Turkey introduces its own emissions trading system, initially for sectors covered by the EU carbon border adjustment mechanism

Turkey has adopted rules for the pilot phase of its emissions trading system, which will run in 2026 and 2027. It will initially focus on five sectors that overlap with the main scope of the European Union’s Carbon Border Adjustment Mechanism (CBAM). However, the first obligation to surrender allowances for verified emissions will apply only to emissions from 2027. The international news service Argus reported.

According to published information, companies covered by the system will be subject only to emissions monitoring, reporting and verification in 2026. The first obligation to meet emissions targets will apply to emissions from 2027. Allowances corresponding to verified emissions must be surrendered by the last working day of November 2028 at the latest.

The pilot is expected to cover electricity generation, cement, iron and steel, aluminium, and fertilisers. Participation is mandatory for installations emitting at least 50 thousand tonnes of CO₂ equivalent. These sectors are therefore largely also covered by the European CBAM, which also covers imported hydrogen.

From 2026, CBAM will apply to selected imports from outside the EU. Importers of covered goods above a specified threshold will have to purchase certificates priced in line with allowances in the EU Emissions Trading System (EU ETS). Each certificate corresponds to one tonne of CO₂ emissions. The mechanism is intended to limit so-called carbon leakage—the relocation of emissions-intensive industrial production from the EU—and level the playing field between European producers and foreign competitors.

What counts towards the carbon price

CBAM costs may be reduced if an importer can demonstrate that it has already paid for emissions in the country of origin. The European calculation also takes into account the free allowances received by EU producers of the same goods. The mere existence of a Turkish ETS therefore does not automatically mean that import obligations will be reduced. What matters is whether, and how much, was actually paid for emissions.

In the 2027 pilot year, allowances in Turkey are to be allocated entirely free of charge. This means that, at this stage, the new system may not create direct costs for producers comparable to those under a fully auctioned system. The specific impact on European importers will therefore also depend on how Turkish rules quantify any carbon price paid.

Different benchmarks and uncertainty around offsets

Turkey plans to set different benchmarks for electricity generation and industry. For power plants, these are to be based on the weighted average emissions intensity over the five-year period from 2023 to 2027 and set for individual installations. In industry, they will be based on the emissions intensity of the entire sector in a given year. The rules also allow the use of so-called carbon offsets, subject to explicit approval by the Carbon Market Board (CMB).

Operators of installations covered by the new emissions system must submit verified data for 2026 by 30 April 2027 and for 2027 by 30 April 2028. Electricity producers must also submit historical data for 2023–2025 by 30 June. Allowances issued for the pilot phase may be used only to meet obligations in that phase, while unmet obligations will carry over into the first full period.

Impact on European trade and Czechia

The first formal period of full operation of Turkey’s ETS is expected to run from 2028 to 2035, divided into the periods 2028–2030 and 2031–2035. The CMB may change the scope, duration and rules of the pilot phase. For investors and trading partners, it will therefore be important not only what the adopted rules say, but also whether they are amended during the pilot.

Czech companies importing goods from Turkey in the covered sectors may need to deal both with reporting emissions embodied in products and with the potential impact of Turkey’s carbon charge on the calculation of the carbon border charge under CBAM. This follows from the overlap between the sectors and the rules for recognising carbon prices paid outside the EU.

In Czechia, the Ministry of the Environment and the Customs Administration are to handle CBAM-related administration. For domestic businesses, the availability of verified emissions data from Turkish suppliers will therefore be important, as will how the rules of the two systems are applied together in practice.