The Climate Law Proposal
Introduction
The Climate Law Proposal ("Law Proposal") was submitted to the Grand National Assembly of Turkey on February 20, 2025. Climate law is part of the primary legislation and policy documents being prepared to enhance Turkey's climate actions, to complete them as soon as possible[1]. This development is an important step toward restructuring the policies in the country's economic, social, and legal fields in response to the global threat of climate change.
Türkiye joined the United Nations Framework Convention on Climate Change in 2004 and became a party to the Paris Agreement in 2021. Furthermore, in line with the 2053 Net Zero Emissions Target, the Medium-Term Program 2024-2026, published by a Presidential Decision, outlines a roadmap to support greenhouse gas emission reductions and accelerate the green transition process. The Law Proposal, which aims to combat climate change in line with the net zero emissions target, encompasses the reduction of greenhouse gas emissions, climate change adaptation activities, planning and implementation tools, revenues, permits, supervision, and the procedural and institutional framework for these matters. Additionally, it seeks to ensure that the industrial and trade sectors comply with the green transition through economic tools such as the Emission Trading System (“ETS”) and the Carbon Border Adjustment Mechanism (“CBAM”).
Fighting Climate Change: Greenhouse Gas Emission Reductions, Climate Change Adaptation Activities, Financial Incentive Mechanisms, National CBAM
Greenhouse Gas Emission Reductions, Climate Change Adaptation Activities
According to the Law Proposal, greenhouse gas emission reductions and climate change adaptation activities will be monitored on an annual basis by the Directorate of Climate Change ("Directorate"), which operates under the Ministry of Environment, Urbanization, and Climate Change ("Ministry")[2] . The Directorate is authorized to ensure inter-institutional coordination, define activities and standards, monitor progress, and regulate market-based mechanisms related to carbon pricing. This regulation aims to promote the participation of all stakeholders in the fight against climate change while ensuring the process is carried out centrally and in a coordinated manner.
Adaptation and mitigation actions are not alternatives to each other but are described as complementary elements[3] . These two policies are also explained in the Republic of Turkey's Updated First Nationally Determined Contribution ("Nationally Determined Contribution")[4] about specific sectors[5] . As stated in the Law Proposal, institutions and organizations must take measures to reduce greenhouse gas emissions in the sectors specified in the Nationally Determined Contribution, which are in line with the net-zero emissions target and the circular economy approach. In this context, measures such as increasing energy, water, and raw material efficiency, preventing pollution at the source, using renewable energy and clean technologies, preferring low-carbon fuels and raw materials, spreading electrification, and implementing zero-waste systems are proposed[6]. Additionally, the need for relevant institutions and organizations to prevent carbon sink losses in forests, agriculture, pastures, and wetlands is emphasized, along with the need to protect and increase sink areas and conserved areas[7] .
Financial Incentive Mechanisms
The Law Proposal regulates the use of financial instruments and support mechanisms in the fight against climate change. Institutions and organizations are encouraged to benefit from climate finance, green capital market instruments, and bank financing[8] . Within the scope of the circular economy and zero waste, it is stipulated that the Ministry will collaborate with relevant ministries to carry out studies on the reuse of products, the evaluation of waste as alternative raw materials, and the determination of recycling rates, thus creating support mechanisms. Additionally, national and sectoral reports will be prepared to encourage climate change investments, and the Turkey Green Taxonomy[9] will be established[10].
National CBAM
Another important regulation is the establishment of a CBAM to address the embedded greenhouse gas emissions of imported goods in Turkey's Customs Territory[11] . The Ministry of Trade will determine the details of this mechanism. The CBAM was first proposed by the European Commission in 2021 as part of the "Fit for 55" climate package, adopted in 2023, and the transition period for its implementation will begin in 2026. The goal of the European Union's (EU) CBAM is to price the embedded carbon emissions from the production processes of goods exported to the EU, thus preventing carbon leakage. In addition to environmental concerns, the economic considerations related to protecting the competitiveness of the EU industry are highlighted in the justification of the Law Proposal. Similarly to the EU example, the aim is to establish a CBAM at the national level to contribute to global climate change efforts while ensuring the protection of trade and industries in our country. The content, procedures, and principles of the national CBAM are expected to be regulated separately in the legislation.
