification toward renewables (Government of Kazakhstan, 2014[46]), while the 2030 Transport and Logistics Potential Development Concept prioritises multimodal connectivity and regional trade integration (Government of Kazakhstan, 2022[44]). Although the transport strategy is not explicitly framed around sustainability, it offers opportunities to embed low-carbon and climate-resilient design in new infrastructure. Together, these strategies illustrate Kazakhstan’s progressive but still fragmented approach to building a sustainable, diversified and resilient infrastructure base.
2.2.2. Long-term planning tools: modelling, scenario-building and foresight capabilities
Steering the infrastructure transformation needed to achieve Kazakhstan’s carbon-neutral and climate-resilient objectives by 2060 demands planning instruments that extend beyond conventional policy cycles and incorporate long-term uncertainty into decision-making. Effective transition planning requires frameworks that connect near-term priorities with future emission trajectories and resilience goals, guiding investment towards sustainable and low-carbon infrastructure. Developing such forward-looking approaches allows policymakers to anticipate trade-offs, explore multiple decarbonisation pathways and strengthen coherence between climate, economic and social objectives. In this context, long-term low-emission development strategies (LT-LEDS), complemented by strategic foresight and adaptation planning, are central to ensuring that infrastructure and policy choices made today remain viable and aligned with Kazakhstan’s net-zero ambitions.
Developing and implementing Kazakhstan’s LT-LEDS
Long-Term Low Emission Development Strategies (LT-LEDS) provide a strategic framework for integrating infrastructure into national development priorities across ministerial portfolios (OECD/The World Bank/UN Environment, 2018[49]). This approach highlights the interconnections between infrastructure for energy, transport, water, and other sectors, while leveraging co-benefits such as improved health outcomes and quality job creation. By fostering synergies, reducing inefficiencies, and building support for the transition, LT-LEDS help align mitigation efforts with 1.5°C pathways and the Sustainable Development Goals (SDGs). China’s long-term deep decarbonisation analysis undertaken by IDDRI’s Deep Decarbonisation Initiative, which accompanies countries in their LT-LEDS exercises, shows how co-ordinated planning across industry, transport and energy can significantly cut emissions while reducing major air pollutants in Chinese cities and meet World Health Organisation air quality standards (OECD/The World Bank/UN Environment, 2018[49]).
Kazakhstan has taken major steps to establish a long-term framework for achieving carbon neutrality by 2060. In February 2023, it became the first country in Central Asia to adopt a Long-Term Low-Emission Development Strategy (LT-LEDS) through the Strategy for Achieving Carbon Neutrality by 2060, approved by Presidential Decree No. 121. Building on previous analytical work from local and international experts, the Strategy was developed over three years under the leadership of the MNE and the Economic Research Institute (ERI), with inputs from the Ministry of Ecology and Natural Resources and support from GIZ, the World Bank, the OECD and the EBRD. It outlines Kazakhstan’s pathway to net zero, establishing national GHG reduction and absorption targets and providing broad sectoral directions (Figure 2.6).
Actual (1990, 2020) and projected (2030, 2040, 2050, 2060) GHG emissions, in Mt CO2e
Note: * Based on Kazakhstan’s unconditional NDC target. ** Indicative levels according to the Carbon Neutrality Strategy.
Source: (Government of Kazakhstan, 2023[5]).
To move from strategy to action, the government launched the preparation of an Implementation Roadmap in 2024, co-ordinated by ERI under the MNE, in partnership with the World Bank, EBRD, OECD and other international organisations and experts. The Roadmap aims to operationalise the Carbon Neutrality Strategy and ensure consistency between long-term targets and sectoral investment plans. The process brings together national experts, business associations and international partners, drawing on modelling, scenario design and investment planning tools to ground the transition in evidence-based analysis.
In the future, strategic foresight could be used as an additional tool for LT-LEDS and other long-term strategy development. Strategic foresight allows policymakers to systematically explore multiple long-term pathways, anticipate emerging risks and evaluate the robustness of policy options under uncertain social, economic, and environmental conditions. Incorporating foresight can help Kazakhstan develop long-term strategies that are adaptive, resilient, and aligned with its 2060 net-zero and climate-resilience objectives (Box 2.4).
Foresight exercises offer several benefits for long-term resilience planning. They create a space for reflection on complex, interconnected long-term issues, which is critical for developing robust and resilient economic strategies. They bring together stakeholders from various government branches, helping to break down organisational silos and foster collaboration. They enable participants to explore the interplay of global megatrends such as climate change, technological innovation, and geopolitical shifts, while promoting upskilling and cross-domain knowledge sharing. A learning-by-doing approach not only generates actionable recommendations but also equips participants with lasting strategic foresight skills to enhance anticipatory policymaking.
Under SIPA, the OECD’s Foresight Toolkit for Resilient Public Policy, which was developed to support more adaptive, systems-oriented policymaking, was piloted in infrastructure-focused exercises with the Department of Development (formerly National Economic and Development Authority, NEDA) in the Philippines (2022) and Bappenas in Indonesia (2023).
Both workshops applied participatory scenario development and stress-testing to explore how the countries draft infrastructure strategies (Philippine Development Plan 2023-2028; Indonesia’s Medium-Term National Development Plan, or RPJMN, 2025-2029) could perform under an array of conditions shaped by climate change, technological shifts, urbanisation and fiscal constraints. The exercises gathered participants from a variety of ministries and non-government representatives to stress-test the draft strategies against a variety of disruptions to identify vulnerabilities and refine investment priorities.
In Indonesia, the process informed adjustments to national infrastructure priorities in the context of the RPJMN, emphasising flexibility, cross-sectoral co-ordination and nature-based solutions. In the Philippines, it supported a more integrated view of climate risks and long-term infrastructure resilience, generating interest within the government to develop targets on investment in resilient infrastructure.
Source: (OECD, 2025[50]).
Applying a policy coherence framework
To guide effective implementation, the OECD recommends using its Policy Coherence for Sustainable Development (PCSD) framework to ensure that economic, social and environmental objectives are fully integrated across all phases of LT-LEDS development (Aguilar Jaber et al., 2020[51]). The framework is built around eight building blocks that allow assessment of the coherence and quality of the LT-LEDS process - from design and consultation to the content of the strategy and its implementation (Table 2.3).
Building blocks of the approach and corresponding enabling factors at each stage of the LT-LEDS
Source: Adapted from Aguilar, Jaber et al (2020[51]).
Applying the PCSD framework highlights both strengths and gaps in Kazakhstan’s LT‑LEDS process (Table 2.4). The MNE formally led the process, with ERI acting as technical co-ordinator, and drew contributions from over 200 stakeholders across government, business, academia and civil society. Twenty-two thematic working groups provided a platform for dialogue and modelling, supported by national and international experts. Economic modelling was robust, integrating domestic expertise and support from partners such as GIZ and DIW-Econ.
However, participation from subnational administrations and coal-dependent regions was limited, reducing opportunities to embed just-transition considerations. Engagement with sectors most affected by decarbonisation could also have been broader, which would have strengthened confidence in the modelling scenarios and improved ownership of the results.
Process assessment against enabling factors
The Strategy enshrines the net-zero goal in law and provides a long-term vision for aligning economic growth with decarbonisation. It sets clear milestones toward 2060 and links the transition to sustainable growth and social inclusion. Yet the Strategy remains largely conceptual: sector-specific targets, modelling results and allocation of institutional responsibilities are not specified, and monitoring indicators are limited to economy-wide GHG and CO2-removal figures. In particular, modelling scenarios used during the process were not included in the final document. Table 2.5 summarises the main strengths and weaknesses.
Strategy assessment against enabling factors
Source: Author’s elaboration.
Although the Strategy marks a landmark commitment, its limited detail on scenarios, quantitative sectoral targets and policy measures constrains its usefulness as an implementation tool. Businesses consulted under SIPA noted that the absence of clear roadmaps and carbon-pricing signals hampers investment planning for decarbonisation. Additionally, further specifications of the update process, including alignment of review cycles with the Global Stocktake under the Paris Agreement, would help strengthen the document.
Implementation Roadmap to the Strategy for achieving Carbon Neutrality by 2060 and next steps
The Implementation Roadmap to the Strategy for achieving Carbon Neutrality, now under preparation, offers an opportunity to address remaining gaps and mobilise investment. Work began in 2024, with 18 specialised working groups comprising more than 200 experts. The process has faced challenges such as staff turnover, variable government engagement and the complexity of reconciling diverse stakeholder inputs, but it represents a critical step toward operationalising Kazakhstan’s long-term climate goals, linking macroeconomic planning, sectoral policies, and long-term decarbonisation objectives.
The OECD reviewed a draft version of the Roadmap in late 2024 and issued recommendations to strengthen its analytical and strategic foundation (Box 2.5). These include establishing a quantified reference scenario, building on past modelling work, linking policy actions to measurable outcomes and aligning NDCs and sectoral plans with net-zero objectives. The credibility and coherence of the Roadmap will determine its ability to attract finance and drive implementation across sectors.
In November 2024, the OECD provided a set of eight recommendations to the government of Kazakhstan in the framework of the development of the Carbon Neutrality Strategy’s Implementation Roadmap. These recommendations stem from analytical and policy work carried out under the Programme by the OECD and its implementing partners, as well as the OECD literature and standards on sustainable infrastructure and climate policies.
Cross-cutting recommendations:
Include a reference scenario with quantitative objectives, metrics and targets in the Roadmap;
Include effective indicators for tracking the expected outcomes of actions vs. decarbonisation objectives;
Ensure that NDC, development and sectoral plans, programmes and policies align with the Strategy’s objectives and Roadmap provisions;
Include actions supporting the enhancement of the strategic state planning system for integrating climate goals, including the promotion of SEAs.
Sector- and instrument-specific recommendations:
Further link Kazakhstan’s plans for ETS and carbon pricing mechanism reforms with carbon price targets to enhance signalling effect;
Provide or pave the way to clear sectoral decarbonisation pathways in hard-to-abate industries, recognising economic benefits;
Promote the sustainability of Kazakhstan’s connectivity agenda through a clear action plan and tools for aligning trade and transport infrastructure on net-zero targets;
Take OECD and international standards and best practices into account in the just transition plan.
Source: Author’s elaboration
2.2.3. Credible national sustainability and climate commitments
Kazakhstan’s adoption of the Strategy for Achieving Carbon Neutrality by 2060 marked a historic step toward aligning national development with global climate goals. Yet its credibility will depend on the government’s ability to translate long-term ambition into clear, measurable, and enforceable actions. The persistence of large-scale coal projects, weak carbon price signals and long-term fossil fuel contracts continues to undermine confidence in the country’s decarbonisation pathway. Without a credible plan for coal phase-out and a consistent policy environment, Kazakhstan risks delaying its transition and deterring the investments needed to achieve its 2060 target.
Establishing a clear commitment to phasing out coal is essential for unlocking renewable energy investment and sustaining economic diversification. Coal currently employs more than 30,000 workers, with reserves estimated at 170 billion tonnes, among the largest in the world. The sector remains deeply embedded in the economy: annual output averages 110-115 million tonnes (Figure 2.7), and several long-term extraction contracts extend into the 2040s and 2050s, only a decade before the country’s net-zero deadline. Recent announcements of new coal-fired capacity and refurbishment projects, along with references to the development of “clean coal” technologies, contrast sharply with the objectives of the Carbon Neutrality Strategy, which envisages eliminating coal-based generation by mid-century through expanded renewables, natural gas as a transition fuel, and the deployment of carbon capture, utilisation and storage (CCUS) technologies. The Asian Development Bank’s partnership with Kazakhstan under the Energy Transition Mechanism signals early momentum for coal plant retirement, but its impact will remain limited without a comprehensive national phase-out strategy that aligns energy planning, regulation and investment incentives.
Note: Includes bituminous coal and lignite.
Source: (Kazenergy, 2023[52]).
