CAREC Institute Releases Brief on Emission Trading Systems in the Region

The CAREC Institute has released a new economic brief, authored by Dr. Marina Wang, Senior Research Specialist, which examines the evolving role of Emissions Trading Systems (ETS) in the Central Asia Regional Economic Cooperation (CAREC) region. The study comes during global shifts in carbon pricing and the European Union’s planned Carbon Border Adjustment Mechanism (CBAM).

The brief looks at the experiences of China and Kazakhstan, the region’s current leaders in emissions trading, to show how well‑designed carbon markets can cut emissions, protect trade competitiveness, and promote sustainable growth. It reviews global trends in emissions trading, such as market growth, the industries involved, price changes, and revenue raised, and discusses whether a shared CAREC carbon market could work. It also discusses the political, economic, and institutional problems other CAREC members may face when introducing carbon pricing.

Key recommendations are proposed:

Redirect carbon revenues: invest carbon revenues and international climate finance in renewable energy projects, especially solar and wind.

Support key industries: develop sector-specific carbon trading systems for industries like cement and metals to keep them competitive and encourage decarbonization.

Strengthen data systems: improve monitoring and reporting with help from international partners to ensure transparency and support future market connections.

Promote a just transition: use carbon pricing revenues to help affected workers and vulnerable households through retraining programs and energy subsidies.

Coordinate regionally: harmonize carbon market rules and gradually link systems across CAREC countries, tailoring approaches to each country’s readiness and capacity.