Türkiye’s Green Leap: Paving the Way to Net Zero with Landmark Climate Law Proposal

Türkiye’s Green Leap: Paving the Way to Net Zero with Landmark Climate Law Proposal

Türkiye has taken a major step toward meeting its national and international obligations in the fight against climate change by introducing its first-ever climate law proposal. On 20 February 2025, Türkiye’s first Climate Law Proposal (the “Draft Law”) was submitted to the Presidency of the Grand National Assembly of Türkiye. This landmark legislation is designed to align with Türkiye’s green growth vision and its commitment to achieve net zero emissions by 2053, as outlined in its Nationally Determined Contributions (“NDCs”) and climate action plans.

The Draft Law addresses critical areas such as climate change adaptation, just transition, emissions trading system (“ETS”), embedded greenhouse gas emissions, voluntary carbon markets, and green incentives. It also sets out the procedural and institutional framework for planning, implementation, revenue generation, permitting and auditing ensuring coordinated action among key stakeholders.

Below is an overview of the key provisions of the Draft Law, which has been long anticipated as part of Türkiye’s broader compliance with its national and global climate goals.

Turkish Carbon Trading Market: A National ETS and Carbon Border Adjustment Mechanism (“CBAM”)

The most significant aspect of the Draft Law is the establishment a national ETS modeled after the EU ETS, to be managed by the Directorate of Climate Change (the “Directorate”). The ETS will regulate carbon emissions through a legal and institutional framework for carbon trading, setting a cap on total emissions within designated sector.

Under this framework, businesses subject to the ETS will be required to obtain greenhouse gas (“GHG”) emission permits to continue their operations producing GHGs. They must submit annual allowances corresponding to their verified annual GHGs. Businesses emitting below their allowance can sell excess allowances, while those that exceed their allowances must purchase additional allowances on the market, which will be operated by Enerji Piyasaları İşletme Anonim Şirketi.

The Draft Law also introduces carbon offset mechanisms, allowing companies to partially fulfill their obligations by investing in carbon reduction projects. The Directorate will oversee a centralized national carbon credit and offset system, for registering carbon credit-generating projects within Türkiye.

Additionally, the Draft Law lays the foundation for a national CBAM. This system will assess the carbon footprint of imported goods, ensuring parity between carbon costs of imported and domestically produced carbon-intensive products. Without a domestic carbon pricing system, Turkish exporters would be subject to the EU’s CBAM costs. This is particularly relevant for high emission industries with substantial international trade, such as iron and steel, cement, aluminum, fertilizer, and electricity. Therefore, by establishing its own ETS and CBAM, Türkiye aims to mitigate financial burdens on its industries and retain carbon-related revenues for reinvestment in the green transformation of key sectors. Given the global financing gap for climate action, estimated at over $1.5 to $2 trillion annually, this step signals Türkiye’s strong commitment to its Paris Agreement obligations.

The Draft Law also introduces a more comprehensive framework for monitoring, reporting, and verification (“MRV”) of GHG emissions. Businesses failing to meet their MRV obligations will face administrative sanctions, including fines ranging from 500,000 to 5 million Turkish Liras. Industrial facilities, power plants, and other large businesses will be required to report their GHG emissions regularly, with additional penalties imposed for non-compliance.

Obligations for Public Institutions and Organisations

Public institutions and organisations will also be subject to new climate obligations under the Draft Law, including:

• Enhancing energy, water, and raw material efficiency;
• Preventing pollution at the source;
• Increasing the use of renewable energy;
• Utilizing alternative clean or low-carbon fuels and raw materials;
• Expanding electrification and clean technology adoption;
• Implementing measures in line with fair transition principles; and
• Establishing, implementing, and monitoring a zero-waste system.

The Directorate will coordinate inter-agency efforts, set necessary standards, and regulate carbon pricing mechanisms. It will also have the authority to request essential data and documentation from both public institutions and private entities.

To enhance local climate action, the Draft Law mandates the development of Local Climate Change Action Plans (“YİDEP”) at provincial level. It defines the roles and responsibilities of local governments and administrative bodies ensuring effective local coordination through provincial climate change coordination councils, which will involve participation from local stakeholders.

Green Incentives and Financial Support

The Draft Law regulates financial incentives to support green transition, balancing funding between adaptation and emission reduction projects. The revenues generated from the ETS will be utilized to:

• support the transition to a low-carbon economy;
• research and development initiatives;
• and the deployment of new technologies aligned with Türkiye’s NDCs, its 2053 Net Zero Emission Target, and its green growth objectives.

Transitional Phase and Implementation

The Draft Law includes a pilot phase prior to the full activation of the ETS. The Carbon Market Board will set out the procedures and principles for this transition, with reduced administrative penalties during the initial phase.

Businesses covered by the ETS must obtain emission permits within three years from the Draft Law’s enactment to continue operations that generate GHG emissions.

Looking Ahead

Türkiye’s first-ever climate law proposal marks a pivotal milestone in its efforts to combat climate change and drive green growth. By introducing a robust framework that includes a national ETS, CBAM, and green incentives, the law provides clear guidelines for both public and private sectors to contribute to achieving the country’s ambitious net-zero goal by 2053.

For Turkish businesses, adapting to this regulatory shift is not just about compliance—it presents an opportunity to gain a competitive edge in the global market. By embracing green practices and carbon-conscious strategies, businesses can align with international standards, avoid future carbon-related penalties, and establish themselves as leaders in the emerging global green economy. With effective implementation, the Draft Law promises to enhance environmental resilience while unlocking new economic opportunities, strengthening Türkiye’s position on the global stage.

Following the approval of the Draft Law by the Turkish Parliament’s Committee on Environment on 27 February 2025, it will come into effect upon final approval by the General Assembly and publication in the Turkish Official Gazette.

For more information on the Climate Law Proposal and its impact on your company or business, please contact your CMS partner or local CMS expert: Dr Döne Yalçın, Merve Akkuş or Deniz Tirit.