2. Statistics on environmental expenditures in Kazakhstan: Current state of affairs

This chapter outlines work by Kazakhstan’s Committee on Statistics with regard to implementation of the System of Environmental-Economic Account. It examines what kind of green finance is measured in the country, defining expenditures for environmental protection and resource management. It further offers a conceptual link between green finance and the country’s statistical system on environmental and green economy expenditures. Through the use of available statistical data presented in 11 figures, this chapter also shows how much investment and current expenditures have been spent for environmental protection activities and examines where major data gaps exist.

    

What kind of green finance is measured in Kazakhstan?

The Committee on Statistics of the Ministry of National Economy (Committee on Statistics) has developed and manages the statistical database on current and investment expenditures for environmental protection, as well as the associated questionnaires used to collect data. The committee bases its environment-related statistical system on the Classification of Environmental Protection Activities (CEPA) under the System of Environmental-Economic Accounts (SEEA).1 CEPA defines “environmental protection” as all purposeful activities and actions that directly aim to prevent, reduce and eliminate pollution or any other degradation of the environment resulting from production and consumption processes.

CEPA targets activities whose primary purpose is environmental protection. It thus excludes activities that aim principally to satisfy technical needs or internal health and safety requirements, or to mobilise and manage natural resources. It also excludes activities that aim primarily to produce and market environmental goods (since they do not directly aim at environmental protection, but rather at use of the goods produced). Savings of energy and raw materials are only included to the extent that they mainly aim at environmental protection.

This study uses the terms “current expenditure” and “investment expenditure” for environmental protection or resource management. These two terms are based on the instructions for the statistical forms for investment expenditures and costs of environmental protection. The study defines two different types of expenditures as follows:

• Current expenditures: expenses of entities to ensure ongoing work, technological processes and industries, as well as for the maintenance and operation of machinery and equipment, that are designed to prevent, reduce, clean or eliminate pollutants

• Investment expenditures: investment by entities in fixed assets, such as facilities, machinery, equipment and vehicles, to protect the environment or achieve rational use of natural resources (Committee on Statistics, 2017[1]), (Committee on Statistics, 2017[2]).

Figure 2.1 illustrates how relevant information on current and investment expenditures for environmental protection and resource management is collected. Statistical Form 161112108 collects data for investment. Statistical Form 151112212 collects data for environmental protection, including current (or operational) expenditures that are both provided by the Committee on Statistics.

Four types of expenses are collected through Statistical Form 151112212, of which this study uses the data collected as “current costs” as current expenditures for environmental protection. Apart from current costs, Kazakh entities report on their environmental payments, payments for resource use and compensation for damage (see the next sub-section for further details).

Figure 2.1 also shows which activities are measured as environmental protection and resource management activities in Kazakhstan’s statistical system (at the bottom of the figure). Information related to investment expenditure captures all the categories on environmental protection (in accordance with CEPA), and renewable energy and energy efficiency, as well as other climate change mitigation activities. Conversely, current expenditures only capture environmental protection activities under CEPA.

Figure 2.1. Conceptual link between measurement of green finance and Kazakhstan’s current statistical system on environmental and green economy expenditures

Note: RES: renewable energy sources. EE: energy efficiency. “Other climate mitigation” includes, but is not limited to, activities such as avoidance of fugitive gases.

Sources: Adapted from (Committee on Statistics, 2017[2]), https://stat.gov.kz/respondent/form; (Committee on Statistics, 2017[1]), https://stat.gov.kz/respondent/form.

The detailed instructions prepared by the Committee on Statistics provide definitions of certain environmental protection activities for which public- and private-sector entities are required to report their expenditures (Committee on Statistics, 2017[1]), (Committee on Statistics, 2017[2]). In addition, the instruction on investment expenditures also includes guidance about reporting investment in energy saving, renewable energy or other GHG reduction measures (See Table 2.1).

Table 2.1. Summary of definitions of expenditures for environmental protection and resource management
	Investment expenditures	Current expenditure
Environmental protection	protection of the environment and rational use of natural resources commissioning and reconstruction of wastewater treatment plants commissioning of facilities for cleaning household and drains improvement of surface water quality protection of land resources creation of specially protected nature areas.	maintenance and operation of fixed assets for environmental protection (without the cost of their modernisation and reconstruction): raw materials, fuel and electricity, personnel costs; insurance payments related to environmental facilities and equipment, etc. costs of collection, storage/disposal and processing/neutralisation, destruction, disposal of production and consumption wastes on their own control over the harmful effects on the environment, and monitoring activities, scientific and technical research, environmental management operational measures for the preservation and restoration of the quality of the environment disturbed as a result of previously conducted economic activities other measures to reduce the harmful effects on the environment.
Energy saving, renewable energy and other GHG reduction measures	investment in energy-saving technologies cost of implementing legal, organisational, scientific, industrial, technical and economic measures aimed at efficient use of fuels and energy investment in renewable energy GHG emissions reduction or increase in GHG absorption, such as using flaring gas, reducing waste generation, ncreasing reuse/alternative use, using gas cleaning systems, eliminating sources of GHG emissions investment in technology of producing goods and services for minimising environmental impact, preserving ecosystems, reducing use of resources, etc.	Not tracked as of 2019
Sources: Adapted from (Committee on Statistics, 2017[2]), https://stat.gov.kz/respondent/form; (Committee on Statistics, 2017[1]), https://stat.gov.kz/respondent/form.

