Turkey's New Climate Law: What Foreign Investors, Companies, and Climate-Focused Stakeholders Need to Know
Turkey's New Climate Law: What Foreign Investors, Companies, and Climate-Focused Stakeholders Need to Know
Introduction: A New Era for Climate Regulation in Turkey
On July 2, 2025, Turkey passed its Climate Law No. 7552, officially published in the Official Gazette on July 9, 2025. This law marks a structural shift in Turkey's climate policy, aligning with net-zero targets and the green growth vision while establishing a legally binding framework for carbon pricing, a national Emission Trading System (ETS), and climate adaptation obligations for public and private sectors.
In this deep dive, we will cover:
What Turkey's Climate Law enforces and its scope
The structure and functioning of the Turkish ETS
Compliance requirements for investors and businesses
Opportunities for foreign investors and exporters
How Turkey's Climate Law aligns with CBAM and EU Green Deal
The future of carbon markets and voluntary offset credits in Turkey
What CFOs, sustainability directors, and compliance officers need to do now
This premium, conversion-focused guide is written without emojis, providing actionable insights to position your company for compliance while capturing incentives.
1. Purpose and Scope of Turkey's Climate Law
Article 1 of the law defines its purpose as combating climate change in line with Turkey's net-zero emission targets and the green growth vision.
Scope:
Reduction of greenhouse gas (GHG) emissions
Adaptation to climate change
Establishment of planning and implementation tools
Revenue structures, permitting, monitoring, and institutional frameworks for climate governance.
Key Definitions: The law defines terms like:
Net Zero Emission
Emission Trading System (ETS)
Carbon Credit
Voluntary Carbon Markets
Carbon Pricing Tools
Climate Adaptation and Mitigation
Table: Core Definitions in Turkey's Climate Law
| Term | Definition |
| Net Zero Emission | Balancing emitted GHGs with removals using technology or sinks |
| ETS | National and/or international market mechanism for carbon pricing |
| Carbon Credit | Certified removal or reduction of 1 ton CO2e |
| CBAM | Border Carbon Adjustment aligned with EU mechanisms |
| Climate Finance | National and international funding for mitigation and adaptation |
2. Establishment of the Turkish Emission Trading System (ETS)
The law mandates the creation of a Turkish ETS, managed by the Climate Change Presidency under the Ministry of Environment, Urbanization, and Climate Change.
How the ETS Works:
Emission permits are required for facilities conducting activities causing direct GHG emissions.
Annual allocation of allowances based on historical data and benchmarking.
Tradable allowances and a market-driven price discovery mechanism.
Pilot phase before full implementation with reduced penalties.
Aligns with the EU ETS to ease CBAM-related trade compliance for exporters.
Table: Key Features of the Turkish ETS
| Feature | Detail |
| Allowances | Tradable, electronic, non-seizable until transferred |
| Coverage | Energy, heavy industry, large manufacturers |
| Pilot Phase | Reduced penalties, system testing |
| Market Oversight | Conducted by the Energy Market Regulatory Authority |
| Linkages | Future alignment with EU ETS and other global markets |
3. Compliance Obligations for Businesses
Who Needs to Comply:
Energy producers and large industrial facilities
Manufacturers with significant GHG emissions
Importers and exporters affected by CBAM
Entities involved in trading carbon credits or offsets
Core Requirements:
Obtain GHG emission permits
Submit verified annual GHG emission reports
Deliver allocated allowances matching verified emissions
Implement mitigation and adaptation measures
Participate in ETS auctions and trading if exceeding allowances
Penalties:
Non-compliance will result in fines up to 50,000,000 TRY per violation, including additional penalties for repeat offences and delivery shortfalls.
4. Opportunities for Foreign Investors and Exporters
Turkey's Climate Law also opens opportunities for carbon finance, technology investments, and clean energy projects:
Carbon Credit Generation: Through verified mitigation and removal projects.
Green Taxonomy Compliance: Aligning investments with Turkey's Green Taxonomy.
ETS Trading: Participation in Turkey's ETS to offset emissions and trade allowances.
Technology Investments: In carbon capture, hydrogen, renewable energy, and low-carbon manufacturing.
CBAM Readiness: Easier alignment with EU Green Deal requirements for exporters.
This creates a regulatory certainty and market signal for climate-conscious investors.
5. Revenue Structures and Incentives
The law allows the use of ETS revenues for climate investments and adaptation:
Revenues from ETS allowance auctions and emission permits will fund climate projects.
Special allocations for just transition measures to support sectors and regions.
Potential grants, low-interest loans, and financial incentives for green investments.
6. Penalties, Enforcement, and Monitoring
Turkey's Climate Law has a clear enforcement mechanism:
Emission reporting obligations
Emission permit requirements
Penalties for non-compliance
Enforcement by the Climate Change Presidency
Data integration with the National Geographic Information Platform
ETS operations and trading integrity will be monitored by the Energy Market Regulatory Authority and the Climate Change Presidency.
7. Alignment with EU CBAM and Global Carbon Markets
Turkey's ETS is designed to align with the EU CBAM (Carbon Border Adjustment Mechanism), reducing potential trade friction for Turkish exporters.
Benefits:
Smoother EU market access
Avoidance of double carbon pricing
Alignment with global climate commitments
Turkey also plans to establish linkages with international carbon markets, allowing carbon credit exports and participation in global trading schemes.
8. Next Steps for CFOs, Compliance Teams, and Sustainability Leaders
What You Should Do Now:
Assess your facility’s GHG emissions baseline.
Determine ETS exposure and compliance needs.
Prepare for GHG permit applications.
Integrate carbon cost into product pricing and planning.
Consider carbon credit generation and trading opportunities.
Align your sustainability strategy with Turkey's Green Taxonomy.
Table: Immediate Action Plan
| Step | Action |
| 1 | Baseline GHG audit |
| 2 | Compliance exposure analysis |
| 3 | Permit and reporting preparations |
| 4 | Carbon cost planning |
| 5 | Evaluate offset/credit projects |
| 6 | Align ESG strategy |
Conclusion: A Call to Action
Turkey’s Climate Law is not just a compliance obligation; it is a strategic opportunity to align with global climate trends, secure market positioning in the EU, and participate in the emerging Turkish carbon market.
Contact us now to schedule a climate compliance consultation with our CPA and ESG teams to:
Understand your facility's exposure
Strategize your ETS participation
Plan for carbon pricing integration
Access government incentives
CTA: info@ozmconsultancy.com
Frequently Asked Questions
What is the Turkish Climate Law?
A legally binding framework for reducing GHG emissions, implementing a national ETS, and aligning with net-zero targets.
Does my company need to participate in the ETS?
If you operate in energy, manufacturing, or high GHG emission sectors, you will likely be required to comply.
How will this affect exports to the EU?
It will ease CBAM compliance and reduce double carbon pricing risk for Turkish exporters.
Can we generate and sell carbon credits?
Yes, verified removal or mitigation projects can generate credits usable in Turkey’s ETS and voluntary markets.