Reinforcing policy coherence between fossil fuel development and decarbonisation goals is critical to rebuilding investor confidence. The lack of internal consistency between Kazakhstan’s 2030 targets and its 2060 neutrality pledge generates uncertainty about the long term. The absence of a reference scenario and quantified milestones within the Carbon Neutrality Strategy constrains its credibility and weakens the signalling effect for private finance. High emissions benchmarks for coal-fired power under Kazakhstan’s Emissions Trading System (0.985 tCO₂/MWh, compared with 0.621 for gas) further reduce incentives to shift toward cleaner technologies (Kazenergy, 2019[53]). Inconsistent policy signals – such as subsidised coal production and continued licensing of new extraction projects – have prompted doubts among domestic and foreign investors regarding the government’s long-term commitment to clean energy. Several industrial stakeholders have indicated reluctance to invest in electrification and energy-efficient technologies, citing limited confidence in the stability of national clean energy policies. Strengthening policy coherence and carbon-price alignment would thus be a precondition for mobilising private capital and developing bankable renewable infrastructure.
Achieving credible climate action will require strong political leadership, cross-ministerial co-ordination and active public engagement. The scale of Kazakhstan’s energy transition demands sustained involvement from top economic decision-makers across government, state-owned enterprises and the private sector. Building public acceptance is equally important: the 2022 unrest underscored the social and political sensitivities surrounding energy pricing and economic inequality. Successful implementation of climate reforms depends on transparent communication, early consultation, and measures to protect vulnerable households (OECD, 2025[54]). Current national statements highlighting the prioritisation of “clean coal” development run the risk of sending mixed signals, while clear disclosure of fossil-fuel contracts, transparent monitoring of emissions targets and consistent inclusion of climate criteria in state planning could all help rebuild public trust and strengthen the legitimacy of Kazakhstan’s transition strategy.
Embedding social and regional equity at the core of the transition will be crucial for its durability. Kazakhstan’s coal regions are home to an estimated 1.4 million people across 20 single-industry towns, where livelihoods depend heavily on mining and fossil-fuel production. A rapid shift away from coal without adequate mitigation measures could exacerbate unemployment, regional disparities and social tension. Ensuring a just transition in the coal sector alone could cost between USD 2.5 billion and 3 billion, covering mine closure, land reclamation, reskilling and local economic diversification (World Bank Group, 2023[4]). International experience shows that successful transitions – such as those in Germany’s Ruhr region and Canada’s coal provinces – combine national funding with place-based strategies and strong social dialogue. Kazakhstan could build on this approach by establishing a dedicated Just Transition Fund to finance vocational education, regional development and entrepreneurship in affected areas, while integrating just transition principles into national climate investment frameworks.
2.2.4. Policy-level and asset-level sustainability evaluation tools integrating environmental and social considerations
The adoption and effective use of policy- and project-level sustainability evaluation tools and methodologies by national and subnational governments can enhance greatly a country’s capabilities for planning and delivering sustainable infrastructure. These tools may require additional human capacity, time, and finance to policy and project development and implementation. However, they also bring important benefits as they enable better understanding of environmental and social impacts and identification of solutions reducing these impacts, which can translate into economic gains. This is particularly important when applied to the infrastructure projects, which typically represent very high costs over long periods of time.
Policy level assessments
Strategic Environmental Assessments (SEAs) are one of the main instruments at the policy level for integrating environmental considerations into planning and decision-making. SEAs encompass a set of analytical and participatory methods designed to integrate environmental considerations into the development of policies, plans, and programmes (OECD, 2006[55]). Their core objectives include embedding sustainability goals into strategic decision-making, collecting and analysing relevant data, including stakeholder input, for informed choices, assessing the potential environmental and health impacts of proposed actions, and establishing conditions for environmentally responsible implementation (OECD, 2006[55]).
Kazakhstan has a legal basis for SEAs, but their practical efficacy is undermined by persistent implementation challenges. The Environmental Code includes provisions to carry out SEAs in key economic sectors, such as energy, transport, and industry, as well as in regional and territorial development plans (Government of Kazakhstan, 2021[43]). The Code defines SEAs as a type of environmental assessment that evaluates the significant impacts of state programs, territorial development programs and master plans on the environment (Government of Kazakhstan, 2021[43]). The SEA process includes determining the need for assessment, defining the scope, preparing the report, assessing its quality and monitoring the impacts. The Code outlines criteria for impact screening and requires involving various stakeholders, including state bodies, external experts, and the public (Government of Kazakhstan, 2021[43]). Despite this legal foundation, and consistent with the fact that Kazakhstan has not yet ratified the UNECE protocol on SEA, implementation faces several barriers, including limited sectoral guidance, overregulation and low public participation.
To enhance SEA implementation, Kazakhstan can develop practical guides for various sectors and for local governments and agencies, following examples from other countries. In addition, amending legal and regulatory acts, creating a special budget program for external experts, and integrating SEA into the planning process from the start are crucial steps. Overcoming barriers like overregulation and lack of public participation requires co-ordinated efforts and modern communication technologies. Expanding SEA coverage to regional development documents and increasing public engagement are also essential. The Implementation Roadmap to Kazakhstan’s Low Carbon Strategy to 2060 represents an opportunity to integrate SEAs as a strategic planning tool across levels of government to help strengthen a whole-of-government approach to the implementation, ensuring that net zero criteria are integrated across policies, plans and programmes, including at the sub-national level. As partners such as the EBRD and the World Bank have conducted pilot projects for the implementation of SEAs at the sub-national level, future actions on promoting and strengthening SEAs should integrate the knowledge and feedback from this work.
Project-level assessments
At project level, evaluation tools integrating sustainability criteria can significantly improve the strategic planning of sustainable infrastructure. Evaluation tools can be used for project sustainability appraisal, including: i) environmental impact assessments (EIAs); ii) integrated cost-benefit analysis, strengthened by using environmental sustainability criteria (e.g., the Sustainable Asset Valuation method (SAVi)); or iii) other approaches developed by international partners, such as the UNECE’s PPP and Infrastructure Evaluation and Rating System (PIERS). These enable a more holistic approach to measuring infrastructure projects’ cost-effectiveness, including environmental and social costs and benefits at all stages of the infrastructure lifecycle. They can also help attract sustainable finance to projects by introducing sustainability considerations into the planning process. Policies that reflect the cost of negative externalities (i.e., carbon pricing) impact the results of these valuation methods.
Kazakhstan has integrated Environmental Impact Assessment (EIA) into its legal and regulatory framework. Kazakhstan is already a Party to the Convention on EIA in a Transboundary Context, allowing for projects to consider cross-border environmental impacts (UNECE, 2019[56]). Despite plans for ratification in 2024 (UNECE, 2023[57]), Kazakhstan has yet to ratify the second amendment. The EIA process is implemented in accordance with the requirements of the Environmental Code (Government of Kazakhstan, 2021[43]), and the ministerial order for the Instructions for organizing and conducting an environmental assessment (Ministry of Ecology, Geology and Natural Resources of Kazakhstan, 2021[17]).
While the legal framework is broadly in place, the practical implementation of Environmental Impact Assessments still faces critical challenges. Kazakhstan’s current EIA process mandates 30-day public consultations, which are published in the “Unified Environmental Portal” (www.ecogosfond.kz), but interviews indicate that the practical application of this requirement has been mixed (OECD, 2025[42]). Moreover, procedures in Kazakhstan tend to be repetitive and to require extensive documentation, adding to the administrative burden. At the same time, the key challenge relates less to the number or complexity of procedures than to the depth and quality of the analytical assessment underpinning EIAs, which may limit their effectiveness and result in outputs of limited relevance for decision-making. In particular, implementation at the regional level has been repeatedly found weak – local authorities often lack sufficient capacity or incentives to enforce EIA requirements (MDPI, 2025[58]). Strengthening the emphasis on the quality of assessment, including the analysis of alternatives, cumulative impacts and post-project monitoring, could enhance the practical effectiveness of EIA processes while building on the existing regulatory framework.
Integrated cost-benefit analysis: the example of SAVi
Public investment and policy decisions in Kazakhstan would greatly benefit from cost-benefit analyses integrating sustainability criteria. These “integrated cost-benefit analyses” are typically conducted ex ante to estimate the monetary value of a policy package's costs and benefits within a specific area and over a defined timeframe. They allow for the identification and valuation of indirect and otherwise hard-to-account-for economic, social and environmental impacts of project development, including positive and negative spillovers. The result is typically expressed as a benefit-to-cost ratio, similar to more conventional cost-benefit analyses and Return on Investment (ROI) calculations (OECD, 2018[59]). Despite these developments, the degree to which social and environmental costs and benefits are incorporated into public infrastructure appraisal varies, largely due to government capability constraints in applying these new methodologies.
Under SIPA, Kazakhstan piloted an integrated cost-benefit analysis to assess a cross-border connectivity project using the Sustainable Valuation Asset (SAVi) methodology. SAVi combines system dynamics with project finance modelling to capture the full economic, social, environmental, and governance risks of infrastructure projects and to quantify externalities in monetary terms. By providing a life-cycle assessment of costs and benefits, it helps policymakers and investors identify priorities and trade-offs to build stronger cases for sustainable infrastructure investment. In the Shymkent-Tashkent-Khujand trade and logistics centre case, SAVi captured avoided costs and added benefits typically excluded from conventional cost-benefit analyses (CBAs), including the economic impacts of border delays, air pollution and road safety, climate-related damage to infrastructure, and induced trade and employment effects across countries (Box 2.6). In Kazakhstan, broader use of integrated cost-benefit analysis would enable policymakers and investors to make investment decisions that are not only based on a valuation of strictly financial returns – as those do not yet integrate negative externalities, for example on climate – but also on these investments’ contributions to fulfilling broader national economic, social and environmental priorities. SAVi assessments can thus be used by policymakers and investors to steer capital toward sustainable infrastructure (IISD, 2024[60]).
Kazakhstan and Uzbekistan are working to enhance trade relationships along the Shymkent–Tashkent–Khujand economic corridor by developing feasibility studies for an International Centre for Trade and Economic Co-operation, and a trade and logistics centre (ICTEC). These investments aim to create jobs, boost private sector trade and investment, and improve economic co-operation, including in tourism. Additionally, the project includes plans for a modernised border crossing to facilitate the movement of people, vehicles, and goods. Under SIPA, the International Institute for Sustainable Development (IISD) applied the Sustainable Asset Valuation (SAVi) methodology to the ICTEC project, assessing sustainable transport and building infrastructure options.
While a traditional benefit-to-cost ratio analysis of this project considering only the classic economic impacts (e.g., capital and O&M costs for the railway and power generation, revenues from freight trade) amounts to 0.82 for every USD invested, the SAVi assessment, which considers the project from a societal point of view and is based on the estimation of the full range of economic, social, and environmental added benefits and avoided costs finds an integrated benefit-to-cost ratio of 8.53 per USD invested.
Note: BCR = benefit-cost ratio; S-BCR = sustainable benefit-cost ratio.
IISD finds that the sustainable scenario will yield significant economic benefits, including revenues and additional value added from freight trade, time savings, job creation in railway and power generation, and avoided costs related to CO2 emissions, traffic accidents, energy, and fuel use. The most substantial impact comes from the value added by freight trade, particularly from a 60% shift from road to rail transport. Additionally, the scenario includes significant added benefits from time savings and job creation, as well as avoided costs stemming from reduced CO2 emissions and fuel use as a result of the shift from road to rail transport.
Overall, the project will increase trade efficiency and connectivity between Kazakhstan and Uzbekistan by reducing supply bottlenecks at the border and speeding up administrative processes, both of which will facilitate larger volumes being traded and lower economic losses. As a result of increased trade efficiency, businesses and farmers, including many women, will have improved access to markets.
The project demonstrates that advancing sustainable infrastructure investment options in the transport and buildings sector requires identifying, assessing and valuing these societal benefits and avoided costs so that city planners and project developers can advocate for their implementation and financing.
Source: (IISD, 2024[60]).
Developing infrastructure responding to criteria covering all dimensions across the sustainability spectrum often requires adopting specific tools addressing topics that are traditionally overlooked. Due to the emerging nature of these priorities and policy tools supporting them, effectively mainstreaming climate resilience and gender equality into infrastructure planning generally requires targeted capacity‑building for policymakers, grounded in established approaches, standards, and international best practices. The next two sub-sections explore the potential for better integrating resilience and gender into infrastructure development in Kazakhstan, drawing on OECD standards, tools and best practices.