This detailed guidance greatly helps clarify what activities and expenses each entity shall report as expenditures for environmental protection or certain resource management activities. The committee’s instructions are particularly detailed and useful for categories of expenses (e.g. the definition of “maintenance costs” or “investment costs in investment”). However, they are less detailed about specific activities (e.g. what kind of activities should be considered as “protection of atmospheric air and problems of climate change”).

Green finance that can contribute to implementation of the Green Economy Concept appears broader than the activities captured in the statistical forms and accompanying instructions. It is not enough to measure finance only for activities that aim primarily to protect the environment. For instance, the Statistical Forms do not clearly reflect measures for reduction of water resource consumption, rational use of forestry resources or climate change adaptation.

Further, the instructions do not detail key principles or performance criteria. When judging whether an activity should be reported as green finance, reporting entities have no reference point. Some activities are relatively easy to identify as green finance (e.g. solar panel and air pollution abatement). Others are less clear (e.g. energy efficiency for power plants, natural gas vehicles, climate change adaptation). Clearer principles or performance criteria for the latter would therefore be useful to better understand green finance flows in Kazakhstan and improve methodologies to measure such finance flows.

As discussed in Chapter 3, Kazakhstan’s effort for clearer definitions of green finance could benefit from several international and national initiatives that aim to define and classify green or sustainable finance. For instance, the European Commission through its Technical Expert Group (TEG) has started to develop “a common sustainable finance taxonomy to ensure market consistency and clarity, starting with climate change” (HLEG, 2018[3]). An activity must satisfy one of the following four conditions to qualify as sustainable finance (TEG, 2018[4]):

• Contribute substantially to at least one of the six environmental objectives (i.e. climate change mitigation; climate change adaptation; sustainable use and protection of water and marine resources; transition to a circular economy, waste prevention and recycling; pollution prevention and control; and protection of healthy ecosystems).

• Do no significant harm to any of the other environmental objectives.

• Comply with minimum social safeguards.

• Comply with technical screening criteria.

How does Kazakhstan’s national statistical system collect data?

The Committee on Statistics collects data on environmental expenditures in Kazakhstan, in accordance with CEPA and the Classification of Economic Activities of the Republic of Kazakhstan. The latter is equivalent to the International Standard Industrial Classification up to four digits (OECD, 2019[5]).

The committee collects information on investment expenditures (in fixed assets) and current (or operational) expenditures through two separate statistical forms (161112108 and 151112212). While the form on investment is used for reporting on various investment activities including on environment and resource management, the form on current environmental expenditures is specifically on environmental protection activities.

The statistical form on environmental protection (151112212) collects data on environmental expenditures. This form reports not only current (or operational) costs for environmental expenditures, but also four other types of expenses by entities as shown below:

1. 1. Current costs for environmental protection are used as current expenditures for environmental protection in this study. This type includes expenses of public and private entities to ensure ongoing technological processes and industries, as well as to maintain and operate machinery and equipment used to prevent, reduce, clean, recycle or eliminate pollutants;

2. 2. Environmental payments are expenses actually paid according to legislation for discharges, emissions of pollutants and waste, among others;

3. 3. Payments for the use of natural resources mainly include payments for the use of surface water resources, land, wildlife, forests and protected natural areas;

4. 4. Compensation for damages are fines and penalties collected by authorised state bodies for claims for damages due to violation of environmental legislation (Committee on Statistics, 2017[2]).

Current (or operational) expenditures in this report include only “current costs” among these four types. Current costs for environmental protection (type 1) account for 60% of total amount of the four types of expenses by the reporting entities. These costs have increased, in nominal terms, by about 60% from 2012 to 2017, amounting to KZT 175 billion (or USD 462 million2) in 2017 (see Figure 2.2). Reporting entities would also pay environmental payments, payments for resources use and compensations to the government authorities. However, such payments and compensations were not necessarily used directly for investment in, or operation of, environmental protection or resource management activities.

Figure 2.2. Trends in environmental expenses provided by Kazakh entities for environmental protection (excluding investment expenditures)

KZT billion - Nominal

Sources: Adapted from (Committee on Statistics, 2017[2]), https://stat.gov.kz/respondent/form; (Committee on Statistics, 2017[1]), https://stat.gov.kz/respondent/form.

Green finance can be provided or channelled through several different financial sources, intermediaries and project developers. These channels generally have different implications for data availability and the ease of measuring financial flows. In Kazakhstan, they include republican (or national) and local governments, development partners, state-owned enterprises, private-sector entities and households. Kazakhstan’s statistical system requires domestic public entities and all firms in the country’s business registry to report on their investment and current expenditures for environmental protection, and on their investment in resource management (e.g. energy efficiency and renewable energy development) (OECD, 2019[5]).

