The Green Finance Centre Ltd of the Astana International Financial Centre (hereinafter referred to as GFC) has handed a draft Decree of the Government of Kazakhstan on Green Taxonomy (hereinafter referred to as Taxonomy) over to the Ministry of Ecology, Geology and Natural Resources. The draft Decree includes a revised Taxonomy and accompanying guidance disclosing the approaches to its development and use, for application both within the framework of state financial support programs for green projects and in the broader context of green financing.
Devising a taxonomy of green projects is an essential element of legislative initiatives proposed by the AIFC Authority to develop a green finance system in Kazakhstan. A green taxonomy, as a clear guide to identifying eligible activities and projects as environmentally sustainable, is an integral part of a country's green ecosystem.
All language on green finance previously proposed by AIFC in support of the new market have been adopted in the new Environmental Code of Kazakhstan. Along with them, accompanying amendments are made to the Entrepreneurial Code of Kazakhstan that lay down incentives for businesses to use green finance instruments. In particular, they provide for subsidizing interest rates for green loans and green bonds, allowing businesses to obtain concessional loans within the framework of the "Business Road Map-2025" (State Program for Support and Development of Businesses). For instance, business entities in municipal and industrial waste treatment, installation of energy-saving equipment and lighting, energy saving services and many other sectors will get access to financial support of up to 50% of green loan rates, as well as up to 50% of coupons rates for green bonds.
As a first step, the Taxonomy is to be used expressly to provide a basis for the application of such economic incentives. Accordingly, it is expected to be applied in Kazakhstan under the proposed subsidy scheme from July this year. The draft Decree, apart from setting approaches to Taxonomy application by financial market entities, authorized financial support agencies, regulators and potential external review providers for green projects within the framework of state incentives for the green economy, also covers the matter of obtaining confirmation of green projects’ compliance with the Taxonomy thresholds and the respective role of external review providers. Specifically, it defines possible categories of potential external review providers assessing compliance with the Taxonomy, recommended and mandatory requirements for their competence, accountability for providing opinions that are not confirmed by subsequent evaluations of environmental impacts of green projects, and other issues.
The draft of the "Green" taxonomy per se, originally developed by GFC with the participation of international experts, underwent a number of consultation rounds involving a wide range of stakeholders. Separate discussions were held on the Taxonomy application scheme with international organizations, second-tier banks, potential external review providers, representatives of state bodies and authorized organizations, and as part of the work on the specification of thresholds for certain Taxonomy activities led by the International Center for Green Technologies and Investment Projects.
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The Astana International Financial Centre was created by the initiative of the First President of the Republic of Kazakhstan, Leader of the Nation, Nur-Sultan Nazarbayev as part of the “100 steps to implement five institutional reforms” national program. The Centre’s development strategy until 2025 was approved by the Management council of the AIFC during the council’s meeting on July 2, 2020. In accordance with the strategy, the vision of AIFC is in becoming the leading financial centre in the region that includes Central Asia, the Caucasus, EAEU countries, western China, Mongolia, and Eastern Europe.
The mission of the AIFC is to assist the sustainable and long term development of the region. As the head of state Tokayev noted, “AIFC, with its unique opportunities, can act as a universal platform that connects the countries in the region.”
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