2.2.5. Mainstreaming resilience into infrastructure development
Kazakhstan faces escalating climate hazards that threaten key sectors and the broader economy. As temperatures rise, extreme weather events, including droughts and floods, are occurring with greater frequency and severity, and the trend is expected to continue. Scenario analysis projects that, under a high-emissions pathway, real GDP could decline by up to 6.5 % by 2050 compared to a no-climate-change baseline, with agriculture and construction among the hardest-hit sectors. Agriculture suffers from reduced crop yields and livestock productivity during droughts and heatwaves, while floods cause major damage to roads, bridges, energy networks and buildings. Agricultural losses could range from KZT 7 billion to KZT 300 billion on average depending on the severity of the drought, while flood-related damage could reach up to KZT 51 billion per event. Droughts threaten energy security through lower hydropower output and reduced cooling capacity at thermal power plants, while heatwaves increase electricity demand for cooling (GIZ, 2025[61]).
Given these direct impacts on infrastructure, Kazakhstan’s planning and evaluation of infrastructure projects need to anticipate rather than react to increasing climate risks. In doing so, the country can better develop resilient infrastructure designed to withstand and recover from disasters and disruptions. Kazakhstan can achieve this by integrating climate hazard mapping, vulnerability assessments and long-term scenario analysis into project design, selection and management processes. This would allow policymakers to identify priority investments, evaluate trade-offs and deliver assets capable of withstanding both slow-onset and acute climate hazards.
Integrating climate risks into the financing of infrastructure is also essential. Resilience can be made a key component of public procurement frameworks, PPP criteria and infrastructure financing standards, mainstreaming climate resilience into infrastructure delivery. International experience shows that requiring climate risk assessments, adaptation measures and lifecycle cost analyses in tender documents, concession agreements and PPP contracts, helps embed resilience considerations in project planning and implementation. Such provisions not only improve the long-term reliability and durability of assets but also enhance investor confidence by reducing exposure to physical climate risks and potential cost overruns. In Kazakhstan, although the policy space for RBC and sustainable infrastructure investment is expanding, the systematic inclusion of climate resilience criteria in procurement, PPP frameworks and financing standards is still emerging.
By embedding resilience into infrastructure governance and investment frameworks, Kazakhstan can reduce the costs of climate impacts and ensure that its infrastructure systems remain reliable, efficient and sustainable in a changing climate. The government’s development of a National Adaptation Plan, supported by the UNDP and the Green Climate Fund, which aims to embed climate resilience in national, regional and sectoral planning frameworks, is a positive step (UNDP, 2024[62]). Under SIPA, the OECD developed country-level analysis and policy advice on mainstreaming resilience in Indonesia, Mongolia and the Philippines. Box 2.7 summarises SIPA experience from Indonesia and the Philippines that could provide a useful guide for Kazakhstan’s actions on mainstreaming climate resilience.
Mainstreaming climate resilience into infrastructure planning is essential to protect long-lived assets, avoid costly disruptions, and ensure sustainable development. However, many countries still lack the institutional frameworks, planning tools, and technical capacity needed to systematically address climate risks across infrastructure lifecycles.
OECD analyses in Indonesia and the Philippines, conducted under SIPA, highlight that while climate risks are growing, resilience remains weakly integrated into project planning, appraisal and investment decisions. Co-ordination across institutions is limited, the use of climate risk data is inconsistent and nature-based solutions remain underutilised.
To address these gaps, governments could consider the following policy directions:
Develop and apply resilience standards and certification for infrastructure planning and investment.
Embed climate risk criteria into project appraisal and approval processes.
Strengthen cross-ministerial co-ordination and integrate resilience into national development and infrastructure strategies.
Scale up the use of nature-based solutions, particularly in vulnerable urban, coastal and river basin areas.
Build capacity for strategic foresight and risk-informed planning through training, tools and pilot applications.
By embedding resilience into infrastructure governance and decision-making, countries can better safeguard infrastructure systems against a changing climate while maximising long-term value for people and the environment.
Source: (OECD, 2024[63]; OECD, 2024[64]).
2.2.6. Mainstreaming gender in national strategic planning frameworks
Applying a gender lens to infrastructure development is, in Kazakhstan as elsewhere, a critical pillar of gender equality. Infrastructure plays a foundational role in enabling equitable access to essential public services, including energy, transport, water, and digital connectivity. Beyond its technical function, it is a powerful driver of inclusive economic growth and social justice, shaping opportunities in key areas such as health, education, and employment.
Kazakhstan is a regional leader in progress on gender equality. It was one of the first countries of the region having established a national institution in charge of gender equality promotion, included gender equality in its Constitution, and having ratified several international conventions (UN Women, 2024[65]). The country ranked 92nd out of 148 countries in the Global Gender Gap Index 2025, down from the 76th place out of 146 in 2024 (World Economic Forum, 2025[66]).
Kazakhstan possesses a strong legal and strategic framework for gender equality, anchored in its Constitution and the Law on State Guarantees of Equal Rights and Equal Opportunities for Men and Women (Government of Kazakhstan, 2009[67]). This is supported by the national Concept of Family and Gender Policy which aims at achieving parity of rights, benefits, duties and opportunities for women and men across all spheres of social life (Government of Kazakhstan, 2016[68]). The Concept is operationalised through a detailed Action Plan comprising 48 measures, including engaging private, corporate and quasi-government sectors in gender equality programs, and monitoring women’s representation in leadership positions across government and corporate sectors, targeting 30% representation by 2030 (Government of Kazakhstan, 2016[68]). Kazakhstan has also ratified international agreements such as the UN Convention on the Elimination of All Forms of Discrimination Against Women (United Nations, 1979[69]), and endorsed the Beijing Declaration and Platform for Action (United Nations, 1995[70]), committing to adequately financing gender equality initiatives, ensuring strong accountability mechanisms, and utilising comprehensive gender data aligned with Sustainable Development Goals (SDGs). Most recently, Kazakhstan has strengthened its commitment to gender equality through its NDC 3.0, which now includes a specific focus on gender equality and aims to mainstream gender considerations in climate-related laws, strategies, and investment plans (Government of Kazakhstan, 2025[6]).
Despite broader national commitments to gender equality, there remains significant scope to strengthen the integration of gender considerations into sustainable infrastructure plans and strategies in Kazakhstan. While high-level documents such as the Strategic Development Plan acknowledge the goal of achieving equal rights and opportunities for men and women (Priority 6) (Government of Kazakhstan, 2024[48]), this commitment has yet to be translated systematically into infrastructure planning frameworks. Key supporting documents, such as the NIP (Government of Kazakhstan, 2024[1]) and Concept for transport (Government of Kazakhstan, 2022[44]), prioritise economic viability, national competitiveness and job creation, and include detailed project pipelines – 204 projects across energy, transport, water and digital infrastructure – but omit gender considerations from project selection criteria, performance frameworks and outcome indicators. Strengthening the use of gender-sensitive targets, gender-disaggregated data and systematic gender analysis across policy instruments would help assess how infrastructure investments affect women and men differently, and support more inclusive participation in infrastructure-related sectors. Currently, the application of gender analysis across the infrastructure project cycle remains limited and is frequently driven by external donor-funded projects and multilateral development banks rather than robust national standards.2
Kazakhstan should prioritise systematically mainstreaming gender considerations in infrastructure planning frameworks and strengthen institutional capacity. This involves developing nationally endorsed guidelines and technical tools for line ministries and regional authorities to ensure gender-differentiated impacts are considered across the entire infrastructure project lifecycle. Efforts should be co-ordinated to jointly analyse existing gender gaps, plan targeted interventions and embed gender components, criteria and responsive design approaches directly into infrastructure policies, project pipelines and investment strategies. Furthermore, institutional efforts are needed to improve the collection, availability and use of gender-disaggregated data to support evidence-based planning, and align gender equality outcomes with broader national economic, environment and development objectives.3
To ensure equitable and sustainable infrastructure outcomes, Kazakhstan could strengthen gender-responsive monitoring, evaluation and accountability of infrastructure policies and projects. This could involve broader and more structured engagement of stakeholders, including civil society, the private sector and academia, in the monitoring and evaluation processes to enhance transparency and support evidence-based policymaking. Expanding the participation of women and gender-oriented organisations in public consultations and supervisory bodies could further enhance transparency and strengthen public oversight. This requires embedding measurable gender targets in strategic plans and sectoral programs, mandating gender-disaggregated data in all monitoring and reporting processes, and developing institutional mechanisms for regular gender-sensitive audits and public disclosure, leveraging frameworks such as ESG reporting. Monitoring and evaluation systems should assess the differentiated impacts of infrastructure investments on women and men. In parallel, women’s meaningful participation in public councils, stakeholder consultations and participatory planning processes could be further strengthened through minimum targets or other mechanisms that help ensure substantive influence over decisions across the infrastructure investment cycle.4
Kazakhstan is taking action to enact policies aimed at enhancing investments into sustainable energy, transport and industry, including energy tariff reform, ETS reform, e-mobility measures in cities, and efforts to raise businesses’ awareness and efforts towards energy efficiency and clean technology development and adoption. Moving forward, Kazakhstan could consider the following priorities:
Removing harmful fossil fuel subsidies while advancing energy tariff reforms to incentivise investments in renewable energy. Given the socially and politically sensitive nature of FFS, the government should plan and communicate adequately, involving stakeholders, and devising measures for mitigating reform impact on the most vulnerable households, for example through direct cash transfers to beneficiaries (rather than utilities companies), based on income or consumption levels.
Reforming its Emissions Trading Scheme (ETS) to incentivise investments in energy efficiency and clean energy infrastructure. The most critical and forward step in the short-term will be to establish a carbon price floor, along with a publicly disclosed 5-year carbon price trajectory. For the mid- to long-term, a phased transition to auction of allowances will enable enhanced carbon pricing and ensure the transparency and competitiveness of the mechanism. Earmarking revenues from the ETS for climate action and integrating offset mechanisms will further strengthen the instrument, making it fit for future ambitious climate action and sustainable infrastructure development.
Mainstreaming sustainability considerations in the connectivity agenda: (i) enhance connectivity through the expansion of multimodal networks, modernisation of rail infrastructure, and advancement of digital trade solutions for seamless regional and global integration, (ii) decarbonise transport infrastructure, through the adoption of electrified rail for freight transport, and (iii) increase resilience, through investments in ports and waterways to address Caspian Sea level decline (ITF, 2025[71]).
Developing a comprehensive plan to drive industrial decarbonisation with a specific emphasis on the hard-to-abate mining and metallurgical industry. This plan should include measures to align industrial policy with decarbonisation targets through a phase approach combining the adoption of innovative low-carbon solutions and use of bridging solutions. It should also seek to equip businesses with the knowledge and tools for reducing the carbon footprint of their products and operations, including through robust MRV systems. It should finally use a mix of climate and environmental policies as well as financing solutions to discourage GHG emission and support and enable industrial firm investments in decarbonisation.
While a robust national institutional and strategic planning framework forms the essential foundation for advancing sustainable infrastructure, successful implementation requires that sector-specific frameworks align with overarching sustainability objectives to ensure coherent and effective implementation across the economy. These sectoral frameworks, encompassing core policies, regulations and market standards, are pivotal because they profoundly influence private investor decision-making. They establish the necessary obligations and shape the commercial conditions under which viable business models for sectoral projects can emerge. This section analyses the current framework conditions in Kazakhstan for sustainable investment across the energy, transport, and industrial sectors.
2.3.1. Framework conditions for sustainable energy infrastructure development
Kazakhstan has made significant strides in deploying renewable energy, particularly solar and wind power. Electricity from renewables reached 7% of the total energy mix in 2025, up from 6.4% in 2024 (Astana Times, 2026[72]). As of early 2026, 3.5 GW of installed renewable energy capacity is in operation. Auctions for 6.7 GW of capacity have been approved for the 2024-2027 period, and the Action Plan for the Development of the Electric Power Industry to 2035 lays out a roadmap to commission at least 8.4 GW of renewable energy by 2035 (Omigrazy, 2025[73]).
Nevertheless, the integration of renewables faces technical and regulatory challenges. Kazakhstan’s electricity grid, originally designed around large, centralised coal plants, has limited capacity for flexible generation and lacks modern balancing and forecasting systems. The uneven geographic distribution of renewable resources and weak inter-regional transmission infrastructure further constrain deployment (IEA, 2022[74]). According to the International Energy Agency (IEA), grid modernisation and investment in energy storage will be essential to accommodate higher shares of variable renewable energy (IEA, 2022[74]). Despite the push for renewables, and recent scale-up of renewable energy, a University of Central Asia analysis indicates that energy investments aimed at decarbonisation continue to favour fossil fuel-based projects over renewables, specifically coal expansion and coal-to-gas switching projects. Although the latter provide immediate greenhouse gas reductions, they risk locking in high-emission infrastructure for the future (Figure 2.9). Their environmental performance, furthermore, hinge on the incorporation of methane leakage mitigation measures and technological design allowing for the integration of low-carbon technologies, such as CCUS. Finally, coal expansion, often justified by near‑term energy security considerations, poses significant risks of emissions lock‑in inconsistent with low‑carbon pathways, as well as heightened stranded asset risks over time.