Table 2.2 outlines different sources and state of tracking for the green economy transition. It highlights financial instruments; sources, intermediaries and project developers for investments; and which of these channels report on expenditure-related data to the Committee on Statistics. The statistical system does not require entities to report on which financial instruments were used for their environmental expenditures. This study therefore does not disaggregate the data on green finance flows by financial instrument. Such an approach could be an area for future analytical work on Kazakhstan’s statistical system.

Table 2.2. Different sources and state of tracking
Sector	Sources/intermediaries/project developers	Examples of financial instruments	Reporting to the Committee on Statistics
Public	Domestic public finance (republican and local budgets)	Investment by republican and local budgets, and subsidies, including grants, for green activities	Yes
	Development financial institutions and bilateral donors (international)	Grants, concessional and non-concessional loans, bonds, equity and guarantees	No
Private	State-owned entities (e.g. Development Bank of Kazakhstan, Damu Fund, Samruk Kazyna, etc.)	Grants, concessional and non-concessional loans, bonds and equity	Yes (as private-sector entities)
	Private-sector entities based in Kazakhstan	Debt/equity financing Balance-sheet financing	Yes (those included in the business registry)
	Private-sector entities based outside Kazakhstan	Debt/equity financing Balance-sheet financing	No
	Households	Own revenues and expenses Debt financing	No
Sources: Adapted from (Committee on Statistics, 2017[2]), https://stat.gov.kz/respondent/form; (Committee on Statistics, 2017[1]), https://stat.gov.kz/respondent/form; (OECD, 2019[5]).

What figures do the available data sets show?

This sub-section uses available data to estimate the scale of current and investment expenditures for environmental protection activities, and to some extent, for resource management activities in Kazakhstan. Examples of resource management include renewable energy, energy efficiency and other climate mitigation actions such as avoidance of fugitive gases. It draws on data on the website of the Committee on Statistics, as well as on information from the pilot estimate under joint work by the OECD and the government of Kazakhstan on the SEEA. It first provides an overview of both current and investment expenditures, followed by separate and more detailed examination of each of them.

Overview: Current and investment expenditures

Table 2.3 shows the data on investment and current expenditures (current costs only)3 for environmental protection. For both investment and current expenditures, the largest amounts were spent on air pollution, wastewater treatment and waste management, as well as on protection and rehabilitation of soil, groundwater and surface water. The table also shows a sharp rise in investment expenditures for renewable energy and energy efficiency from 2015-17, which amounted to nearly KZT 30 billion (USD 79 million) in nominal terms. It also marks substantial fluctuations in the volumes during the same period.

Table 2.3. Investment and current expenditures of environmental protection and certain resource management activities from 2015 to 2017
KZT million, nominal
Activity	CEPA2 class	Investment expenditure			Current expenditure (current costs only)
		2015	2016	2017	2015	2016	2017
Protection of atmospheric air and problems of climate change	CEPA 1	24 936	18 128	22 764	50 613	41 624	48 912
Wastewater treatment	CEPA 2	15 186	10 128	5 966	46 221	44 166	47 842
Waste management	CEPA 3	14 131	8 464	6 210	51 883	42 105	50 153
Protection and rehabilitation of soil, groundwater and surface water	CEPA 4	10 449	4 278	8 826	10 998	16 182	13 578
Noise and vibration effects reduction	CEPA 5	-	4	-	31	36	39
Conservation of biodiversity and habitat	CEPA 6	688	461	420	903	880	635
Radiation safety	CEPA 7	192	90	81	1 120	1 110	1 135
Scientific research	CEPA 8	333	621	129	2 935	3 333	4 038
Other areas of environmental protection	CEPA 9	16 969	1 761	42 568	9 946	2 770	9 112
Total (Environmental protection)		82 883	43 937	86 962	174 650	152 206	175 445
Renewable energy sources	-	7 488	956	18 885	n.a.	n.a.	n.a.
Energy-saving technologies and energy efficiency	-	656	155	15 612	n.a.	n.a.	n.a.
Other measures to reduce GHG emissions1	-	1 115	218	n.a.	n.a.	n.a.	n.a.
Total (Resource management)		9 258	1 329	34 497	n.a.	n.a.	n.a.
Notes:
← 1. These other measures are gas flaring, reduction of waste generation and increasing reuse or alternative use to reduce waste landfill, eliminating sources of GHG emissions.
← 2. CEPA: Classification for Environmental Protection Activities, GHG: Greenhouse gas, n.a.: information not available.
Sources: Adapted from (Committee on Statistics, 2017[2]), https://stat.gov.kz/respondent/form; (Committee on Statistics, 2017[1]), https://stat.gov.kz/respondent/form.

The level of investment and current expenditures (current costs only) for environmental protection as a share of GDP remains relatively low, compared to those of EU countries (see Figure 2.3). Investment as a share of GDP is 0.2% on average over the period between 2015 and 2017 and that of current expenditure (only current costs) is 0.4% for the same period. This is substantially lower than the targeted investment needs identified by the Green Economy Concept (1.0% of GDP), while recognising the data may have missed certain types of expenditures. Environmental expenditure per GDP in EU-28 countries accounts for 2.0% on average over the same period (for data on the European Union, see (Eurostat, n.d.[6])).

