Turkish industry focuses on transformation under Emissions Trading System

Turkey's upcoming Emissions Trading System (ETS) is set to drive a major transformation across key industrial sectors, including energy, metals, cement, chemicals, glass, and ceramics. The regulatory framework, established by the Climate Change Directorate under the Environment, Urbanization and Climate Change Ministry, was officially published in the Official Gazette last week. This marks a pivotal step in Turkey's efforts to align with global climate goals while managing the economic implications of decarbonization. The ETS regulation outlines the legal structure for Turkey’s national carbon market, aiming to reduce greenhouse gas emissions and promote the adoption of low-carbon production technologies. Industrial enterprises will be required to monitor, report, and verify their emissions, and surrender emission allowances corresponding to their verified output. This shift transforms carbon from a mere environmental metric into an economic factor influencing production costs, investment strategies, and overall competitiveness. Seyit Ardıç, chairman of the Ankara Chamber of Industry (ASO), emphasized the significance of the regulation during a statement to state-run Anadolu Agency. He described the ETS as a crucial milestone in the country’s green transformation. According to Ardıç, the system will have direct effects on energy, iron and steel, aluminum, cement and lime, glass and ceramics, paper and pulp, as well as specific chemical and hydrogen production activities. Additionally, the cost implications of the ETS could ripple through supply chains affecting sectors such as machinery, automotive, and electrical-electronics. Ardıç stressed the importance of a clear implementation schedule, robust financial support, and effective incentives to ensure the success of the transition. He highlighted the need for particular attention to small and medium-sized enterprises (SMEs), which require substantial assistance to manage the associated costs. “We must turn this process into a transformation opportunity that strengthens the competitiveness of our industry,” he stated. Global energy think tank Ember noted that the introduction of Turkey’s ETS represents a significant evolution in the nation’s climate policy. By setting product-based benchmarks to reduce industrial emission intensity, the system aids in supporting the green transition and maintaining the competitiveness of exporters under the EU’s Carbon Border Adjustment Mechanism (CBAM). Under the Turkish ETS, facilities emitting over 50,000 tons of CO2 annually will be mandated to monitor and report their emissions, and submit certificates matching their annual output. Ember pointed out that Turkey’s decision to implement the ETS is largely driven by its trade relationships with the European Union. The CBAM allows for deductions in carbon costs if a carbon price has already been paid in the exporting country. Implementing an effective ETS in Turkey ensures these costs remain within the country, directing funds toward the green transition of domestic industries. This approach also enhances the competitiveness of Turkey’s export sectors in international markets. As the ETS takes shape, stakeholders across the industrial sector are preparing for the challenges and opportunities ahead. With the system poised to reshape production practices and economic dynamics, the coming months will likely see increased focus on compliance, innovation, and strategic adaptation. The success of this initiative will depend on the effectiveness of support mechanisms and the ability of businesses to navigate the evolving landscape of sustainable production.