USD million, 2010-2023
Source: Author’s elaboration based on Dosmagenbetov, A. (2024), “Decarbonisation of energy in Central Asia” database, University of Central Asia.
OECD work has consistently shown that carbon pricing measures is essential for stimulating climate action.5 Carbon prices and their evolution are essential hypotheses underpinning decarbonisation scenarios and modelling under LT-LEDS. Furthermore, assumptions regarding carbon price levels and trajectories are key hypotheses underpinning deep decarbonisation scenarios and modelling for long-term strategies, such as the suggested trajectories by the IEA for emerging markets (IEA, 2021[75]). For emerging and developing economies with limited public budgets, carbon pricing also plays a crucial role in lowering the costs and enhancing the returns of sustainable policy interventions. Kazakhstan’s effective carbon pricing framework includes subsidies to fossil fuels, fuel excise taxes, and its ETS, which the country is looking to reform (OECD, 2024[76]). Until now, the dialogue on carbon pricing in Kazakhstan has focused on fossil fuel subsidy and ETS reform.
Reforming fossil-fuel subsidies
In Kazakhstan, fossil-fuel subsidies (FFS) represent a significant market distortion within the energy sector. From 2010 to 2023, Kazakhstan’s annual direct and indirect FFS averaged 5.8% of GDP, with the most recent spike in 2022 exceeding USD 15 billion (Figure 2.10). While this increase may be partially attributed to fluctuations in energy prices during the COVID-19 crisis and the Russian invasion of Ukraine, fossil-fuel subsidies remain significant and are among the highest in the region which suggests that Kazakhstan has a long way to go in its energy sector reforms (IMF, 2025[77]). Analysis from the UN Partnership for Action on Green Economy finds that the increase in FFS is driven primarily by price support mechanisms rather than traditional budget spending. In 2019, induced transfers, arising when regulated energy prices are set below the real cost of supply, amounted to approximately USD 8.7 billion, whereas direct budgetary transfers accounted for only USD 456 million (UN PAGE, 2022[78]).
Fossil fuels subsidies in Kazakhstan by product type in million USD, 2010-2023
Source: (IEA, 2024[79]).
Reforming Kazakhstan's substantial FFS is a critical fiscal, environment and developmental opportunity to stimulate investment in infrastructure that is sustainable. The elimination of FFS could raise GDP by 2.2 percent and cut GHG emissions by 16.8 percent by 2030 (IMF, 2025[77]). In addition, the gradual removal of FFS can directly contribute to achieving six of the 17 Sustainable Development Goals (SDGs) and free up significant financial resources. The high share of FFS as a part of GDP suggests that a gradual removal of FFS can provide substantial financial resources to support the green transition in Kazakhstan, in an equitable way, through public incentives and investment in renewables, targeted social programs as well as potential reduction in other distortionary taxes (see section 2.2.3 for a deeper dive into the just transition) (IMF, 2023[80]).
Kazakhstan is pursuing a comprehensive energy subsidy reform. The reform is designed to tackle the financial burden of FFS and accelerate the energy transition by incentivising investment in sustainable energy infrastructure (IMF, 2025[77]). Central to this reform, Kazakhstan approved a new, incentive-based tariff regulation methodology for the electricity and heating sectors in late 2023 (IMF, 2023[80]). This is part of the "Tariff in Exchange for Investment" Program for 2023–2029 which was introduced as part of broader efforts to modernise the aging utility infrastructure (Government of Kazakhstan, 2023[81]). These reforms are expected to raise utility cost recovery from around 85% to 100% by 2026, establishing a more financially sustainable basis for energy providers and reducing the scale of induced transfers that previously dominated Kazakhstan’s subsidy landscape. Cost-reflective tariffs are also expected to create more predictable revenue streams, helping to attract private and foreign investment into energy infrastructure, including renewable energy and grid modernisation (IMF, 2025[77]; World Bank Group, 2024[82]).
Further opportunities exist to strengthen current subsidy reform, amplify its fiscal and economic benefits and promote sustainable infrastructure. Underpriced electricity and heat tariffs are a particularly significant component of implicit subsidies and are linked to chronic underinvestment in ageing infrastructure. Given the significant amount of direct and indirect subsidies for the production and consumption of fossil fuels in Kazakhstan, reforming these mechanisms of state support should be considered in the first place, noting that such reforms could free up an estimated USD 403 million (154 billion KZT) annually at the national and local budget level. In addition, phasing out subsidies for partial cost compensation to energy producers could yield additional savings of USD 49 million (19 billion KZT) per year. Complementary measures include rationalising tax expenditures – through a careful evaluation of the effectiveness of all available tax benefits, particularly in mineral extraction and excise regimes – to increase fiscal transparency and reduce distortions, as well as the gradual liberalisation of energy prices toward market levels to improve revenue collection and curb future induced transfers. (UN PAGE, 2022[78])
Managing a “pro-poor” energy subsidy reform is a critical challenge as universal subsidies are fiscally burdensome and inefficient in reaching the poor (IMF, 2013[83]). Under SIPA, the IISD workshop on best practices for supporting low-income groups while implementing FFS reform, emphasises that getting prices right is the essential first step (OECD, 2023[84]; IISD, 2013[85]). However, the method of implementation is key. A phased approach, like the two-year, incremental monthly price hikes for diesel in India, has proven more sustainable than a "big bang" reform, successfully navigating political cycles and reducing vulnerability for high-risk consumer groups such as farmers and the trucking industry (IISD, 2015[86]). This suggests that sustained political will and a gradual strategy are vital for successful price deregulation. These considerations form a core component of a broader just transition policy package, discussed in section 2.2.3.
To ensure a just transition and mitigate the impact on vulnerable populations, reforms must transition from inefficient universal subsidies to better-targeted mechanisms. Options for targeting include direct cash transfers to beneficiaries instead of utilities, or using subsidy schemes based on income and gender, as well as voluntary opt-out/opt-in schemes and volumetric consumption limits. At the same time, the political economy of subsidy reform must be acknowledged, as energy price increase can trigger significant social and political tensions if not carefully managed. Effective communication is needed to build public consensus by raising awareness of existing subsidies and demonstrating how the reforms will benefit the most vulnerable (IISD, 2013[85]). The FFS reform can also be strategically packaged with broader climate and development objectives, such as coal phase-out and Just Transition plans, potentially funding these initiatives through revenues generated from reformed energy tariffs or Emissions Trading System (ETS) (OECD, 2023[84]).
Reforming Kazakhstan’s Emissions Trading System
Emissions Trading Systems (ETS) are a key tool in global carbon pricing strategies, providing a market-based approach to managing infrastructure GHG emissions. Kazakhstan was the first country of the former Soviet Union to implement an ETS in 2013, marking a significant step in its carbon pricing strategy (European Union, IEA, 2022[87]). Modelled closely after the European Union’s ETS (EU ETS), the first international system established in 2005, Kazakhstan’s ETS operates on a “cap-and-trade” principle. Key design features, such as the allocation of allowances and the processes for measurement, reporting, and verification, are largely based on the EU ETS framework (Carbon Limits and Thomson Reuters Point Carbon, 2013[88]).
Kazakhstan’s ETS covers nearly 60% of national GHG generated by energy use and includes more than 200 industrial facilities from major sectors such as oil and gas, mining, power generation, metallurgy, and chemicals (Figure 2.11). According to Article 291 of the Environmental Code, carbon credit units for installations that receive free allowances are determined by benchmarks, which specify allowable emissions per unit of production (Kazenergy, 2023[52]). The Ministry of Ecology and Natural Resources (MENR) manages the allocation of these free quotas. Companies that exceed their allocated allowances can purchase additional credits from others on the Commodity Exchange (ICAP, 2023[89]).
Percentage share of CO2 emissions from energy use covered by an emissions trading system
Note: The share presented for Germany separately from the rest of EU ETS countries refers to the share of CO2 emissions from energy use covered by its national ETS (nationaler Emissionshandelssystem, or nEHS). The share presented for EU ETS countries is the total share over all EU ETS countries covered in this report. The EU ETS applies to all EU countries as well as Iceland, Liechtenstein and Norway. The ECR database in this report does not cover Bulgaria, Croatia, Liechtenstein, Malta and Romania. Mexico's pilot ETS is not presented here because prices were null in 2021. Canada, China, Japan and the United States each have sub-national ETSs, and the country-level share of emissions covered by these systems (along with the national ETS for China) are presented here.
Source: (OECD, 2023[90]).
One major issue is that carbon prices in Kazakhstan remain low. In 2024, the average carbon price on the secondary market was USD 0.74 (KZT 470) per tonne of CO2 (ICAP, 2025[91]), far below the EU ETS price of EUR 65.23 per tonne in 2024 (ICAP, 2025[92]). This disparity is largely driven by the oversupply of allowances and the widespread practice for free quotas, particularly for coal-fired power plants. Unlike the EU system, which has undergone significant reforms to increase cap stringency and strengthen the market (European Commission, 2024[93]), Kazakhstan’s ETS has remained largely unchanged (European Union, IEA, 2022[87]), thus failing to create the necessary economic rationale to incentivise emissions trading, drive investment in cleaner technologies or achieve meaningful reduction in GHG emissions (AIFC, 2025[94]).
ETS reform is increasingly urgent as Kazakhstan advances its Carbon Neutrality Strategy to 2060 and faces the EU Carbon Border Adjustment Mechanism (CBAM). The CBAM will gradually impose carbon costs on imports to the EU, pressuring Kazakhstan’s emissions-intensive and trade-exposed (EITE) industries to decarbonise. Though oil exports are currently excluded, coverage is expected to expand.
Aligning Kazakhstan’s ETS with international standards will not only strengthen its climate credibility but also safeguard the competitiveness of its exports. The core reform priorities include phasing out free allowances and introducing auctioning, and complementary policies, such as market stability measures and carbon revenue utilisation, which can mitigate the negative impacts of the phase-out by supporting low-carbon infrastructure development and social protections. This balanced approach will help ensure that Kazakhstan’s ETS transition meets both environmental and social equity objectives (Box 2.9). To take immediate action and advance this agenda, Kazakhstan could consider announcing publicly the introduction of a carbon price floor, along with a 5-to-10-year carbon price trajectory. This would help manage market participants’ expectations, prior to a full-scale implementation of the ETS reform and launch of an auction mechanism.
Under SIPA, the OECD provided recommendations to Kazakhstan to support the plan of reform for its Emission Trading Scheme (ETS) and enhance its effectiveness in curbing GHG emissions from infrastructure. The work highlights three key avenues for reform:
Transitioning from free allowances to auctioning. Free allowances undermine price signals and reduce incentives for companies to invest in low-carbon technologies, limiting the ETS’s effectiveness in driving decarbonisation. A gradual, transparent phase-out, paired with targeted support for vulnerable sectors and clear timelines, will strengthen carbon pricing, enhance market efficiency, and align Kazakhstan’s ETS with international best practices, ensuring competitiveness and credibility in global climate action.
Market stability measures are essential tools designed to mitigate carbon price volatility by stabilising prices (OECD, 2023[90]). Stable prices enable firms and investors to plan more effectively, fostering consistent progress toward achieving net-zero emissions. Several factors influence price stability within an ETS, including: (i) the design and structure of the ETS; (ii) the accuracy of carbon measurement; (iii) the allocation of allowances; (iv) system governance and stability oversight; and (v) the availability and transparency of emission data collection (OECD, 2023[90]). ETSs globally apply both quantity-based and price-based mechanisms to manage volatility. Kazakhstan can take into account international experience shared by the OECD through SIPA, such as the EU ETS’s Market Stability Reserve, UK’s Cost Containment Mechanism, and the carbon price levy used in the Netherlands, as it develops its market stability measures.