Figure 2.3. Investment and current expenditure for environmental protection as share of GDP

Note: Left axis: KZT; Right axis: percentage of GRP

Sources: Adapted from (Committee on Statistics, 2017[2]), https://stat.gov.kz/respondent/form; (Committee on Statistics, 2017[1]), https://stat.gov.kz/respondent/form; (World Bank, 2019[7]), https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG.

Current expenditures

Figure 2.4 illustrates how data on current environmental expenditures are disaggregated and at what levels these data are available. Disaggregated data on current expenditure (current costs in the figure) for environmental protection into private- and public-sector entities (and households) would be useful for the Kazakh government to analyse green finance flows within the country. However, the Committee on Statistics does not publish such data. Disaggregated data are available by region (i.e. 14 regions, as well as Astana City and Almaty City), as well as by activity for the data sets from the pilot estimate during 2015-17.

Figure 2.4. Availability of disaggregated data on current expenditure of environmental protection

Note: This study considers only “current costs” to be “current expenditures” as part of green finance.

Source: Author’s own elaborations

About 85% of the current expenditures for environmental protection in 2017 has been directed to protection of atmospheric air and problems of climate change (28%), wastewater treatment (27%) and waste management (29%). Current expenditures are also an important source for scientific research related to environmental protection, which accounts for 2%.

Current expenditures for environmental protection also vary substantially among oblasts (see Figure 2.5). For instance, Aktobe, Atyrau, Karaganda, Mangistau and Pavlodar oblasts record relatively large amounts of expenditure for environmental protection. This is partly due to the relatively large size of the economies and their structures. In terms of economic structure, Atyrau and Mangistau oblasts have relatively large shares of industrial, mining and extractive sectors in their gross regional product (GRP). Karaganda and Pavlodar oblasts have relatively large shares of manufacturing and energy sectors in their GRP. Aktobe has a relatively large share of mining and energy sectors in its GRP. Aktobe, Mangistau and Pavlodar also record relatively high shares of environmental expenditures per GRP compared to other regions (0.86%, 0.75% and 0.96% respectively).

Figure 2.5. Current environmental expenditures (current costs only) by region

Note: Left axis: KZT billion annual average between 2015 and 2017; Right axis: percentage of GRP

Sources: Adapted from (Committee on Statistics, 2017[2]), https://stat.gov.kz/respondent/form; (Committee on Statistics, 2017[1]), https://stat.gov.kz/respondent/form.

Expenditures are expressed in nominal terms and the average annual inflation rate between 2012 and 2017 was about 7.8%. Hence, the increase is slightly smaller as shown in Figure 2.6. Discussion under the joint project on SEEA by the Committee on Statistics and the OECD also suggested that Kazakhstan explore and determine the most appropriate price index to derive the expenditure data in real terms (OECD, 2019[5]).

Figure 2.6. Trends in current expenditure for environmental protection (current costs only)

KZT – Nominal and real price in 2012

Sources: Adapted from (Committee on Statistics, 2017[2]), https://stat.gov.kz/respondent/form; (Committee on Statistics, 2017[1]), https://stat.gov.kz/respondent/form. GDP deflators are obtained from (World Bank, 2019[8]), https://data.worldbank.org/indicator/NY.GDP.DEFL.KD.ZG?end=2017&locations=KZ&start=2011&view=chart.

Different industrial sectors have different spending patterns for environmental protection. Figure 2.7 shows data on current environmental expenditures by the six economic sectors that spent the largest amounts for a three-year average over 2015-17. The mining and quarrying industry spent the largest volume of current expenditures for environmental protection activities, especially waste management (KZT 25 billion) and air pollution (KZT 13 billion). This seems natural given the nature of this industry. The manufacturing industry also spends a large amount of current environmental expenditures related to air pollution (KZT 26 billion), wastewater management (KZT 20 billion) and waste management (KZT 12 billion).

Figure 2.7. Top six industries spending current expenditures for environmental protection

KZT billion per year – average between 2015 and 2017

Notes:

1. CEPA1: Protection of ambient air and climate; CEPA2: Wastewater management; CEPA3: Waste management; CEPA4: Protection and remediation of soil, groundwater and surface water; CEPA5: Noise and vibration abatement (excluding workplace protection); CEPA6: Protection of biodiversity and landscapes; CEPA7: Protection against radiation (excluding external safety); CEPA8: Research and development; CEPA9: Other environmental protection activities.

2. For full data, see Annex 1.

Sources: Adapted from (Committee on Statistics, 2017[2]), https://stat.gov.kz/respondent/form; (Committee on Statistics, 2017[1]), https://stat.gov.kz/respondent/form.

Investment expenditures

Similar to current expenditures, the Committee on Statistics also collects data on investment expenditures from public and private-sector entities in accordance with CEPA, but through Statistical Form 161112108. In this way, the committee collects and maintains data on expenditures for fixed capital formation in various environmental protection activities along with other types of investment-related data in general.