Establishment of the ETS
The Law Proposal regulates the Directorate's establishment of the Emission Trading System (ETS). The ETS is defined as a national and/or international market-based mechanism that operates on the principle of setting a cap on greenhouse gas emissions and encourages emissions reduction through buying and selling of allowances[12] . It can be observed that the ETS was first implemented in the EU in 2005 to limit greenhouse gas emissions. The ETS primarily aims to limit the greenhouse gas emissions released into nature by setting an upper limit on emissions[13]. In this system, facilities that are allocated emission allowances meet their emissions by using the allowances provided to them or by engaging in emission trading.
With the Law Proposal, it is regulated that the Directorate will prepare a national allocation plan and distribute the allowances[14] . It is also regulated that the market operator will operate the ETS market, Energy Exchange Istanbul / Enerji Piyasaları İşletme A.Ş. (“EXIST”). The ETS market consists of primary and secondary markets, organized and operated by EPİAŞ, where the buying and selling of allowances and/or other standardized contracts deemed appropriate for emission trading are conducted regularly and organized[15] .
It is mandatory for businesses participating in the ETS to obtain a greenhouse gas emission permit from the Directorate to continue their activities that cause greenhouse gas emissions[16] . Based on key information such as production processes and sources that cause greenhouse gas emissions, businesses will carry out their production activities by the greenhouse gas emission permits granted to them[17] . Similarly, new facilities must obtain a greenhouse gas emission permit before starting production activities[18] . Additionally, the allowances traded in the ETS market are not subject to the Public Procurement Law No. 2886 provisions. This is because the length of tender processes and their procedures could negatively impact the dynamic nature of allocation prices and lead to disruptions in the market economy[19] .
It is worth noting that, to encourage the cost-effective and efficient reduction of greenhouse gas emissions, a draft regulation on the operation of Carbon Markets[20] has been prepared, which regulates the establishment and operation of carbon markets for the distribution and trading of allowances under the ETS. The Energy Market Regulatory Authority ("EMRA") opened this draft regulation to public consultation on November 23, 2023[21] . Although it has not yet come into force, it is expected to be enacted in line with the final version of the provisions of the Draft Law, as well as the Electricity Market Law No. 6446, which serves as the legal basis for the regulation.
As stated in the justification of the Law Proposal, with the direct implementation of carbon pricing through the ETS in our country, the aim is for the carbon costs to be retained domestically, and to contribute to the green transformation of industries[22] . Accordingly, if exporters have not paid a carbon price in Turkey, they will be required to cover the entire carbon cost in the EU; however, if a carbon price has been paid in Turkey, they will have the opportunity to reduce their costs by paying only the difference between the amount paid in Turkey and the EU price[23] . Thus, with the implementation of the ETS, it can be seen that efforts are being made to preserve Turkey's competitiveness in its commercial relations with the EU.
Finally, establishing the Carbon Market Board is envisaged as the higher decision-making authority responsible for making decisions regarding the implementation of the ETS and ensuring its functionality[24] . The Directorate will manage the allocation processes, ensure the monitoring, reporting, and verifying greenhouse gas emissions, regulate offsetting activities, and determine the use of carbon credits within the ETS[25] . EXIST will conduct the financial settlement and other financial transactions, report market-distorting behaviors to the Directorate and EMRA, and provide the necessary organization for the functioning of the ETS market[26] .
Voluntary Carbon Markets and Offsetting[27]
Within the framework of the ETS, a compensation mechanism that allows a portion of the allocation obligations to be met with carbon credits may be applied[28] . For offsetting operations under the ETS and voluntary commitments, the principles of a national system that produces carbon credits through activities aimed at reducing greenhouse gas emissions and increasing carbon sinks will be determined by the Directorate[29] . Additionally, owners of projects that produce carbon credits under national or international standards in any voluntary carbon market within the country must register their projects in the carbon credit registration system within the timeframe specified by the Directorate[30] .