Kazakhstan would benefit from implementing a price floor at a relatively low level, planning for gradual increase. By setting a minimum carbon price aligned with the EU ETS, Kazakhstan can set a minimum level for carbon price under its ETS and increase carbon revenues domestically. This strategy not only helps stabilise domestic carbon prices but also aligns Kazakhstan’s policies with EU standards, supporting local revenue generation and compliance. Communicating a 5- to 10-year carbon trajectory would help build awareness and support from businesses and stakeholders, helping them to anticipate the effects of carbon price increases and integrating those into their business models.
Earmarking carbon revenues for climate initiatives. The revenues raised from carbon pricing should be strategically directed to realise climate objectives, in close alignment with the Low Carbon Strategy, Nationally Determined Contributions (NDC) plan and Country Strategy for (2022-2027). The funds should support investments in clean energy and energy efficiency, adaptation measures and climate-resilient infrastructure, and social protection for low-income households and vulnerable workers.
Integrating carbon offset mechanisms within the ETS can expand compliance flexibility and unlock emission reduction opportunities beyond directly regulated sectors (ICAP, 2023[95]), while supporting participation in international carbon markets under Article 6 of the Paris Agreement. To maximise this potential, carbon revenues generated through allowance auctioning should be strategically reinvested to support offset projects and complementary climate initiatives, creating a virtuous cycle between ETS reform, revenue use, and offset development. To ensure public acceptance and long-term stability, Kazakhstan should adopt a multi-objective approach to revenue use (IMF, 2021[96]) and balance climate investment with social protection (Institute for Climate Economics, 2024[97]). Effective governance and co-ordination among key institutions, including the Ministry of Finance and legislative bodies, will be essential for the efficient and transparent allocation of carbon revenues, reinforcing trust and policy coherence (Institute for Climate Economics, 2024[97]).
Source: OECD (2024), Kazakhstan ETS reform, SIPA policy note.
The strengthening of Kazakhstan’s MRV system will be critical for effective ETS reform and for voluntary carbon market development in support of sustainable infrastructure scale-up. Any carbon market, whether it is mandatory or voluntary, requires that an effective carbon emission monitoring, reporting and verification (MRV) system is in place to document and track GHG emissions from energy, transport and industry installations. These systems enable high-quality and high-integrity carbon market mechanisms. Kazakhstan, with the support of the OECD, has been working to strengthen its MRV system based on the implementation of ISO standards for carbon management, targeting energy and emissions-intensive industrial companies. This experience, in addition to directly strengthening Kazakhstan’s capacity, can also be a stepping stone for regional peer learning and co-operation on voluntary carbon markets, as Kazakhstan is developing an institutional framework for its participation in international carbon markets under Article 6 of the Paris Agreement. A list of eligible mitigation activities is under preparation, and includes infrastructure sectors such as energy, transport, waste and industry. This development could play a key role in sustainable infrastructure development and help achieve NDC goals by enhancing access to international climate finance and generating carbon credit revenue.
2.3.2. Framework conditions for sustainable transport infrastructure development
Kazakhstan’s transport and logistics infrastructure sector is a critical contributor to both national export-led ambitions and climate outcomes. The sector contributed 6.2% of GDP in 2022 and is projected to reach 9% by 2025 (AIFC, 2024[30]). Connectivity is at the core of Kazakhstan’s economic development agenda. The country aims to leverage its strategic geographic position and regional economic influence to become a key hub in the multi-modal Trans-Caspian Transport Corridor (TCTC), which links China to Europe via Central Asia and has experienced growing freight volumes since Russia’s full-scale invasion of Ukraine in 2022 (OECD, 2025[98]).
Transport, however, is a major contributor to Kazakhstan’s greenhouse gas emissions. It accounts for 10.5% of the national total in 2022, with road transport responsible for the largest share (Figure 2.12). Emissions from the sector have been rising both in absolute terms and relative to other energy-related sources. Without decisive policy action, World Bank analysis projects this upward trajectory will persist (World Bank Group, 2023[4]) .
Total GHG emissions in kilotonne (kt) CO2 equivalent from transport by year and sub-subsector, 1990 to 2023
The regional connectivity agenda is a key driver of transport and logistics infrastructure investment, focused on expanding networks and enhancing competitiveness. Despite USD 35 billion invested over the past 15 years, transport infrastructure remains insufficient to support competitiveness, with the country ranking 79th out of 139 in the 2023 World Bank Logistics Performance Index (AIFC, 2024[30]). Long transport distances, harsh climate conditions and aging infrastructure drive up costs and constrain efficiency (ITF, 2025[71]). Persistent delays, capacity constraints, and fragmented modal links raise trade costs and limit Kazakhstan’s role in the Middle Corridor (OECD, 2023[31]).
To address these challenges, the government adopted the Transport and Logistics Development Concept to 2030, prioritising multimodal corridors, cross-border hubs, fleet modernisation, and removal of non-physical barriers, alongside targets such as 35 million tonnes of transit by 2030 (OECD, 2024[32]; Astana Times, 2023[99]; Astana International Financial Centre, 2024[100]). These efforts are reinforced by national programmes like Nurly Zhol, the Kazakhstan 2050 Strategy, and the National Infrastructure Plan 2024–2029. Major plans include rail, road, maritime, and air freight projects aimed at boosting capacity, reducing transit times, and strengthening multimodal connectivity by 2030, including new rail links to China and Uzbekistan, 9,000 km of highway upgrades, port dredging and terminal expansions, and cargo terminal construction (ITF, 2025[71]). Moreover, projects to advance the TCTC are raising strong interest from investors, particularly from China and the EU.
There is significant scope to better integrate regional connectivity objectives with transport and trade sustainability. Despite initial plans to decarbonise the transport sector, the connectivity and climate agendas remain disconnected. Transport decarbonisation targets and policy measures are mostly contained in climate and urban mobility plans. There is currently no single national policy framework that centrally co-ordinates decarbonisation across all transport modes or assigns clear regulatory responsibility for environmentally friendly mobility within the government, and national plans addressing regional connectivity projects make little to no reference to climate goals, although measures to enhance efficiency and competitiveness, such as rail electrification and digitalisation, have the potential to yield positive climate outcomes. SIPA work has paved the way towards a better integration of connectivity, decarbonisation and sustainability issues, as described later in this sub-section. From a governance perspective, assigning the Ministry of Transport an explicit mandate for green and low‑carbon transport development could ensure a unified approach and accelerate the implementation of a low-carbon transport infrastructure agenda (UNCTAD, 2025[101]).
Kazakhstan’s growing exposure to extreme climate events has direct impacts on existing transport infrastructure, with annual losses incurred by hazards estimated at USD 32 million in 2023, more than 60% of which concerning damages to railways and 35% to roads (Asian Transport Outlook, 2024[102]). Recent OECD work highlights the opportunity to adopt adaptation measures and increase the climate resilience of road and rail infrastructure, including the building of dams and drainage structure, as well as use of higher performance materials (OECD, 2025[98]). Mitigating and integrating risks stemming from the decreasing level of the Caspian Sea will be critical as the TCTC agenda unfolds (OECD, 2025[98]). Currently, transport resilience measures envisaged by the government, such as those outlined in the NDC 3.0, tend to focus on disaster risk management. Kazakhstan could consider the lessons from OECD work led in Asian countries under SIPA on the mainstreaming of climate resilience into transport infrastructure planning and enhance its approach through increased capacity and resources for climate risk assessments, resilience standards and regulations, and resilience financing mechanisms.
Integrating transport connectivity with decarbonisation and climate resilience can create enabling conditions for accelerating investments in transport and logistics that align with climate and sustainable development objectives. Under SIPA, ITF undertook an extensive review of Central Asian and Mongolian large-scale freight transport infrastructure projects and policies, modelling their impact on connectivity, sustainability and resilience (Box 2.10). The report highlights opportunities for Kazakhstan to enhance (i) connectivity, through the expansion of multimodal networks, modernisation of rail infrastructure, and advancement of digital trade solutions for seamless regional and global integration, (ii) decarbonisation, through the adoption of electrified rail for freight transport, and (iii) resilience, through investments in ports and waterways to address Caspian Sea level decline (ITF, 2025[71]). The analysis yields a series of recommendations for Kazakhstan, focusing on three core areas: (1) Expanding multimodal transport and logistics networks; (2) Modernising rail infrastructure and digitalising operations; and (3) Strengthening decarbonisation and climate adaptation (ITF, 2025[71]).
Kazakhstan is a pivotal transport hub for Central Asia, connecting China, Europe and the South Caucasus through rapidly expanding trade and transit corridors. Growing freight volumes and major infrastructure investments – particularly along the Trans-Caspian route – present strong opportunities to boost regional integration and competitiveness. Yet Kazakhstan’s freight system remains carbon-intensive, infrastructure-dependent and exposed to climate and logistical disruptions. Strengthening multimodal connectivity and modernising freight operations will be key to improving efficiency, cutting emissions and enhancing resilience.
A more integrated approach can unlock synergies across connectivity, sustainability and resilience, by combining corridor expansion with rail electrification, digital logistics, modal shift and stronger climate risk management (see chapter 1, section 1.4.2). Modelling shows that the scenario combining connectivity and decarbonisation outperforms the connectivity-only scenario in Kazakhstan. Disruption costs under the combined scenario amount to USD 29 per tonne, compared with USD 40 per tonne under the connectivity-only scenario. This suggests that combining connectivity upgrades with efficiency measures, such as high-capacity vehicles, digital co-ordination, and reduced border delays, can make the system more resilient by creating more flexible routing options and lower-cost alternatives during disruptions. The report from ITF identifies several priority policy directions for Kazakhstan:
Expand multimodal corridors. Scale up investment in the Trans-Caspian Transport Corridor and develop a national logistics strategy to integrate rail, road and air networks across major hubs.
Modernise ports and border crossings. Upgrade Aktau and Kuryk ports, expand dry ports with automated systems, and introduce digital customs and cargo monitoring at key crossings.
Accelerate rail electrification and digitalisation. Prioritise electrification and double-tracking on high-use routes, strengthen competition among operators, and deploy smart logistics under the Digital Trade Corridor initiative.
Integrate decarbonisation and resilience. Invest in low-emission freight technologies, adapt infrastructure to heat and flooding risks, and address declining Caspian water levels through targeted port and waterway upgrades. Upgrading dry port infrastructure can address physical vulnerabilities and improve overall resilience of the transport system.
Improve logistics efficiency. Reduce empty runs, consolidate cargo at key hubs, and embed climate-smart, energy-efficient practices across logistics chains.
Source: (ITF, 2025[71]).
Beyond regional and international corridors, strengthening local connectivity within Kazakhstan could complement efforts to improve both efficiency and sustainability. While transit corridors have taken priority, local connectivity lags behind (ITF, 2025[71]). Enhancing domestic transport linkages between production centres, industrial hubs and consumption markets can help reduce transport distances, logistics costs and associated emissions. More spatially efficient freight systems and better-integrated domestic networks can also reduce unnecessary freight movements and support greener supply chains (ITF, 2019[103]). Integrating local connectivity considerations into national transport planning can therefore help decouple growing freight activity from emissions while supporting more balanced regional development.
While Kazakhstan has introduced measures to support cleaner urban mobility, efforts remain fragmented and are not embedded within a comprehensive urban mobility framework. Current initiatives focus on modernising urban public transport through the deployment of low-emission vehicles, such as electric buses and trams, supported by incentives, charging infrastructure expansion and selected urban planning measures aimed at reducing transport emissions (Report News Agency, 2024[104]). The newly adopted NDC 3.0 also outlines a series of measures to boost EV and cleaner fuels adoption, and switch to new, low-carbon urban mobilities. However, urban transport decarbonisation is not yet supported by coherent, city-level mobility plans with clear targets, governance structures and financing mechanisms. The absence of integrated planning across land use, transport and environmental policy limits the effectiveness of current interventions and constrains the shift towards low-emission, multimodal urban systems (World Bank Group, 2023[4]).
Kazakhstan could build on regional experiences to develop a more integrated approach to urban mobility. Work conducted by the ITF under SIPA on urban mobility in Uzbekistan (ITF, 2023[105]) and Ulaanbaatar (ITF, 2023[106]) highlights the importance of combining vehicle electrification with a broader shift towards sustainable modes, including public transport, walking, cycling and shared mobility. Establishing metropolitan transport authorities in major cities, adopting Sustainable Urban Mobility Plans (SUMPs), and integrating informal and private mobility services into a co-ordinated system could help improve accessibility, reduce emissions and enhance system efficiency. Expanding mass transit solutions, improving service quality and coverage, and promoting active and shared mobility options can help reduce reliance on private vehicles. At the same time, digital solutions, such as integrated ticketing and real-time data, can enhance system performance and user experience. Embedding climate objectives into urban transport planning will be essential to ensure that growing urban mobility demand is met in a way that supports Kazakhstan’s broader decarbonisation and sustainable development goals.