Disaggregated data on investment expenditure of environmental protection are available by region, source and activity. This means the disaggregation of data for investment expenditure is more granular than that of current expenditures (Figure 2.8). Public-sector finance is disaggregated into republican and local budgets. For its part, private-sector finance consists of investment funded by individual entities’ own sources and borrowed funds (e.g. bank loans). The private sector here also comprises state-owned enterprises, such as JSC Baiterek National Management Holding, including the Development Bank of Kazakhstan and JSC Sovereign Wealth Fund Samruk Kazyna. Yet publicly available statistics do not distinguish investment data by these state-owned entities from the rest of the private-sector entities.

Figure 2.8. Availability of disaggregated data on investment expenditure of environmental protection

Source: Author’s own elaborations

As shown in Figure 2.9, the private sector has provided the largest portion of investment in environmental protection (89% of total expenditure) over 2013-17. Data on the private investment markedly fluctuate. Further, the data show that most private-sector entities (i.e. 84% of total private sector finance) use their own funding, such as internal reserves, to invest in their environmental protection activities during the same period.

On average, over 2013-17, the private-sector entities spent about KZT 71 billion (USD 187.7 million) per year out of their own funding for environmental protection. During the same period, they spent about KZT 13.2 million (USD 34.9 million) annually with borrowed funds. In the public sector, the republican budget allocated KZT 4.5 billion (USD 11.9 million) per year, while local governments allocated KZT 5.4 billion (USD 14.2 million) on average annually for 2013-17.

Figure 2.9. Investment expenditures in environmental protection

KZT - Nominal

Sources: Adapted from (Committee on Statistics, 2017[2]), https://stat.gov.kz/respondent/form; (Committee on Statistics, 2017[1]), https://stat.gov.kz/respondent/form.

Of borrowed funds, the available statistics show that domestic bank lending was small (in 2013-14) or nearly non-existent (in 2015-17). It is not clear why bank loans financed such little investment, especially from 2015 to 2017. Nor is it clear why bank loans decreased from KZT 3.4 billion (USD 9 million) in 2013 to almost zero in recent years. As one potential reason, environmental protection activities cannot afford the high cost of capital (e.g. high interest rate). As a result, private-sector entities often tend not to take loans from banks. This rationale, however, does not explain the relatively high volume of bank loans in 2013. Identifying the underlying reasons may deserve further analytical work.

The data show notable variations in the amounts of investment in certain sectors such as wastewater management and “other areas”. These could benefit from further examination (Table 2.4).

Apart from the salient number on the “other areas” category in 2017, investment in the “air pollution prevention and climate change” category shows the largest number of all (27.6% on average between 2013 and 2017). Meanwhile, climate change related activities here, by definition, do not include energy efficiency or renewable energy under CEPA. Another large part of investment has been spent on “wastewater treatment” (20.8% on average), followed by “protection and rehabilitation of soil, groundwater and surface water” (15.5%) and “waste management” (12.0%).

Table 2.4. Investment expenditures for environmental protection by activity
KZT million
	2012	2013	2014	2015	2016	2017
Protection of atmospheric air and problems of climate change	28 829	26 815	27 056	24 936	18 128	22 764
Wastewater treatment	20 119	18 775	41 812	15 186	10 128	5 966
Waste management	10 777	8 026	16 941	14 131	8 464	6 210
Protection and rehabilitation of soil, groundwater and surface water	7 597	10 612	13 436	10 449	4 278	8 826
Reduction of noise and vibration effects	22	5	126	_	4	_
Conservation of biodiversity and habitat	379	135	164	688	461	420
Radiation safety	451	197	71	192	90	81
Scientific research	454	722	790	333	621	129
Other areas of environmental protection	6 522	12 213	3 096	16 969	1 761	42 568
Sources: Adapted from (Committee on Statistics, 2017[2]), https://stat.gov.kz/respondent/form; (Committee on Statistics, 2017[1]), https://stat.gov.kz/respondent/form.

Similar to current expenditures, the levels of investment in environmental protection also vary substantially among regions (Figure 2.10). For instance, Atyrau and Mangistau oblasts, as well as Astana City, recorded relatively large scales of investment expenditures for environmental protection during 2015-17. The relatively large volume of investment in Astana City may have correlated with the large scale of investment in fixed capital formation in general in the still expanding capital city. In terms of shares of environmental expenditures per GRP, Akmola, Zhambyl and North Kazakhstan regions marked relatively high shares over 2015-17.

Figure 2.10. Investment environmental expenditures by region

Note: Left axis: KZT billion annual average between 2015 and 2017; Right axis: percentage of GRP

Sources: Adapted from (Committee on Statistics, 2017[2]), https://stat.gov.kz/respondent/form; (Committee on Statistics, 2017[1]), https://stat.gov.kz/respondent/form.

