Carbon pricing and the future of Kazakhstan’s exports

Starting January 1, 2026, European companies importing goods will be required to purchase CBAM (Carbon Border Adjustment Mechanism) certificates for every tonne of embedded carbon in their imported products. The price of these certificates will match the current cost of carbon allowances under the EU Emissions Trading System (EU ETS), effectively equalizing the carbon cost of imported goods with that of similar products made inside the European Union (EU).

CBAM is designed to prevent “carbon leakage”-when companies relocate production to countries with weaker climate rules-and to ensure fair competition by factoring the cost of CO₂ emissions into imported goods.

Currently, CBAM applies to six carbon-intensive sectors:

iron and steel, aluminum, cement, fertilizers, electricity, and hydrogen.

Importers will have to submit their first CBAM reports by May 31, 2027, covering emissions from 2026, and surrender the corresponding number of CBAM certificates. If they fail to do so, they face penalties of €100 per excess tonne of CO₂.

This timeline aligns with the phased removal of free EU ETS allowances: between 2026 and 2034, free permits for EU producers will gradually be reduced, while importers will pay an equivalent share of carbon costs through CBAM.

The EU is one of Kazakhstan’s largest export markets, accounting for about 47% of its export revenue in 2024 (≈$38.1 billion).

Most of this revenue comes from fossil fuels (oil, petroleum products, uranium, coal, etc.), which are not covered by CBAM at this stage.

Goods from CBAM sectors make up only about 1.3% of Kazakhstan’s exports to the EU-worth around $478.2 million in 2024. These are mainly:

• ⁠ ⁠ferrous and non-ferrous metals
• ⁠ ⁠mineral fertilizers

By contrast, cement exports are near zero, electricity is not directly exported, and hydrogen exports are nonexistent.

This means Kazakhstan’s primary CBAM exposure lies in metallurgy and fertilizers-the sectors that will bear most of the carbon cost burden.

According to a worst-case scenario by the National Bureau of Economic Research (Kazakhstan), if CBAM were fully enforced in 2025, Kazakh exporters would pay about $57.9 million annually for EU carbon certificates, based on the current CO₂ price of ~$86 per tonne (as of September 2025).

This implies an effective extra tariff of ~12.1% on covered goods, broken down roughly as:

• ⁠ ⁠Aluminum: $19.7 million
• ⁠ ⁠Fertilizers: $20.8 million
• ⁠ ⁠Ferrous metals: $17.6 million

Note: These calculations account for the new de minimis threshold introduced in 2025: importers bringing in less than 50 tonnes of CBAM goods per year are exempt from CBAM obligations. According to the European Commission, this excludes over 90% of importers, though the remaining 10% cover 99% of emissions in CBAM trade.

Macro vs. Micro Perspective

• ⁠ ⁠The estimated $58 million equals only about 0.15% of Kazakhstan’s total EU export revenue, so the macro-level impact is limited for now.
• ⁠ ⁠But for individual firms, a 12% surcharge could significantly reduce profitability and competitiveness in the EU market.

For context, a hypothetical scenario showed that if Chinaapplied a CBAM-like system using its current domestic carbon price ($14 per tonne), Kazakhstan’s exports of CBAM-related goods to China ($1.37 billion out of $14.9 billion total) would face an annual carbon bill of about $40.5 million, or ~3% of the value-far lower than the EU’s burden.

While the overall risk to Kazakhstan’s economy is currently small, CBAM poses a real challenge for specific sectors like metals and fertilizers.

Still, there are several factors that could soften the impact in the short and medium term-which will be crucial for Kazakhstan’s exporters to navigate as they adapt to the EU’s new carbon border rules.

1.⁠ ⁠Crediting the Domestic Carbon Price Against CBAM Payments

Under the EU’s CBAM (Carbon Border Adjustment Mechanism), exporters can deduct any carbon price already paid in the country of origin from the CBAM payments due at the EU border. This right is explicitly stated in the “CBAM: Questions and Answers” document and the EU Regulation 2023/956.

However, this deduction is only allowed if the carbon price was actually paid, and exporters must provide supporting documents as proof. The EU has not yet set a final list of acceptable documents, but exporters can currently use tax or allowance invoices/receipts, bank statements, references to legal acts, and letters from competent authorities – as long as they clearly link the payment to the volume of goods and the period concerned.

For example, if Kazakhstan’s Emissions Trading System (ETS) becomes fully operational and the carbon price reaches around $5 per ton of CO₂ (2–3 times higher than the current price), Kazakh exporters could reduce their CBAM costs by about $4 million.

At the same time, raising Kazakhstan’s domestic carbon price to match the EU ETS level of $80+ per ton would be premature and economically risky. Only 4 out of 225 Kazakh companies covered by the national ETS currently export to the EU. Raising the carbon price for all would burden the entire domestic industry while benefiting only a small group of exporters – making it economically unjustified at this stage.

2.⁠ ⁠Using Actual Emissions Data Instead of Default Values

CBAM calculations can be based on two types of data:

• ⁠ ⁠If exporters (or their EU partners) provide verified data on actual emissions (actual values), CBAM certificates are calculated based on these figures.
• ⁠ ⁠If they don’t, the European Commission uses default values, which are deliberately set high – based on the average emissions of the least efficient 10% of installations – to encourage exporters to implement monitoring, reporting, and verification (MRV) systems.

Kazakh exporters can lower their costs by working closely with their EU partners to get their emissions verified by an accredited verifier. This is also in the EU partner’s interest, since they are the ones who must buy the CBAM certificates and want to keep their number as low as possible.

Using verified actual values can significantly reduce CBAM liabilities. If no data is provided and default values are used, the carbon cost automatically increases, making the product less competitive.

In fact, Kazakhstan already has sectoral benchmarks (allowable emissions per unit of production in regulated industries) that are often much lower than the EU’s default values – which could become an advantage if verified and used in CBAM reporting.

3.⁠ ⁠Competing with Other Importers – and Long-Term Risks

CBAM applies equally to all importers into the EU.

Those who:

• ⁠ ⁠have a functioning MRV system,
• ⁠ ⁠can credit the carbon price paid at home, and
• ⁠ ⁠maintain good cooperation with EU partners and verifiers

will structurally face lower CBAM costs than competitors from countries lacking these elements.

In the short and medium term, this gives Kazakhstan an opportunity: local exporters can reduce CBAM pressure through proper documentation, verified actual emissions data, and close partnerships.

But in the long run, the rules will get tougher:

• ⁠ ⁠The EU is already discussing expanding CBAM to more goods – from chemicals and polymers to intermediate and processed products (for example, currently only steel is covered, not finished steel products like machinery and parts).
• ⁠ ⁠They may also start accounting for indirect emissions (from electricity used, transport, etc.).
• ⁠ ⁠Default values are expected to become stricter, making it increasingly costly to not submit data.
• ⁠ ⁠The EU is also considering introducing sectoral emission benchmarks, which would gradually close the gap between “clean” and “dirty” imports and prevent manipulation.

In other words, while Kazakh exporters still have room to maneuver in the next few years – by documenting and verifying emissions or benefiting from competitors’ weaker compliance – this window will narrow. CBAM will become stricter and more comprehensive, meaning that in the future it will be much harder to “work around” the system. The focus will shift from short-term tactics to systematically cutting emissions and aligning Kazakhstan’s national regulations with EU standards.