2.3.3. Framework conditions for sustainable industrial infrastructure development
Kazakhstan’s industrial sector is both economically significant and emissions intensive. Industry (including the construction sector) accounted for 31.4% of GDP in 2024, compared to the OECD average of 21.2% (World Bank Group, 2025[107]), and is the second-largest final energy consumer, using 29.3% of final energy (Bureau of National Statistics, 2024[108]). In 2023, the industrial sector accounted for 11.7% of total energy-related CO2 emissions in Kazakhstan (IEA, 2025[14]). The metallurgical sub-sector, in particular, was responsible for 65.2% of industrial CO2 emissions in the period 1990-2023 (Figure 2.13). Without significant progress in power sector decarbonisation, the ability of the country to use electrification as a vector of decarbonisation will remain limited (OECD and Qaztrade, 2024[109]).
Aligning with national decarbonisation goals and integration of climate considerations in trade regulations and developments will require a transformation of heavy industries underpinned by investments in process and energy efficiency as well as cleaner technologies. The NDC 3.0 recognises the risk of fast growing GHG emissions from industrial expansion lest decarbonising measures are undertaken (Government of Kazakhstan, 2025[110]). With its small domestic market, Kazakhstan’s economy relies heavily on external exports, which represent 62% of GDP in 2023 (World Bank Group, 2025[111]).
The carbon intensity of Kazakhstan’s industrial exports and the economy’s high dependence on fossil fuels expose the country to increasing trade- and sustainability-related risks, particularly as international climate policies such as the EU Carbon Border Adjustment Mechanism (CBAM) come into effect. Under the CBAM, carbon-intensive industrial exports such as steel, aluminum from the metallurgical sector, and fertilisers face growing costs. The World Bank estimates that, under the current scheme, Kazakhstan could face annual losses exceeding USD 250 million. Projections further suggest that, should the CBAM’s scope broaden to include additional sectors such as oil, these losses could rise to USD 1.2 billion, relative to Kazakhstan’s gross export value of USD 12 billion (IMF, 2024[112]; World Bank Group, 2023[4]). More broadly, failing to decarbonise export products risks missing opportunities associated with the development of low-carbon value chains in clean energy, green hydrogen, and raw materials critical to the low-carbon transition.
Total industry emissions by sector in MtCO2, 1990-2023
Note: Total industry emissions excluding mining industry and construction sub-sectors
Kazakhstan’s mining and metallurgical complex (MMC) has been a pillar of its national diversification and industrial growth strategy, but its decarbonisation and alignment on enhanced environmental outcomes require specific measures. According to official sources, the MMC represents 8% of national GDP (Government of Kazakhstan, 2025[113]), and the government is planning supporting measures for further investment in and growth of the sector, with the notable aim of further developing processing capabilities and move into higher value-added product categories (Government of Kazakhstan, 2025[113]). The mining and metallurgical sector, which includes critical minerals processing and steel and iron production, is among the most polluting and difficult sectors to decarbonise due to limited potential for electrification and limited availability of commercially viable low carbon solutions. Paradoxically, the sector can play a pivotal role in the global energy transition as the use of critical raw materials and metallurgical products are essential to the manufacturing of renewable energy equipment, electric vehicles and manufacturing processes. The OECD finds that national exporting industries currently have limited incentives, knowledge or financial capacities to adopt the technologies or invest in the infrastructure necessary for contributing to the national decarbonisation agenda (OECD and Qaztrade, 2024[109]).
Decarbonising the MMC will require a phased approach to low-carbon technology adoption, and use of bridge technologies. In steel production, switching from legacy blast furnaces to natural gas-based Direct Reduction of Iron (DRI) can reduce emissions by 30%. In the near to medium-term, CCUS can reduce direct emissions by 35% in aluminium production and 60% in steel production (GIZ, 2024[114]). In the longer term, green hydrogen is regarded as one of the most promising technologies, especially for decarbonising the steel sector, where it can replace coking coal as a reduction agent in the iron ore process, leaving water as a by-product instead of carbon dioxide, while also serving as a clean source of industrial heat (GIZ, 2024[114]).
Under SIPA, the OECD worked with Kazakhstan’s export promotion agency Qaztrade to broker a public-private dialogue and develop guidance on promoting an industrial decarbonisation agenda for hard-to-abate exporting sectors. Building on current policy frameworks recognising trade and sustainability risks and the need for a transformation of industry practices, it provides a set of recommendations for strengthening knowledge, incentives and financial capabilities for low-carbon technology adoption and positioning of Kazakhstan as competitive player in the global energy transition (OECD and Qaztrade, 2024[109]). Taken together, these recommendations provide a comprehensive, phased approach, integrating sector-specific strategies, harmonisation of regulatory frameworks, and public and private investment mobilisation (Box 2.11).
Develop integrated, sector-specific decarbonisation roadmaps with legally-binding targets. Establish actionable roadmaps for the mining and metallurgical sector, ensuring alignment with national low-carbon strategies and international standards. These roadmaps should articulate a shared vision, set measurable targets, and define indicators to guide stakeholders through the transition. It is essential that these roadmaps are regularly updated to reflect technological advances and evolving market conditions.
Harmonise policy and regulatory frameworks. Co-ordinate sectoral strategies with the National Carbon Neutral Strategy, updated NDCs, and the Concept for the transition of Kazakhstan to Green Economy. Fiscal incentives, permitting procedures, promotion of Best Available Techniques, and investment frameworks must be aligned to provide clarity and certainty for industrial actors. Avoiding fragmented or conflicting policy signals requires robust inter-ministerial collaboration.
Mobilise public-private collaboration and innovative financing. Strategically deploy public investment to crowd in private capital, prioritising de-risking instruments such as Carbon Contracts for Difference and targeted subsidies for clean technology adoption. Institutionalising regular public-private dialogues will help maintain agile governance and inform best practices. State-owned enterprises should be leveraged as catalysts for green innovation, with procurement quotas and earmarked budgets for low-carbon projects.
Expand and systematise demand-side policies. Move beyond fragmented interventions by adopting systematic demand-side policies, including renewable energy quotas, public procurement prioritising low-carbon products, and sector-specific mandates. These measures will create stable, long-term demand for low-carbon technologies and redirect private capital from established extractive sectors toward innovative, sustainable solutions.
Deploy de-risking instruments to lower barriers for private investment. Introduce and scale up de-risking instruments, including mechanisms such as Carbon Contracts for Difference, interest rate swaps, political risk insurance, and performance guarantees, to reduce investment risks and offset higher upfront costs. These tools will make low-carbon projects more attractive to private investors by mitigating uncertainty and improving returns.
As recommended in section 2.3.1., strengthen the Emissions Trading System (ETS) and use revenues strategically. Introduce a minimum carbon price floor within Kazakhstan’s ETS to ensure a meaningful and predictable price signal for industry, gradually raising it to align with climate targets. Expand ETS coverage to additional sectors and emissions sources and certify offsets via programs such as the Qazaq Green Certificate Programme. Allocate ETS revenues to subsidise cleaner fuels and technologies and complement carbon pricing with reforms such as fossil fuel subsidy removal and targeted investment support.
Strengthen information, training, and capacity building for industrial firms. Establish a centralised CBAM information platform that integrates resources on carbon footprint metrics, energy efficiency, and decarbonisation planning. Expand targeted training and outreach initiatives tailored to the mining and metallurgical sector, leveraging international experience through collaboration with organisations such as the OECD and the Ministry of Ecology and Natural Resources. Accelerate dissemination and adoption of sector-specific Best Available Techniques (BATs) by promoting active participation in expert groups and collaboration with countries that have advanced permitting systems. Helping exporters develop operations‑based carbon footprint metrics can help avoid the use of default industrial reference values that may overstate emissions.
Enhance firm-level monitoring, reporting and verification (MRV) systems. Mandate adoption of internationally recognised MRV standards (e.g. ISO 14064, ISO 14067) across industrial firms. Invest in training, digital infrastructure, and financial incentives to improve emissions data accuracy and comparability. Provide sector-specific guidance and technical assistance to empower firms in meeting reporting requirements, integrating carbon management into core operations and identifying solutions to drive GHG emission reduction in their operations.
Source: (OECD and Qaztrade, 2024[109]).
Kazakhstan has made significant progress in developing a national sustainable and green finance architecture. Institutions such as the Astana International Financial Center (AIFC), the Agency for Regulation and Development of the Financial Market (ARDFM), the National Bank of Kazakhstan (NBK), and the Development Bank of Kazakhstan (DBK), together with international partners, are actively supporting market development. The country has begun experimenting with a range of green and sustainability‑linked instruments, signalling increasing market maturity. The adoption of the national Green Taxonomy, the expansion of labelled bond and loan issuances, and the rollout of mandatory ESG reporting have strengthened the foundations for scaling sustainable investment. In parallel, Kazakhstan has emerged as a regional leader in promoting and enforcing Responsible Business Conduct (RBC), positioning the country to leverage RBC more strategically to drive sustainable infrastructure investment. These advances create favourable conditions for mobilising greater private capital for low‑carbon and climate‑resilient infrastructure. To build on this momentum, Kazakhstan should:
Establish a unified national green finance framework. Move beyond fragmented, exchange-specific initiatives (AIX vs. KASE) and create a coherent national approach to green finance. A unified framework will send clear signals that scaling up sustainable finance is a national priority, boost market confidence, and incentivise businesses to align with sustainability objectives. This is critical for financing large-scale infrastructure projects in energy, transport, and urban development.
Mobilise international and domestic green capital for infrastructure. Accredit at least one local financial institution to the Green Climate Fund to unlock concessional climate finance for infrastructure projects. Issue sovereign green bonds and sukuks to channel financing into municipal-level sustainability initiatives and deepen liquidity in domestic capital markets to fund electricity, transport, and industry investments.
Build a pipeline of bankable sustainable infrastructure projects. Address bottlenecks such as weak project preparation and limited external verification capacity. Strengthen project quality and provide technical assistance to ensure projects meet screening criteria for green lending and bond issuance, enabling financing for renewable energy, sustainable transport, and resilient urban systems.
Embed the Green Taxonomy across infrastructure finance policies. Integrate taxonomy criteria into public procurement, concessional lending, state investment programs, and PPP appraisals to mainstream sustainability in infrastructure planning and financing decisions.
Strengthen the Taxonomy’s credibility and usability. Introduce mandatory disclosure, science-based thresholds, and a “do no significant harm” principle. Ensure regular updates and transparency, especially for transition categories, to avoid greenwashing and lock-in of carbon-intensive infrastructure.
Align the Taxonomy with global standards and pursue regional interoperability. Harmonise with international frameworks and explore a common Central Asian taxonomy to reduce transaction costs, enhance investor confidence, and attract cross-border climate finance for infrastructure projects.
Adopt a comprehensive, whole-of-government strategy to embed Responsible Business Conduct (RBC) across all ministries, institutions, and state-owned enterprises, with a strong focus on infrastructure development that meets sustainability goals. This includes integrating RBC principles at every stage of infrastructure projects, ensuring due diligence, transparency, and anti-corruption practices to drive long-term sustainable infrastructure outcomes.
Enhance labour and environmental protections within infrastructure sectors by promoting meaningful stakeholder engagement, improving regulatory enforcement such as unannounced inspections, and adopting best environmental practices. These actions contribute directly to building resilient and sustainable infrastructure, aligning development with social and environmental responsibility.
Use RBC criteria in public procurement processes and reinforce RBC expectations for SOEs, building on the example set by Samruk‑Kazyna. Strengthening the use of RBC tools and standards in infrastructure development would allow the government and SOEs to lead by example and help attract financial flows from other sectors into sustainable infrastructure.
