This article examines the roles of international policy diffusion and domestic politics in shaping the design of an emissions trading system (ETS) in Kazakhstan. We find that although the overall framework for the Kazakh ETS and many of its design elements are based on the EU ETS, domestic political factors were central mediating variables in the diffusion process. The system was initiated at the highest levels within the government, but the fast-tracked nature of the implementation process did not provide sufficient notification to the donor community to mobilize much-needed technical support until the pilot phase had been completed. Implementation of a fully operational system was postponed until 2018 due to industry mobilization against the system and unresolved legal and technical issues. The findings indicate that the longer-term outcome of a diffusion process can be policy divergence, not convergence, as domestic interest groups influence policy and as governments learn from their own implementation experiences.