Legal Framework Introduced by the Climate Law:
National Emissions Trading System and Carbon Credit System

Türkiye is entering another significant phase in its fight against climate change. Accelerated by the EU Carbon Border Adjustment Mechanism (CBAM) and the commitments under the Paris Agreement, the legal reform process is evolving into a carbon market infrastructure. As of 2025, Türkiye has established the legal and administrative framework for a national Emissions Trading System (ETS). What does this new system entail, and what lies ahead for the sectors?

Legal Groundwork under the Climate Law

Adopted by the Grand National Assembly of Türkiye in July 2025 and published in the Official Gazette, the Climate Law constitutes the first regulation to establish the legal infrastructure for carbon pricing mechanisms in Türkiye. With the enactment of the Law:

• The establishment of the Carbon Market Board was mandated,
• The Directorate of Climate Change was authorized as the executive body of the system,
• Energy Exchange Istanbul (EXIST) was designated to play a role in the purchase and sale of carbon allowances,
• Provisions on administrative sanctions, price corridors, and market stability measures were introduced into legislation for the first time.
  
  

Draft TR ETS Regulation: Implementation Roadmap

Following the Law, the Draft ETS Regulation, which sets out the principles and procedures for monitoring, reporting, and verification (MRV) of greenhouse gas emissions and the implementation of the Emissions Trading System, was published for public consultation on 22 July 2025. The draft contains comprehensive provisions, particularly covering energy-intensive industrial sectors, electricity generation, and other high-emission activities:

• Scope: Facilities emitting 50,000 tonnes CO₂ equivalent or more annually will be included in the system. During the pilot phase, sectors covered under the EU’s CBAM will be prioritized.
• Timeline:
  • 2026–2027: Pilot phase (limited allocation, system testing)
  • 2028–2035: Implementation phase (expanded scope and sectors)
• Allocation Mechanism: Allowances determined under the ETS cap will be issued through the Transaction Registry System and sold in the primary market or distributed free of charge. Free allocations will be based on a benchmarking methodology at the sub-installation level. Flexibility instruments such as banking, borrowing, and additional reserves will be part of the system.
• MRV Obligations: Detailed monitoring, reporting, and verification systems—such as monitoring plans, emission reports, and activity reports—will be mandatory.

Türkiye ETS aims to establish a carbon pricing infrastructure compatible with the EU ETS.

What Awaits the Sectors?

Industries such as cement, iron and steel, aluminium, fertilizers, electricity generation, and certain chemical sectors will be directly affected by these regulations. Under this system:

• Carbon costs will become a factor of competition,
• Transition to low-emission technologies will be encouraged,
• Those failing to meet emission reduction targets will face market-based compliance mechanisms.

For businesses trading with Europe, this marks a critical stage in the CBAM alignment process.

National Carbon Credit System (TR KDS)

Another measure introduced under the Climate Law is the Draft Regulation on Carbon Credit and Offsetting, published on 1 August. Under the TR KDS, “Turquoise Credits”—representing one tonne of CO₂ equivalent—will be issued for greenhouse gas reduction and removal activities conducted within Türkiye, verified by independent entities and certified through an authorized standardization body.

The Directorate of Climate Change, Turkish Standards Institution (TSE), and Turkish Accreditation Agency (TÜRKAK), along with relevant verification and validation bodies, have been authorized within the scope of the system.

• Scope: The TR KDS will cover carbon credit generation and trading from projects outside the TR ETS scope, voluntary offsetting arrangements, the use of Türkiye-origin carbon credits in international markets, and the registration and tracking of related projects.
• Offsetting Procedures:
  • Usage rules and limits will be determined by the Directorate of Climate Change.
  • Only Türkiye-origin carbon credits and Turquoise Credits generated under TR KDS may be used.
  • The usage amount will be limited to a share of the allowance surrender obligation as determined by the Directorate of Climate Change
  • Credits must originate from activities outside the ETS scope and have a vintage not older than five years.
  • Renewable energy certificates (YEK-G) or similar energy attribute certificates cannot be used for ETS offsetting.
• Voluntary Use of Turquoise Credits:
  • Turquoise Credits used for allowance surrender in the ETS cannot be reused for voluntary commitments.
  • Credits used voluntarily will be retired.
  • Public institutions will develop incentive mechanisms for voluntary use.

References:

1. İklim Kanunu Metni – Resmî Gazete (9 Temmuz 2025)
   https://www.resmigazete.gov.tr
2. Türkiye Emisyon Ticareti Sistemi Kuruluyor – Turkish Law Blog
   https://turkishlawblog.com/insights/detail/turkiye-emisyon-ticareti-sistemi-kuruyor
3. Türkiye Emisyon Ticaret Sistemi Yönetmeliği Taslağı
   https://iklim.gov.tr/taslaklar-i-2124
4. Karbon Kredilendirme ve Denkleştirme Yönetmeliği Taslağı
   https://iklim.gov.tr/db/turkce/icerikler/files/2025_07_31-Taslak_Denkle%C5%9Ftirme_Y%C3%B6netmeli%C4%9Fi_Temiz.pdf
5. ETS Yönetmelik Taslağı Görüşe Açıldı – Enerji Ajansı
   https://enerjiajansi.com.tr/emisyon-ticaret-sistemi-yonetmelik-taslagi
6. ETS Yönetmelik Taslağı – GENSED
   https://gensed.org/emisyon-ticaret-sistemi-yonetmeligi-taslagi-yayimlandi
7. Türkiye İklim Yasası – ICAP Carbon Action News
   https://icapcarbonaction.com/en/news/turkiye-adopts-landmark-climate-law-paving-way-national-ets
8. ETS Yönetmeliği Haber – Çevre Mühendisliği Portalı
   https://www.cevremuhendisligi.org/index.php/cevre-aktuel/haberler/3616-turkiye-emisyon-ticaret-sistemi-yonetmeligi