Figure 2.11 shows data on investment environmental expenditures by six economic sectors that spent the largest amounts during 2015-17. The numbers shown are a three-year average over the period. Similar to current expenditures, the mining industry invested the largest amount in environmental protection activities. Within these activities, they invested especially in air pollution abatement (KZT 7.0 billion) and wastewater management (KZT 6.0 billion).

The energy sector (i.e. electricity, gas, heat and air conditioning supply) also provided a substantial amount of investment. This was especially true for “other environmental activities”, although the types of activities included in this category are not clear. The energy sector also substantially invested in air pollution abatement (KZT 4.0 billion) and waste management (KZT 3.0 billion). Similarly, the public administration sector invested a large amount in environmental protection. Its activities included air pollution abatement, protection and remediation of soil, groundwater and surface water, as well as wastewater management. The manufacturing sector invested KZT 7.0 billion per year in air pollution abatement, which was the largest amount for one single class of activity.

Figure 2.11. Top six industries spending investment expenditures for environmental protection and their purposes by CEPA class

KZT billion per year – average between 2015 and 2017

Notes:

1. CEPA1: Protection of ambient air and climate; CEPA2: Wastewater management; CEPA3: Waste management; CEPA4: Protection and remediation of soil, groundwater and surface water; CEPA5: Noise and vibration abatement (excluding workplace protection); CEPA6: Protection of biodiversity and landscapes; CEPA7: Protection against radiation (excluding external safety); CEPA8: Research and development; CEPA9: Other environmental protection activities.

2. For full data, see Annex 1.

Sources: Adapted from (Committee on Statistics, 2017[2]), https://stat.gov.kz/respondent/form; (Committee on Statistics, 2017[1]), https://stat.gov.kz/respondent/form.

The statistical form for investment also includes the following three categories as investment activities related to “green economy”:

• investment in renewable energy sources

• investment in energy saving and efficiency

• investment aimed at GHG reduction.

The instruction by the Committee on Statistics shows the three categories include investment in gas flaring, reduction of waste generation and increasing reuse or alternative use to reduce waste landfill, and eliminating sources of GHG emissions. This is especially the case for “investment aimed at GHG reduction” (Committee on Statistics, 2017[1]).

As Table 2.5 shows, the amounts of investment in those activities captured through the statistical form vary markedly, with a substantial hike in 2017. This study could not identify the underlying causes of such a significant change. However, it is relatively common that data on investment expenditures tend to fluctuate to a greater extent than data on current expenditures.

Table 2.5. Investment expenditure for “green economy” related activities
KZT million
	2012	2013	2014	2015	2016	2017
Investments in renewable energy sources	_	9 042	490	7 488	956	18 885
Investments in energy-saving technologies and energy efficiency	_	906	872	656	155	15 612
Investments aimed at reducing greenhouse gas emissions	_	_	413	1 115	218	_
Sources: Adapted from (Committee on Statistics, 2017[2]), https://stat.gov.kz/respondent/form; (Committee on Statistics, 2017[1]), https://stat.gov.kz/respondent/form.

Annex 2.A. Full data on current and investment expenditures for environmental protection by sector and by CEPA class

Annex Table 2.A.1. Current expenditures for environmental protection by sector and by CEPA class
KZT million: three-year average between 2015 and 2017
	CEPA 1	CEPA 2	CEPA 3	CEPA 4	CEPA 5	CEPA 6	CEPA 7	CEPA 8	CEPA 9	Total (2015-17 average)
Agriculture, forestry and fishing	53	37	161	37	1	0	0	4	10	303
Industry	42 262	41 604	41 456	10 628	27	313	1 088	2 469	6 710	146 557
Mining and quarrying	13 333	10 519	24 567	8 598	14	195	940	2 024	3 912	64 102
Manufacturing	25 494	20 250	12 230	862	10	114	140	304	2 492	61 896
Electricity, gas, steam and air conditioning supply	3 194	3 388	1 256	994	3	4	6	107	237	9 189
Water supply, sewerage, waste management and remediation	240	7 446	3 403	174	0	1	3	34	68	11 369
Construction	294	1 074	1 375	143	0	3	1	134	72	3 095
Wholesale and retail trade; repair of motor vehicles and motorcycles	152	172	290	17	0	0	1	6	45	683
Transportation and storage	562	597	700	318	6	73	24	138	154	2 572
Accommodation and food service activities	4	90	118	3	0	0	0	0	2	220
Information and communication	6	12	50	0	0	0	0	0	1	70
Financial and insurance activities	7	18	32	0	0	0	0	0	0	59
Real estate activities	50	153	226	6	0	0	0	0	5	440
Professional, scientific and technical activities	3 461	1 647	2 814	2 431	1	417	7	681	261	11 719
Administrative and support service activities	9	39	165	3	0	0	0	4	6	226
Public administration and defence; compulsory social security	102	151	172	0	0	0	0	0	4	431
Education	21	264	135	0	1	0	0	0	2	422
Human health and social work activities	43	179	312	1	0	0	0	0	0	535
Arts, entertainment and recreation	16	12	16	2	0	0	0	0	1	42
Other services	7	26	24	0	0	0	0	0	2	58
Total	47 050	46 076	48 047	13 586	35	806	1 122	3 436	7 276	167 434
Note: CEPA1: Protection of ambient air and climate; CEPA2: Wastewater management; CEPA3: Waste management; CEPA4: Protection and remediation of soil, groundwater and surface water; CEPA5: Noise and vibration abatement (excluding workplace protection); CEPA6: Protection of biodiversity and landscapes; CEPA7: Protection against radiation (excluding external safety); CEPA8: Research and development; CEPA9: Other environmental protection activities.
Sources: Adapted from (Committee on Statistics, 2017[2]), https://stat.gov.kz/respondent/form; (Committee on Statistics, 2017[1]), https://stat.gov.kz/respondent/form.