Administrative Sanctions and Inspection
Comprehensive administrative sanctions are envisaged for those who engage in activities contrary to the prohibitions or restrictions related to the monitoring of greenhouse gas emissions. For example, those who fail to submit the verified greenhouse gas emission report within the specified time will be fined an administrative penalty ranging from 500,000 Turkish Lira to 5,000,000 Turkish Lira[31] . The same penalty amounts will be applied at double the rate for businesses subject to the ETS[32] . For those who use, import, trade, or place substances that deplete the ozone layer on the market, an administrative fine of 2,500,000 Turkish Lira will be imposed. For individuals and legal entities providing maintenance, repair, and service for products or equipment containing ozone-depleting substances, an administrative fine of 250,000 Turkish Lira will be imposed[33] . Additionally, sanctions will be applied to businesses that fail to comply with ETS obligations, including the blocking of allocation deliveries, permit cancellations, and additional fines. For repeated violations, penalties will be increased progressively[34] .
Although the Directorate holds the authority to inspect acts subject to administrative sanctions, on-site inspections and audits will be carried out on behalf of the Directorate by the Ministry's provincial organization when necessary[35] .
Conclusion
The Law Proposal aims to implement comprehensive regulations to reduce greenhouse gas emissions and ensure adaptation to climate change in line with Turkey’s 2053 Net Zero Emissions Target. Public institutions and organizations will be directed to act by the National Contribution Statement and strategic documents, while key goals such as increasing the use of renewable energy, protecting carbon sinks, promoting the zero-waste system, and sustainable ecosystem management are established. With the newly implemented ETS and carbon credits, businesses will be required to obtain greenhouse gas emission permits, and a national CBAM will be planned for our country. Additionally, the legal infrastructure for climate financing and incentives, the Turkish Green Taxonomy, will be established to promote green investments.
In this context, social and environmental sustainability is adopted as a fundamental principle, with regulations focusing on protecting natural resources, developing educational programs to enhance climate change adaptation capacity, and clarifying local governments' responsibilities. The Directorate's powers and revenues are defined by law to ensure coordination, while inspection mechanisms and sanctions regulations are also introduced.
As a result, this Law Proposal aims for Türkiye to play a leading role in the fight against climate change in alignment with global cooperation and international obligations, capitalize on economic growth opportunities, and prepare for a sustainable future.
- Republic of Turkey Updated First National Contribution Statement, p. 4.
- Law Proposal, art. 4.
- Law Proposal, Justification of Article 5.
- Please see. https://netsifirturkiye.org/wp-content/uploads/2023/07/Turkiye-Cumhuriyeti-Guncellenmis-Birinci-Ulusal-Katki-Beyani.pdf
- Law Proposal, Justification of Article 5.
- Law Proposal, art. 5/4.
- Law Proposal, art. 5.
- Law Proposal, art. 8.
- According to Article 2/1 (çç) of the Law Proposal, it refers to classification systems that contribute to mobilizing climate finance by establishing principles and criteria related to economic activities that contribute to the fight against climate change, in line with the established environmental goals.
- Law Proposal, art. 8/1(c).
- Law Proposal, art. 8/1(ç).
- Law Proposal, art. 2/1 (g).
- Please see. https://webdosya.csb.gov.tr/db/destek/icerikler/full_taslak-20191127113907.pdf
- Law Proposal, art. 9.
- Law Proposal, art. 2 (ğ).
- Law Proposal, art. 9/3.
- Law Proposal, Justification of Article 9/3.
- Law Proposal, Justification of Article 9/3.
- Law Proposal, Justification of Article 9/8.
- For detailed information on the Draft Regulation on the Operation of Carbon Markets, see Erdem & Erdem, Knowledge Base, Rüştü Mert Kaşka, 29.02.2024, https://www.erdem-erdem.av.tr/bilgi-bankasi/karbon-piyasalarinin-isletilmesine-iliskin-yonetmelik-taslagi
- https://www.epdk.gov.tr/Detay/Icerik/4-13184/karbon-piyasalarinin-isletilmesine-iliskin-yonetm
- Law Proposal, Justification of Article 9.
- Law Proposal, Justification of Article 9.
- Law Proposal, art. 10/1(a).
- Law Proposal, art. 10/1(c).
- Law Proposal, art. 10/1(d).
- According to Article 2/1(f) of the Law Proposal, it refers to the use of carbon credits within the ETS framework or for fulfilling voluntary commitments.
- Law Proposal, art. 11/1.
- Law Proposal, art. 11/2.
- Law Proposal, art. 11/5.
- Law Proposal, art. 14/1(a).
- Law Proposal, art. 14/1 (b).
- Law Proposal, art. 14/2.
- Law Proposal, art. 14.
- Law Proposal, art. 15/1.
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