Turkey's Regulation on the Turkey Emissions Trading System, prepared by the Turkish Ministry of Environment, Urbanization and Climate Change, sets out the procedures and principles governing greenhouse gas emissions monitoring, reporting and verification and the implementation of the country's emissions trading system. The regulation was published in the Official Gazette and entered into force on August 27, 2026.
Under the regulation, one allowance represents the right to emit 1 mt of CO₂ equivalent, while the ETS cap will comprise allowances allocated free of charge and those offered for sale on the primary market. The cap will be determined on the basis of emissions intensity and announced through the National Allocation Plan.
Category B and C installations to participate in Turkey ETS
Installations will be divided into three categories according to their estimated annual emissions. Installations emitting up to 50,000 mt of CO₂ equivalent will be classified as Category A, those emitting more than 50,000 mt of CO₂ equivalent and up to 500,000 mt of CO₂ equivalent as Category B, and those exceeding 500,000 mt of CO₂ equivalent as Category C. The Turkey ETS will cover Category B and Category C installations carrying out activities specified in the regulation. Category A installations will remain subject to monitoring, reporting and verification requirements but will not participate in the ETS.
Operators covered by the system will be required to obtain a greenhouse gas emissions permit from the Directorate of Climate Change. The permits will be valid for five years, with renewal applications required at least six months before expiry. Operators covered by the ETS must obtain their permits within three years of the entry into force of the Climate Law, although they will be deemed to hold a permit during this period on a one-time basis.
Free allowances to be determined through benchmarks
Free allowances will be determined using a sub-installation-level benchmarking methodology based on product, measurable heat, fuel and production process benchmarks. The amount allocated free of charge will be calculated using the relevant benchmark value, free allocation rate, sectoral activity factor and verified activity level. A cross-sectoral correction factor may also be applied where necessary.
Operators will be required to surrender allowances corresponding to each installation's verified emissions through the Registry System by the last business day of November in the relevant compliance year. The regulation also provides flexibility mechanisms allowing allowances to be banked for subsequent years and borrowed from future years.
Additional allowance reserve and market stability mechanism introduced
Installations facing an allowance deficit may, subject to certain conditions, access an additional reserve of up to 10 percent of the ETS cap. The minimum price for allowances from this reserve will be set at 50 percent above the higher of the weighted average primary-market price or weighted average secondary spot-market price during the preceding three months.
Allowances will be sold on the primary market according to an auction calendar, while secondary-market trading will take place through continuous trading. A market stability reserve will also be established to support price stability, taking into account allowance prices and the number of allowances in circulation. The issuance, holding, transfer, surrender, cancellation and retirement of allowances will be conducted through the Registry System operated by Energy Exchange Istanbul, with separate accounts established for each installation.
Domestic carbon credits may be used for ETS compliance
The regulation provides for the use of carbon credits generated by projects in Turkey to meet surrender obligations up to a rate determined by the Carbon Market Board. In addition, the Turkey ETS may eventually be linked with emissions trading systems in other countries or regions through measures including the mutual recognition of allowances.
Operators will be required to submit their greenhouse gas emissions and activity-level data for the preceding calendar year by April 30 each year, following verification by an accredited verification body. Relevant data and records must be retained for at least 10 years.
Regulation establishes fines for non-compliance
The regulation establishes administrative fines for failures related to emissions reporting and permit requirements. Fines for failing to submit verified emissions reports range from TRY 627,450 ($13,000) for Category A installations to TRY 6.27 million ($130,258) for Category C installations emitting more than 2 million mt of CO₂ equivalent annually. These penalties will be doubled for operators covered by the ETS. Operating without a required emissions permit may result in penalties of up to TRY 12.55 million ($260,725), depending on the installation's emissions.
Turkey ETS to begin with pilot implementation period
The Turkey ETS will initially operate through a pilot implementation period, whose scope, duration and implementation principles will be determined by the Carbon Market Board. Operators included in the pilot period will be required to submit their initial Monitoring Methodology Plans electronically within two months of the regulation's entry into force, although this deadline may be extended to up to six months. The first implementation period following the pilot phase will consist of two subperiods, with benchmark values for the first subperiod to be announced in the National Allocation Plan following the submission of the relevant verification reports.
The new regulation also repeals Turkey's 2014 Regulation on the Monitoring of Greenhouse Gas Emissions, with references to the previous regulation deemed to refer to the new framework.