Mobilising private capital is becoming increasingly important for Kazakhstan as it seeks to deliver modern, resilient and low‑carbon infrastructure, particularly in a context where public resources alone cannot meet long‑term investment needs. This section provides an overview of the country’s evolving landscape for sustainable and responsible finance and investment, reviewing progress in the development of its national institutional and regulatory framework as well as finance instruments and standards. It examines how these foundations, together with a maturing financial sector and growing interest in green and sustainability‑linked products, can help unlock larger volumes of private capital for infrastructure aligned with environmental and social priorities. The section also explores how Responsible Business Conduct (RBC) standards intersect with sustainable finance to reinforce transparency, due diligence and positive sustainability outcomes of infrastructure investments.
2.4.1. Institutional and regulatory framework for green finance development
Kazakhstan is a pioneer among Central Asian countries in developing sustainable finance, but the domestic market remains at a relatively early stage of development. Cumulative 2020-2025 labelled bond and loan issuances reached more than USD 2.5 billion by December 2025 (Figure 2.14), accounting for only a small fraction of the country’s sustainable investment needs. Mobilising sustainable and green finance will be essential to fill the gap, requiring not only the alignment of infrastructure development with sustainability objectives, but also the establishment of strong regulatory frameworks and institutional capacities to underpin market growth.
Climate change presents both physical and transition risks to Kazakhstan’s financial system. Reliance on energy- and emissions-intensive sectors and the country’s role as a fossil fuel exporter heighten vulnerability to global decarbonisation. The IMF warns that stricter international climate policies could lead to substantial GDP losses, with fossil fuels, electricity, and other energy-intensive sectors being particularly affected (International Monetary Fund, 2024[115]). As the corporate portfolio of Kazakhstan’s banks is heavily exposed to carbon-intensive borrowers, these shifts could erode asset values and increase default risk. Many domestic banks and institutional investors also lack the technical expertise and systems to integrate ESG and taxonomy criteria into lending or portfolio management, constraining the sector’s ability to anticipate and manage transition risks (AIFC, 2023[116]).
Despite these challenges, Kazakhstan has made notable progress in establishing the building blocks of a green finance framework. In addition to the 2021 National Green Taxonomy and draft Social Taxonomy (see section 2.4.2), key measures include the adoption of Green Bond Rules for the Astana International Exchange (2018) and national ESG reporting guidelines, which became mandatory in 2024 (Table 2.6). Together, these instruments provide the regulatory infrastructure to support the scaling up of sustainable finance (OECD, forthcoming[117]).
Note: AIFC = Astana International Finance Centre; AIX = Astana International Exchange; ARDFM = Agency for Regulation and Development of Financial Market; DBK = Development Bank of Kazakhstan
Source: Author’s elaboration.
The Astana International Financial Centre (AIFC) has been playing a pivotal role in the development of a green finance framework in Kazakhstan. The AIFC was created in 2015 by the government with a mission of becoming a regional financial centre attracting international capital in Kazakhstan and Central Asia. It operates under a distinct legal regime modelled after the English common law and international best practice. In 2017 the AIFC established the Astana International Exchange (AIX), which has been instrumental in piloting and developing a green finance framework. The AIFC's Green Finance Centre (GCF) provides assistance to potential issuers and offers external reviews for green instruments, while the AIX has introduced rules for the issuance and listing of ESG-labelled bonds, including green and sustainability bonds. Alongside this, the Kazakhstan Stock Exchange (KASE), the country's primary exchange, has been actively developing its own green finance framework to align with these initiatives, aiming to mobilise green and sustainable finance. At the regulatory level, the Agency for Regulation and Development of the Financial Market (ARDFM) and the National Bank of Kazakhstan (NBK) are crucial in integrating climate risk into financial regulation and policy. These efforts are supported by the Ministry of Ecology and Natural Resources and the Ministry of Finance.
Financial institutions and international partnerships form a crucial component of Kazakhstan's green finance ecosystem. The Development Bank of Kazakhstan and the Damu Fund have pioneered labelled issuances, while international partners such as ADB, EBRD and UNDP have been providing technical assistance, advisory support and direct financing. The growing engagement of these international partners is paralleled by an increase in participation from private-sector actors, including both corporate issuers and commercial banks, who are increasingly integrating ESG principles and expanding their provision of green financing instruments.
The country’s green and sustainable debt market is now valued at USD 1.4 trillion. In stark contrast to Uzbekistan, where sovereign issuances have led the development of sustainable debt markets, Kazakhstan’s corporate issuances from energy SOEs and companies and banks have led the charge domestically, while international financial institutions continue to play an active role (AIFC, 2024[118]; AIFC, 2023[116]). Kazakhstan has experimented with a wide variety of thematic issuances, including green bonds, social bonds and sustainability bonds (combining green and social aspects) (Figure 2.14). However, the market remains underutilised relative to the broader domestic capital market, and is constrained by a shortage of high-quality, bankable projects, weak project preparation and limited external verification capacity. Addressing these bottlenecks will be crucial to expand the pipeline of investable projects (AIFC, 2023[116]).
2020-2025, in million USD by thematic issuance type
Source: AIFC estimates
The institutional set-up of Kazakhstan’s exchanges could pose risks in the future, if not managed prudently. Kazakhstan has two parallel licenced exchanges with different regulatory oversight and central securities depositories. The Kazakhstan Stock Exchange (KASE), which lists government and corporate securities in local currency, coexists with the Astana International Exchange (AIX), which aims to attract foreign investments and diversify Kazakhstan’s economy. KASE and AIX are overseen respectively by the Agency for Regulation and Development of the Financial Market (ARDFM) and the Astana Financial Services Authority (AFSA), each with its own central securities depository. This fragmented landscape risks creating overlapping mandates, segmenting the capital market and opening the door to regulatory arbitrage. However, as the exchanges operate under different jurisdictions, with AIX subject to English common law, and AIX’s main objective narrowly defined in attracting foreign investors, the risks have been deemed limited and well managed so far (World Bank, 2024[119]).
To advance its sustainable infrastructure goals, Kazakhstan's government and financial regulators need to provide greater coherence by moving beyond fragmented, exchange-specific initiatives and establishing a unified national framework for green finance. A single, harmonised approach would send clear signals that scaling up green finance is a national priority, giving businesses stronger incentives to align with sustainability objectives and boosting market confidence, which are essential to attract the needed investment for sustainable development. In addition, stepping up efforts to accredit at least one local financial institution to the Green Climate Fund would help strengthen the national green finance framework and help expand access to international climate finance (AIFC, 2024[118]).
Reforming the national framework represents a significant opportunity to unlock Kazakhstan’s unrealised potential in green finance and drive sustainable infrastructure development. Domestic capital markets represent another untapped source: with USD 36 billion in sovereign bonds and USD 48 billion in corporate bonds already outstanding, expansion of KZT-denominated instruments could channel more domestic savings into infrastructure (ADB, 2021[120]). OECD analysis estimates between EUR 12.1 and 30.2 billion of green bond opportunities in mitigation-related infrastructure in electricity, transport and industry by 2030 (Table 2.7). To fully realise this potential, Kazakhstan will need to deepen liquidity on KASE, attract institutional investors such as the Unified Accumulative Pension Fund (ENPF), and consider sovereign green bonds and sukuks to signal government commitment and channel financing into municipal-level sustainability initiatives. The Astana International Financial Centre (AIFC) is also positioning itself as a regional hub for green and Islamic finance, including sukuk issuance. In parallel, international financial institutions such as the World Bank, ADB, EBRD and IFC remain key partners in financing sustainable infrastructure, while concessional climate funds can help de-risk projects and attract private capital (ADB, 2021[120]).
2.4.2. Green taxonomies
Green taxonomies are important policy levers for channelling capital toward infrastructure projects that support climate and environmental objectives. By providing standardised, legally-based definitions of “sustainable” or “green” projects, they help address a major barrier to the scaling-up of finance and investment in sustainable infrastructure: OECD analysis has found that “[…] policy and market fragmentation [resulting from a lack of harmonised standards and definitions] may constrain the financing of, and investment in, transition-compatible assets, such as renewable energy infrastructure” (OECD, 2020[121]) (Box 2.13). Green or environmental taxonomies can hence be powerful policy tools supporting the financing of sustainable infrastructure, provided an enabling policy framework is in place (OECD, 2020[121]). They improve investor confidence by addressing greenwashing concerns and improving the transparency of sustainability claims. They are supporting tools in the issuance of green bonds or establishment of climate-related investment funds. They also facilitate the integration of ESG criteria into national financial institutions’ lending practices, particularly in infrastructure-heavy sectors such as energy, transport and urban development. If aligned with global taxonomy frameworks and standards, taxonomies also facilitate international climate finance mobilisation.
The EU Taxonomy, adopted as part of the EU’s sustainable finance framework, provides a science-based, unified classification system for identifying environmentally sustainable economic activities. Developed to support the objectives of the European Green Deal, it establishes a common definition of what can be considered “sustainable,” thereby guiding capital flows toward activities aligned with the EU’s 2050 climate‑neutrality target and broader environmental goals. The Taxonomy is intended to enhance market transparency, reduce risks of greenwashing, and improve comparability across jurisdictions by enabling financial and non‑financial companies to do their reporting using consistent sustainability criteria. Its scope spans the sectors most critical to the transition, with a specific focus on directing investment to activities deemed essential for decarbonisation and climate resilience.
The regulatory basis for the EU Taxonomy is set out in the Taxonomy regulation, which entered into force in 2020 and outlines the conditions an activity must meet to qualify as environmentally sustainable. The regulation mandates that activities contribute substantially to at least one environmental objective, do no significant harm to the others, comply with minimum safeguards, and meet detailed technical screening criteria. These criteria are defined through delegated and implementing acts, including the Climate and Environmental Delegated Acts, which the European Commission is currently reviewing to improve usability and reduce reporting burdens. Complementary initiatives, such as the Action Plan on Financing Sustainable Growth and the Sustainability Omnibus Package, further embed the Taxonomy within the EU’s broader sustainable finance policy architecture, supporting regulatory coherence and more effective disclosure frameworks.
Evidence to date suggests that the EU Taxonomy is increasingly used by companies, especially in energy, to guide and communicate sustainable investment decisions, with measurable impacts on capital allocation. In 2024, reporting companies indicated that an average of 22.7% of their capital expenditures were Taxonomy‑aligned, with particularly high alignment in the utilities sector, especially electricity. Total reported Taxonomy‑aligned investments reached EUR 273 billion in 2024, bringing cumulative aligned capital expenditure for 2022–2024 to EUR 742 billion. Germany, France, Italy and Spain accounted for the largest shares of aligned investment, reflecting both the scale of their corporate sectors and strong uptake of the framework. Notably, 90% of aligned investments in 2024 stemmed from companies that have reported alignment consistently over three years, signalling a maturing practice and the growing role of the Taxonomy as a strategic tool for long‑term, sustainability‑oriented investment planning.
Source: European Commission, https://ec.europa.eu/sustainable-finance-taxonomy/taxonomy-compass.
Kazakhstan adopted a Taxonomy of Green Projects in 2021 (“Green Taxonomy”). It was developed by the AIFC’s Green Finance Centre (GCF), together with the International Green Technologies and Investment Project Centre (IGTIPC) under the Ministry of Ecology and Natural Resources, in accordance with paragraph 3 of Article 130 of the Kazakhstan Environmental Code. The Green Taxonomy is based on international best practices: it includes the provisions of the ICMA Green Bond Principles and the Climate Bonds Initiative Taxonomy. It is estimated to cover 57% of Kazakhstan’s GHG emissions (DIW, 2024[122]). In addition, and complementing these efforts, the AIFC’s GFC is currently developing a social taxonomy.
The Green Taxonomy provides a classification of projects eligible for financing through green bonds and green loans. The eight categories it contains correspond to the government’s priorities: (i) renewable energy, (ii) energy efficiency, (iii) green buildings, (iv) pollution prevention and control, (v) sustainable water use and waste, (vi) sustainable agriculture, land management, forestry, biodiversity conservation, and ecotourism, (vii) sustainable transport and (viii) transition energy. The Green Taxonomy explicitly serves to make efficient use of natural resources, reduce environmental harm from infrastructure and economic activities, and support national climate mitigation and adaptation goals.
The additional “transition energy” category was included in 2024 to provide a pathway for high-emitting sectors, particularly those moving from coal to cleaner fuel sources like natural gas. OECD guidance warns that such transition categories carry risks of greenwashing if criteria are not science-based and transparent. They also risk creating market fragmentation when definitions diverge across jurisdictions and may even lock in carbon-intensive infrastructure if used to justify prolonged fossil fuel use. The credibility of a “transition” category requires an even stronger framework ensuring its alignment with environmental goals, including stringent thresholds, robust disclosure and clear phase-out timelines for high-emitting assets (OECD, 2022[123]). In this context, consideration could also be given to requiring a board-approved climate transition plan, confirming the temporary nature of gas use within a long-term decarbonisation trajectory.