Annex Table 2.A.2. Investment expenditures for environmental protection by sector and by CEPA class
KZT million: three-year average between 2015 and 2017
	CEPA 1	CEPA 2	CEPA 3	CEPA 4	CEPA 5	CEPA 6	CEPA 7	CEPA 8	CEPA 9	Total (2015-17 average)
Agriculture, forestry and fishing	0	22	1	0	0	0	0	0	109	87
Industry	17 485	7 649	7 786	3 219	2	64	115	289	14 395	51 004
Mining and quarrying	6 708	6 189	3 170	985	0	63	55	276	5 332	22 778
Manufacturing	7 123	493	1 162	689	1	2	61	7	620	10 154
Electricity, gas, steam and air conditioning supply	3 654	207	3 435	1 455	0	1	0	12	8 429	17 188
Water supply, sewerage, waste management and remediation	0	760	19	90	0	0	0	0	22	884
Construction	1	0	0	8	0	0	0	0	15 401	7 711
Wholesale and retail trade; repair of motor vehicles and motorcycles	0	0	1	0	0	0	0	0	0	1
Transportation and storage	18	1	1	0	0	0	1	0	0	21
Accommodation and food service activities	0	0	0	0	0	0	0	0	0	0
Information and communication	16	0	0	0	0	0	0	0	0	16
Financial and insurance activities	0	0	6	0	0	0	0	0	0	6
Real estate activities	0	7	2	0	0	0	0	0	0	6
Professional, scientific and technical activities	463	489	653	1 457	0	261	5	72	175	3 574
Administrative and support service activities	0	0	0	0	0	0	0	0	0	1
Public administration and defence; compulsory social security	3 959	2 268	888	4 357	0	297	0	0	269	10 751
Education	0	0	0	0	0	0	0	0	0	0
Human health and social work activities	1	0	0	0	0	0	0	0	0	1
Arts, entertainment and recreation	0	0	0	0	0	0	0	0	0	0
Other services	0	0	800	0	0	0	0	0	581	981
Total	21 943	10 427	9 601	7 851	2	523	121	361	20 433	71 261
Note: CEPA1: Protection of ambient air and climate; CEPA2: Wastewater management; CEPA3: Waste management; CEPA4: Protection and remediation of soil, groundwater and surface water; CEPA5: Noise and vibration abatement (excluding workplace protection); CEPA6: Protection of biodiversity and landscapes; CEPA7: Protection against radiation (excluding external safety); CEPA8: Research and development; CEPA9: Other environmental protection activities.
Sources: Adapted from (Committee on Statistics, 2017[2]), https://stat.gov.kz/respondent/form; (Committee on Statistics, 2017[1]), https://stat.gov.kz/respondent/form.

Annex 2.B. Work by the Committee on Statistics

The Committee on Statistics has developed and manages the statistical database on current and investment expenditures for environmental protection, as well as the associated questionnaires used to collect data. The committee publishes information on current and investment expenditures through the following two annual reports:

1. 1. Report on environmental protection expenditures4: this provides data on, among others, current expenditures for environmental protection, environmentally related payments and payments for natural resources;

2. 2. Report on investment activity5: this provides data on investments in fixed assets, including, but not limited to, those in activities for environmental protection and green economy transition such as renewable energy, energy efficiency and other types of climate change mitigation.

The Committee on Statistics produces environmental-economic accounts based on environmental statistics and administrative data. These come from sources such as the Ministry of Agriculture, the Ministry of Energy, the Ministry of Finance, and the Ministry for Investments and Development. The Committee on Statistics has been working to align the country’s statistical system with the System of Environmental-Economic Accounting 2012 – Central Framework (SEEA 2012 Central Framework).6 Through the collaboration with the OECD, the committee conducted pilot calculations (based on available data) that covered the following SEEA accounts and years:

• physical flow account for energy for 2014-17

• air emission account for air pollutants for 2014-17

• solid waste account for 2016-17

• environmental protection expenditure account for 2015-17

• environmental tax account for 2013-17

• asset account for mineral and energy resources (for 19 main mineral and energy resources) for 2014-17.

Among these accounts, the environmental protection expenditure accounts (EPEA) is particularly relevant to this study on measuring green finance flows. EPEA also relates to a number of other accounts in the SEEA, particularly the Environmental Goods and Services Sector. The Committee on Statistics compiled the pilot EPEA based on SEEA and the Eurostat Handbook on Environmental Protection Expenditure Accounts.

