Global climate policy is increasingly shaping international trade, and new instruments such as the European Union’s Carbon Border Adjustment Mechanism (CBAM) are transforming the ways countries access global markets.
With the phased implementation of CBAM starting in 2026, its effects are expected to impact energy systems, industrial production, and trade relations worldwide—including between the EU and Central Asia.
Let’s start with what CBAM actually is.
Imagine that in Europe, producing goods (such as steel, cement, or fertilizers) costs more because factories must pay a “pollution tax” for greenhouse gas emissions into the atmosphere. This encourages them to adopt clean technologies.
However, companies from other countries, having no such taxes or strict environmental regulations, produce these goods more cheaply (by saving on environmental measures) and sell them in Europe. This creates unfair competition and harms the climate.
The Carbon Border Adjustment Mechanism (CBAM), adopted by the European Union, is a way to level the playing field in trade.
In other words, if a company wants to import goods into Europe from a country with lower environmental standards, it must purchase special CBAM certificates. The cost of these certificates equals the amount a European factory would pay for the same level of emissions.
The importer must accurately quantify the embedded emissions (the total greenhouse gases emitted) generated during the production of each specific batch of goods. Starting in 2026, emission reports can no longer be self-certified; they must be verified by accredited independent experts to ensure transparency. If data is missing or unreliable, the EU will apply the highest default values.
CBAM is designed to ensure that European producers do not lose out to cheaper but “dirtier” imports.
On a global scale, two-thirds of the world’s GDP is now covered by carbon pricing instruments.
UNECE Study: How Will the CBAM Mechanism Impact the Economies of Central Asian Countries?
To support Central Asian countries and their European partners in adapting to the Carbon Border Adjustment Mechanism (CBAM), the United Nations Economic Commission for Europe (UNECE) has released a new analytical document titled “The Implications of the Carbon Border Adjustment Mechanism on the Energy Transition in Central Asia”.
The analysis shows that EU carbon prices are projected to rise sharply, reaching approximately 200 USD per tonne of CO₂ by 2030 and around 350 USD by 2050.
This price increase could significantly affect Central Asian exporters of emissions-intensive goods—such as aluminum, cement, electricity, fertilizers, hydrogen, iron and steel—particularly countries with potential future exports of electricity or hydrogen to the EU, namely Kazakhstan and Uzbekistan.
The impact of CBAM on the region can be divided into several key aspects:
Direct Economic Risks and Costs
Projected Financial Losses: If countries in the region do not reduce emissions intensity, they will face substantial costs for purchasing CBAM certificates. According to studies, annual CBAM bill by 2035 could reach:
For Kazakhstan: over € 2 billion;
For Uzbekistan: around € 140 million;
For Tajikistan: around € 20 million.
Reduction in Production Volumes: In the most vulnerable sectors, there may be declines in output and job losses if Central Asian exporters cannot adapt to the new requirements or redirect exports to other markets.
Degree of Exposure of Countries in the Region
The study indicates varying levels of vulnerability among Central Asian countries:
Kazakhstan and Turkmenistan rank among the top 20 countries worldwide most exposed to CBAM due to significant export volumes of covered goods to the EU and the high carbon intensity of their production.
Uzbekistan and Kyrgyzstan are actively updating their Nationally Determined Contributions (NDCs) under the Paris Agreement, aiming to reduce greenhouse gas emissions intensity, which could mitigate CBAM impacts in the future.
Strategic Opportunities and Recommendations
The CBAM mechanism is viewed not only as a challenge but also as a “wake-up call” or “signal to action” for accelerating the energy transition.
Modeling demonstrates that comprehensive decarbonization of CBAM-covered sectors is the most cost-effective strategy for minimizing CBAM risks and securing market access.
Central Asian countries can also implement their own domestic carbon pricing instruments. The cost of carbon already paid in the country of origin is deducted from overall obligations when importing into the EU. Establishing domestic emissions trading systems (as Kazakhstan is doing) allows revenues to remain within the region for financing “green” projects, rather than transferring them to the EU budget.
Decarbonization in Central Asia
Overall, the study emphasizes that Central Asian countries should shift from passive compliance (simply paying for carbon emissions) to proactive decarbonization measures to maintain long-term competitiveness in the global market.
This implies, for example, in the energy sector, a large-scale phase-out of coal-based generation in favor of renewable sources (wind, solar), natural gas, nuclear energy, and hydrogen.
In industry — improving energy efficiency, electrifying thermal processes (e.g., in the cement sector), and introducing low-carbon technologies such as direct reduction of iron.
The study strongly recommends that countries in the region implement their own domestic emissions trading systems (ETS) or carbon taxes.
It is encouraging that countries in the region are demonstrating progress in updating their Nationally Determined Contributions (NDCs) under the Paris Agreement. Uzbekistan in 2025 increased its target for reducing GHG emissions intensity per unit of GDP to 50% by 2035. Kyrgyzstan raised its unconditional emissions reduction target to 18% by 2030.
Another important detail: Although CBAM currently focuses on CO₂, future regulation may also cover methane emissions, which is critically important for the oil and gas sector in Turkmenistan and Kazakhstan.
Meanwhile, the decarbonization strategy in Central Asia is beginning to extend beyond CO₂ alone, including efforts to address methane emissions — critical for the oil and gas sector. Kazakhstan is developing a dedicated National Methane Roadmap to fulfill its commitments under the Global Methane Pledge. Turkmenistan, a major natural gas producer, has officially joined the Global Methane Pledge and adopted a detailed Roadmap for 2025–2026.
By taking the lead in ambitious methane regulation, Central Asian countries can transform a major regional source of emissions into a defining opportunity for global climate leadership.
The report “The Implications of the Carbon Border Adjustment Mechanism on the Energy Transition in Central Asia” was prepared by the Stockholm Environment Institute and the UNECE Sustainable Energy Division within the framework of the “Energy Connectivity in Central Asia” project, funded by GIZ on behalf of the German Federal Ministry for the Environment, Nature Conservation, Nuclear Safety and Consumer Protection (BMUV), with the participation of national stakeholders. The full text of the analysis is available here: https://unece.org/sites/default/files/2026-02/CBAM%20Compliance_formatted-combined%20%281%29.pdf
/// nCa, 17 February 2026