Kazakhstan has developed supporting guidance and disclosure requirement frameworks to facilitate the implementation and use of its Green Taxonomy. In 2024, the Astana International Financial Centre (AIFC) and the Ministry of Ecology and Natural Resources jointly developed methodological guidance for stakeholders (state and local executive bodies, financial institutions, public organisations, businesses and other entities) providing green financing and broader measures supporting businesses with the implementation of Taxonomy-aligned, “green” projects (Government of Kazakhstan, 2024[124]). The guidance aims to increase market participants’ awareness and support its practical implementation. The guidance recommends assessing projects’ environmental and social risks, including whether these could significantly harm the environment, and labour conditions or living standards, when determining taxonomy alignment. Complementary ESG disclosure requirements issued by the Agency for Regulation and Development of the Financial Market (ARDFM)6, jointly with the International Finance Corporation (IFC), lists key taxonomy-derived ESG performance indicators to be disclosed by banks and financial institutions.7 Since 2024, pursuant to the Resolution of the National Bank of the Republic of Kazakhstan8 on reporting requirements for loans and contingent liabilities (the Credit Register), banks have also been required to report data indicating the sustainability attributes of a project. In addition, a dedicated “green loans” sustainability code in the national Credit Register is used to identify taxonomy-aligned lending.
While the adoption of the Green Taxonomy marks a pivotal step toward channelling investments into sustainable infrastructure, its design could be further strengthened to maximise its impact. Analyses carried out by experts and international partners highlight several shortcomings. The ADB notes that the Green Taxonomy lacks technology neutrality and formally misses a “do-no-significant-harm principle”, by which activities classified should not inadvertently cause negative environmental consequences (e.g. on biodiversity) (ADB, 2024[125]).
The government should embed the Green Taxonomy across finance and investment policies while pursuing regional and international alignment. Integrating taxonomy criteria into public procurement, concessional lending, state investment programs and PPP appraisals is critical to embedding sustainability in Kazakhstan’s infrastructure planning. At the same time, interoperability with international taxonomies and greater regional alignment could help mobilise cross-border capital. A common Central Asian green taxonomy, for example, would help reduce transaction costs, enhance investor confidence, encourage knowledge-sharing, and support sustainable investment flows across the region (OECD, forthcoming[117]).
Effective implementation will largely rely on building institutional capacity of financial institutions and targeted companies. These will need training and technical assistance to apply taxonomy criteria consistently across portfolios, especially in infrastructure development where emissions, resilience and lifecycle considerations are complex and interconnected. Policymakers could launch targeted awareness and capacity-building initiatives for large companies in energy, transport, services, and industry, promoting the Green Taxonomy and providing practical guidance on its application. Regulators may also consider introducing incentives and disclosure requirements to encourage adoption (OECD, forthcoming[117]).
A priority will be strengthening monitoring, reporting and verification (MRV) requirements to ensure environmental integrity. While the AIFC Green Finance Centre provides independent external reviews, Kazakhstan lacks a comprehensive, mandatory MRV system at the project level. Introducing binding MRV provisions supported by technical screening criteria would give investors and regulators greater confidence that financed projects deliver measurable sustainability outcomes. This will be particularly important for the taxonomy’s “transition energy” category, which must be grounded in robust, entity-wide climate transition plans aligned with the country’s 2060 carbon-neutrality target and provide clear, verifiable criteria for how they will lead to a definitive and timely reduction in emissions. Clarity on the alignment of thresholds with science-based targets and mandatory data disclosure will also help build credibility and effectiveness of the taxonomy (OECD, forthcoming[117]).
2.4.3. Responsible business conduct framework
Infrastructure development in energy, industry and transport is associated with increased risks related to human rights, labour rights, environmental impacts and business integrity. As governments involve the private sector across the entire infrastructure lifecycle – from planning and financing to delivery, operation, maintenance and decommissioning – Responsible Business Conduct (RBC) plays an increasingly prominent role in the infrastructure sector. With private actors playing a growing role in financing and delivering sustainable infrastructure, attention is shifting to the broader social and environmental impacts of business activities. RBC provides a set of principles to help both public and private stakeholders steer infrastructure development in a more sustainable and responsible manner.
RBC helps improve the sustainability performance of infrastructure investments. By applying RBC principles and standards – particularly risk-based due diligence – companies and investors are better able to identify, prevent and address potential adverse impacts of their infrastructure activities on people, planet and society. Infrastructure projects and their related supply chains can have impacts related to human and labour rights, the environment and climate change, as well as anti-corruption. In this context, the OECD Guidelines for Multinational Enterprises on RBC, together with the Due Diligence Guidance, provide key international standards (OECD, 2018[126]).
Creating the right policy and regulatory environment is essential for governments to promote and enable RBC. The OECD Recommendation on the Role of Government in Promoting RBC underlines that governments should not only develop and implement laws and policies that encourage RBC but also exemplify RBC in their economic and commercial activities. In the infrastructure context, this involves establishing legal frameworks covering human rights, labour rights, environment and anti-corruption as well as implementing state policies on investment promotion and facilitation, public procurement, finance and the governance of state-owned enterprises, as well as efforts to promote meaningful stakeholder engagement and access to remedy (OECD, 2022[127]). Such an enabling environment, in turn, helps countries “keep and attract high quality and responsible investors”.
Under SIPA, the OECD led a review of RBC policies for sustainable infrastructure development in Kazakhstan (OECD, 2025[42]). Infrastructure development in key sectors such as extractives, transport and energy is associated with heightened risks related to labour conditions, environmental impacts, human rights, stakeholder engagement and business integrity. The report finds that Kazakhstan has taken notable steps to strengthen its regulatory and policy environment for RBC.
Kazakhstan has established itself as a regional Responsible Business Conduct (RBC) leader in Central Asia, notably by adhering to several important OECD RBC standards and instruments. The country is so far the only Central Asian adherent to the OECD Declaration on International Investment and Multinational Enterprises and the annexed OECD Guidelines for Multinational Enterprises on RBC (MNE Guidelines). It established a National Contact Point (NCP) in 2017, a national agency which mission is to support companies, governments and other stakeholders implement RBC. It also adheres to three Recommendations on conducting due diligence in key infrastructure sectors, as well as one that formally acknowledges the government’s role in supporting the effective implementation of RBC standards by MNEs. In October 2024, Kazakhstan expressed its commitment to develop a declaration on Responsible Business Conduct (RBC), aimed at setting clear expectations for investors regarding responsible practices and contributions to sustainable development (OECD, 2025[42]).
Kazakhstan has also begun integrating sustainability and RBC into its domestic policy frameworks. OECD analysis notes that Kazakhstan has begun integrating responsible business conduct and sustainability criteria into procurement, creating opportunities to align SOE purchasing with national development priorities. With public procurement representing around 13% of GDP, stronger governance and transparency in SOEs will be crucial to ensure this influence supports greener, higher-value investment and does not crowd out private capital (OECD, 2025[42]). Reforms related to labour safety, environmental protection and anti-corruption, such as implementation of the Labour Code and the Environmental Code’s provisions on Best Available Techniques, also contribute to a stronger enabling environment for RBC in infrastructure.
Growing private sector involvement in infrastructure financing and delivery brings increased attention to the social and environmental impacts of infrastructure projects. In this context, RBC principles provide a framework to guide both public and private actors in supporting sustainable infrastructure development (OECD, 2025[42]). By applying RBC standards and due diligence, companies and investors can identify, prevent and mitigate adverse impacts on people, the environment and society throughout the infrastructure lifecycle. The OECD Guidelines for Multinational Enterprises on RBC and the associated Due Diligence Guidance are central international reference points for managing risks related to human and labour rights, environmental protection and anti-corruption in infrastructure investments (OECD, 2023[128]; OECD, 2018[129])
Governments play a key role in promoting and enabling RBC by establishing a coherent policy framework and leading by example in their own economic activities. The OECD Recommendation on the Role of Government in Promoting RBC highlights the importance of appropriate legal frameworks on human rights, labour, the environment and anti-corruption, as well as policies on investment promotion, public procurement, finance and SOE governance, and mechanisms for stakeholder engagement and access to remedy (OECD, 2022[130]). In turn, such an enabling environment helps countries “keep and attract high quality and responsible investors” (OECD, 2015[131]).
The government of Kazakhstan can build on its foundational regulatory and policy environment for RBC to help accelerate sustainable infrastructure development. Opportunities remain to strengthen the policy framework and more actively promote RBC across the full infrastructure life cycle. By doing so, Kazakhstan can help accelerate infrastructure investments and use its role as an economic actor to address RBC-related risks and impacts at the infrastructure project-level. Recommendations include to:
Strengthen legal and policy coherence by pursuing a whole-of-government approach and ensuring co-ordination between infrastructure-related ministries, the National Contact Point (NCP), and the National Action Plan on Business and Human Rights.
Promote due diligence and stakeholder engagement in high-risk sectors such as extractives, building company capacity to align with OECD guidance.
Strengthen labour and environmental protection by implementing the Concept for Safe Labour, enabling effective inspections, advancing Best Available Techniques under the Environmental Code, and leveraging environmental policy tools such as the Emissions Trading Scheme.
Reinforce anti-corruption and business integrity in infrastructure projects, supporting the Anti-Corruption Agency’s monitoring role and promoting civil society participation.
Advance responsible practices in public procurement and state-owned enterprises (SOEs) by embedding RBC standards in procurement processes, including through the introduction of green public procurement, and deepening and extending due diligence expectations to all SOEs. More broadly, adjusting governmental incentives and financing conditions for SOEs, including through the introduction of performance indicators linked with the reduction investment portfolios’ carbon footprints, could support a stronger alignment of SOE activities with carbon neutrality objectives.
Leverage sustainable finance to integrate RBC into infrastructure investments, mobilising Kazakhstan’s leadership in green and sustainable finance to align capital flows with sustainability goals.
Enhance the consideration of RBC aspects and RBC due diligence across infrastructure planning, financing and operations, building on earlier efforts to promote sustainable procurement.
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← 1. Gross fixed capital formation (GFCF) is often used as a proxy for infrastructure spending, though it is an imperfect one as it covers machinery, equipment and private sector construction.
← 2. Policy note prepared by international consultant Gulfia Abdullaeva, 2025.
← 3. Policy note prepared by international consultant Gulfia Abdullaeva, 2025.
← 4. Policy note prepared by international consultant Gulfia Abdullaeva, 2025.
← 5. Leveraging net effective carbon rates (i.e., putting a price a carbon) can play an essential role in directing investments into sustainable and low-carbon energy infrastructure in Kazakhstan as in the rest of Central Asia. Net effective carbon rates (NECR), which represent the sum of Emission Trading Systems (ETS) permit prices, carbon taxes, and fuel excise tax, less fossil fuel subsidies, are essential for directing investments into sustainable and low-carbon energy infrastructure in Kazakhstan. There is rising interest in the region in reforming fossil fuel subsidies and exploring market-based instruments for carbon pricing and trading. This interest is driven by rising natural gas prices pressuring outdated energy systems and opportunities for regionally trading carbon credits between high-emitting countries (like Kazakhstan) and low-emitting countries (like Kyrgyzstan and Tajikistan), potentially under Article 6 of the Paris Agreement.
← 6. Approved by Order of the Chairman of the Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market dated 28 April 2023 No. 291. Mandatory application started from 2025, beginning with ESG disclosures based on 2024 results.
← 7. (1) Volume of “green” loans (i.e. aligned with the Green Taxonomy) issued during the reporting year, including as a percentage of total loans issued; (2) Total amount of “green” loans in the current portfolio, including as a percentage of the total portfolio; and (3) Share of non-performing “green” loans in the total volume of “green” loans.
← 8. Resolution of the Board of the National Bank of the Republic of Kazakhstan No. 313 of 28 December 2018 “On approval of the list of forms, submission deadlines, and Rules for the provision of reporting on loans and contingent liabilities by second‑tier banks, branches of non‑resident banks of the Republic of Kazakhstan, the Joint Stock Company ‘Development Bank of Kazakhstan’, and organisations carrying out certain types of banking operations.”