Annex Box 2.B.1. Environmentally beneficial subsidies in Kazakhstan

Kazakhstan has both environmentally preferable and harmful subsidy schemes. On the preferable subsidies, the law of the Republic of Kazakhstan “On support for the use of renewable energy sources” specifies the country provides individual consumers with targeted assistance for half the cost of installations for the use of renewable energy sources with a total power of no more than 5 kW. The tariff for 1 kWh of electricity generated is set at different levels: KZT 22.68 for wind power, KZT 34.61 for solar power, KZT 16.71 for small hydropower and KZT 32.23 for biogas (as of March 2019). It remains unclear how such public expenses for the subsidies have been captured in Kazakhstan’s national statistical system, which hence may deserve further examination.

Source: (Government of Kazakhstan, 2009[9]), http://adilet.zan.kz/rus/docs/Z090000165_.

There is a range of databases outside Kazakhstan’s national statistical system, which could help the country measure green finance flows. International public databases include AIDDATA, OECD DAC-Credit Reporting System, Eastern Partnership Transport Projects Database, World Bank Private Participation in Infrastructure Database, and databases of development financial institutions. Commercial databases include Bloomberg New Energy Finance, Dealogic, IJGlobal and Thomson ONE. Domestic institutions include Kazakh Invest and the national development funds and banks.

References

[2] Committee on Statistics (2017), Instruction for completing the statistical form national statistical observation “Report on the costs of protection environment ”, Committee on Statistics under Ministry of National Economy, Nur-Sultan, https://stat.gov.kz/respondent/form.

[1] Committee on Statistics (2017), Instructions for completing the statistical form of nationwide statistical observation “Report on investment activity”, Appendix 4 to the order Chairman of the Committee on Statistics of the Ministry National Economy of the Republic of Kazakhstan, Nur-Sultan, https://stat.gov.kz/respondent/form.

[6] Eurostat (n.d.), Environmental Protection Expenditure Accounts: National Expenditure on Environmental Protection 2006-2017, https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Environmental_protection_expenditure_accounts#General_overview.

[9] Government of Kazakhstan (2009), Law of the Republic of Kazakhstan “On support for the use of renewable energy sources, http://adilet.zan.kz/rus/docs/Z090000165_ (accessed on 12 February 2020).

[3] HLEG (2018), Financing a Sustainable European Economy: Final Report 2018 by the High-Level Expert Group on Sustainable Finance - Secretariat provided by the European Commission, High-Level Expert Group on Sustainable Finance, Brussels, https://ec.europa.eu/info/sites/info/files/180131-sustainable-finance-final-report_en.pdf.

[5] OECD (2019), Agreement between the government of the Republic of Kazakhstan and the Organisation for Economic Co-operation and Development for the realisation of the project “Implementation of the System of Environmental Economic Accounting”: Interim Report, OECD, Paris.

[4] TEG (2018), Taxonomy pack for feedback and workshops invitations December 2019, Technical Expert Group on Sustainable Finance, Brussels, https://ec.europa.eu/info/sites/info/files/business_economy_euro/banking_and_finance/documents/sustainable-finance-taxonomy-feedback-and-workshops_en.pdf.

[7] World Bank (2019), World Development Indicators GDP Growth (annual %), (database), https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG (accessed on 18 January 2019).

[8] World Bank (2019), World Development Indicators: Inflation, GDP Deflator (annual %), (database), https://data.worldbank.org/indicator/NY.GDP.DEFL.KD.ZG?end=2017&locations=KZ&start=2011&view=chart (accessed on 4 April 2019).

Notes

← 1. For further information, see:

https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Glossary:Classification_of_environmental_protection_activities_(CEPA)

← 2. Using the exchange rate between US Dollar and Kazakh tenge by the National Bank of Kazakhstan (KZT 378.29 = USD 1 as of 4 April 2019).

← 3. These current (operational) expenditures only include current costs which enterprises and organisations spent to conduct events, ensure ongoing work technological processes and industries, and maintain and operate machinery and equipment.

← 4. For the latest reports, see:

http://stat.gov.kz/faces/wcnav_externalId/homeNumbersEnvironment?_afrLoop=840975243553685#%40%3F_afrLoop%3D840975243553685%26_adf.ctrl-state%3D1jwbs8noj_43

← 5. For the latest reports, see:

http://stat.gov.kz/faces/wcnav_externalId/homeNumbersInvestment?_afrLoop=840973946095242#%40%3F_afrLoop%3D840973946095242%26_adf.ctrl-state%3D1jwbs8noj_30

← 6. This work conducted with various partners, including the OECD under the project “Introduction of the System of Environmental-Economic Accounting” as part of the Kazakhstan country programme between the government of Kazakhstan and the OECD. The SEEA 2012 Central Framework was produced under the auspices of the United Nations Statistics Division, the Statistical Office of the European Union (Eurostat), the Food and Agriculture Organization of the United Nations, the OECD, the International Monetary Fund and the World Bank Group. It was endorsed as an international standard by the United Nations Statistical Commission in 2012.