Carbon Pricing Policy Opportunities in Central Asia and Azerbaijan

Carbon pricing is one of the most effective and widespread climate incentives, with 75 carbon pricing instruments (CPIs) in operation worldwide. The countries of Central Asia and Azerbaijan have different approaches to CPI implementation, ranging from having an ETS in place to carrying out initial discussions. Joint report by the Eurasian Development Bank (EDB) and the CAREC Institute (CI) provides a comprehensive analysis of the current status, prerequisites and prospects of carbon pricing instruments in Azerbaijan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan. The report also presents a Readiness Assessment Tool to facilitate the decision-making in this field, and makes recommendations to policymakers to help design an appropriate climate policy mix

• Report

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• Summary

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XX September 2025

Carbon pricing is one of the most powerful climate-related policy instruments to reduce carbon emissions in a flexible way. While serving its primary goal of climate change mitigation, when implemented effectively it can also generate revenue that can be reinvested to promote green technologies and provide market participants with more clarity and predictability about emissions levels, supporting long-term planning and decision making. Initially more widespread in high-income economies, carbon pricing mechanisms are now also increasingly being adopted in middle-income countries, reflecting a global shift toward more inclusive climate engagement. 

The share of countries of Central Asia (Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan) and Azerbaijan in global greenhouse gas (GHG) emissions is very small (1.4%), with Kazakhstan and Uzbekistan having the highest share in the region (0.73% and 0.32%, respectively). The share of these countries in global GDP and population is even smaller: 0.87% and 1.08%, respectively. In terms of carbon intensity per GDP, Turkmenistan has the highest value among the countries considered (0.60 kg CO2 per USD). Although these ratios may seem negligible on a global scale, the region’s collective contributions could play a crucial role in global climate efforts and sustainable economic growth.