Economic impact analysis of the proposed introduction of an increased taxation on coal combustion in Kazakhstan
In order to achieve the targeted fuel switch from oil to natural gas, natural gas combustion needs to be more attractive than combustion of coal. A tax policy intervention is considered to be helpful to decrease the fuel price ratio so that users would prefer gas over oil. GIZ proposes to raise the taxes on pollutions from coal combustion in order to create incentives for a fuel switch from oil to gas. This policy paper intends to assess the opportunities of the proposed policy intervention by measuring its impact on the overall pollution volumes, on revenues of local budgets as well as on the country-wide GDP, based on a state-of-the-art modelling approach. We find out, that this policy intervention could be an appropriate instrument to provide an incentive for fuel switch. Furthermore, reducing the share of coal in total fossil fuel demand for power and heat generation to 50%, 40% down to minimum 30% until 2030 would not harm economic growth.
German Corporation for International Cooperation (GIZ)