A joint report by EDB and CAREC Institute highlights the need for balanced carbon pricing frameworks

Almaty, 30 September 2025. The Eurasian Development Bank (EDB) and the CAREC Institute (CI) have released a joint report entitled "Carbon Pricing Policy Opportunities in Central Asia and Azerbaijan". The research paper provides a comprehensive analysis of the current status, prerequisites and prospects of carbon pricing instruments in Azerbaijan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan.

75 carbon pricing instruments (CPI) are currently operational worldwide. Carbon pricing is a tool for reducing carbon emissions and generating additional revenue for the development and implementation of climate technologies. However, the deployment of CPIs presents significant challenges and could lay additional financial pressure on businesses and households.

Central Asia and Azerbaijan account for 1.4% of worldwide greenhouse gas emissions. They have all pledged to reduce emissions and are actively integrating climate-related provisions into their policies. In terms of CPI implementation, these countries have different approaches, ranging from having an emission trading system in place to carrying out initial discussions. Although it is considered to be universally applicable, introducing CPI requires an assessment of many country-specific factors to ensure that the instrument is necessary, feasible and efficient.

In order to facilitate the decision-making in this field, the paper presents innovative instrument for carbon pricing planning - the so-called Readiness Assessment Tool, which is a questionnaire that could be useful for designing an appropriate climate-related policy mix. It takes into account various economic, trade, climate, policy, institutional and other factors to assess whether a CPI is important for achieving national climate targets, whether a country is ready for fiscal climate regulation, and whether this instrument would be effective in the national context.

"Together with our colleagues at the CAREC Institute, we have concluded that there is no "one-size-fits-all" approach to developing a carbon pricing instrument. After applying the Readiness Assessment Tool, developed by the EDB and CAREC Institute, some countries may conclude that the socio-economic risks posed by the instrument outweigh the opportunities. At the same time, others may decide to proceed with carbon pricing in order to maintain and strengthen their long-term competitiveness," - stated Evgeny Vinokurov, EDB Chief Economist.

The publication provides policymakers with recommendations that could facilitate further discussions and help design an appropriate policy mix that would ensure both green and stable growth. Apart from assessing readiness, the authors suggest strengthening carbon-pricing enablers and discovering a wide range of complementary instruments to promote low-carbon growth together with facilitating stakeholders engagement and raising public awareness.

"Carbon pricing is not just a climate instrument-it's a competitiveness and fiscal resilience strategy. This joint EDB-CAREC Institute study lays out practical pathways and a readiness framework to help our countries design fit-for-purpose systems, mobilize green investment, and protect vulnerable households. By aligning domestic reforms with emerging global rules, Central Asia and Azerbaijan can turn transition risks into opportunities for low-carbon, inclusive growth," - noted Charymuhammet Shallyyev, Director of the CAREC Institute.

Both institutions are committed to supporting the region in advancing climate-related policies. They are calling for regional and international collaboration through knowledge sharing, capacity building, and co-financing, in order to ensure a meaningful and sustainable transition to a low-carbon economy.

The full joint EDB-CI research paper is available at https://eabr.org/en/analytics/special-reports/carbon-pricing-policy-opportunities-in-central-asia-and-azerbaijan/

Additional Information:

The Eurasian Development Bank (EDB) is a multilateral development bank investing in Eurasia. For more than 19 years, the Bank has worked to strengthen and expand economic ties and foster comprehensive development in its member countries. By July 2025, the EDB's cumulative portfolio comprised 319 projects with a total investment of US $19.1 billion. Its portfolio consists principally of projects with an integration effect in transport infrastructure, digital systems, green energy, agriculture, manufacturing and mechanical engineering. The Bank adheres to the UN Sustainable Development Goals and ESG principles in its operations.

The Central Asia Regional Economic Cooperation (CAREC) Institute is an intergovernmental organization committed to fostering economic cooperation in the CAREC region. Our mission is to support a shared future and sustainable development through knowledge generation, capacity building, and knowledge sharing.

Jointly owned and governed by eleven member countries-Afghanistan, Azerbaijan, the People's Republic of China, Georgia, Kazakhstan, the Kyrgyz Republic, Mongolia, Pakistan, Tajikistan, Turkmenistan, and Uzbekistan-the CAREC Institute serves as a regional knowledge hub headquartered in Urumqi, Xinjiang Uygur Autonomous Region of the People's Republic of China.

As the knowledge support arm of the CAREC Program, an ADB-led initiative backed by multilateral development partners, we facilitate practical, results-based regional projects and policy initiatives. Our work aligns with the vision of "Good Neighbours, Good Partners, and Good Prospects".

Contact information:

The EDB Media Centre: +7 (727) 244 40 44, ext. 4774 and 2160 ([email protected]), https://eabr.org

The CAREC Institute: +86 (991) 4558584 ([email protected]), https://www.carecinstitute.org/