# 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: 1. **Assess your facility’s GHG emissions baseline**. 2. **Determine ETS exposure and compliance needs**. 3. **Prepare for GHG permit applications**. 4. **Integrate carbon cost into product pricing and planning**. 5. **Consider carbon credit generation and trading opportunities**. 6. **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. ![](https://cdn.hashnode.com/res/hashnode/image/upload/v1752036858755/ce7ba5b7-6e04-4e51-bc29-e2147e937b6f.png align="center")