Turkey's Climate Law: Paving the Way for Climate Investment Leadership

The Climate Law of Turkey Submitted to the Grand National Assembly: A Vital Springboard for Establishing Turkey as a Climate Investment Leader

Submitted to the Grand National Assembly on February 20, the Climate Change Law of Türkiye is designed to reduce greenhouse gas emissions in alignment with a green development vision and a net zero emissions target. The law establishes vigorous planning and implementation mechanisms for both mitigation and adaptation, regulating activities, planning instruments, and institutional frameworks that are essential for reducing emissions and enhancing climate resilience.

Key definitions in the draft include “just transition,” the Emission Trading Scheme (ETS), and terms such as mitigation, adaptation, and carbon pricing tools—ensuring a precise understanding of the terminology throughout the law. Just transition policies are intended to guarantee that, while climate targets are achieved, vulnerable groups are not left behind and green job opportunities are created. Under the ETS, a market-based mechanism is structured around a cap-and-trade system for emissions. Although the law covers a wide range of topics—from sectoral responsibilities to local-level action plans—the sections most relevant to climate finance and carbon pricing warrant closer examination. Many of these issues are addressed in Article 6, which, in addition to establishing a cap-and-trade system, outlines the coordination, monitoring, and reporting of climate finance and related incentives. The article further focuses on developing financial instruments—such as enhanced insurance systems—to mitigate and compensate for losses or damages from climate impacts, and it endorses the creation of a dedicated Climate Change Finance Mechanism to channel financial resources toward climate-related projects.

Incorporating robust carbon pricing mechanisms is critical for Türkiye to attract climate finance and implement sustainable technologies essential for long-term development. In light of a significant global financing gap—often estimated at over US$1.5 to 2 trillion per year for climate mitigation—Türkiye’s adoption of a carbon pricing framework can internalize the external costs of carbon emissions while signaling strong commitment to its Nationally Determined Contribution (NDC) under the Paris Agreement. This clear market signal not only boosts investor confidence but also positions Türkiye competitively in the global race for climate finance, as nations vie for investments in low-carbon technologies. By closing the investment gap and fostering an environment conducive to clean technology innovation, Türkiye can drive economic growth, reduce emissions, and pave the way for a resilient, low-carbon future.

Over the past two decades, Türkiye has emerged as a notable supplier of voluntary carbon credits, significantly contributing to global efforts to lower greenhouse gas emissions and stimulate investments in low-carbon technologies, particularly in renewable energy. These credits have served as a crucial financial mechanism for investors worldwide, enabling them to offset emissions and channel resources into pioneering renewable energy projects and other sustainable initiatives. To fully capitalize on this momentum, it is essential for Türkiye to implement robust legislation and policy tools that not only safeguard the credibility and integrity of its carbon credit market but also enhance its capacity to generate high-quality credits. Strengthening these frameworks will reinforce Türkiye’s competitive edge in the global voluntary carbon market, attract further climate finance, and drive the transition toward a resilient, low-carbon economy.

Under the European Union Green Deal, the Carbon Border Adjustment Mechanism (CBAM) is set to impose a carbon cost on imports from regions lacking equivalent carbon pricing measures, thereby protecting EU industries from unfair competition and curbing carbon leakage. This mechanism poses a significant risk for Turkish industries, as exports to the EU could incur additional costs if Turkish products do not meet comparable low-carbon standards. To mitigate this risk and enhance competitiveness, it is critical for Türkiye to develop a well-structured carbon market that includes both an allowance system and project-based credit mechanisms. By linking these instruments to the EU Emissions Trading System (EU ETS), Türkiye can ensure that its industries are better aligned with international carbon pricing frameworks, thereby reducing the financial impact of CBAM and supporting a smoother transition to a low-carbon economy.

With COP30 taking place in Belem on the horizon, it is imperative for Türkiye to enact its Climate Law without delay. This comprehensive legislation is not merely a regulatory measure—it is a strategic tool to align the country with the Paris Agreement, particularly through Article 6, and to tap into global carbon markets. By instituting robust mechanisms such as carbon pricing and a well-structured allowance and project-based credit system, Türkiye can transform its net zero target from a potential risk into a catalyst for sustainable economic growth. Swift implementation of the law will enhance national resilience, stimulate green investments, and position Türkiye as a leader in the global race to net zero, demonstrating that climate ambition, when executed effectively, can drive innovation and long-term prosperity.

Turkey's Climate Law - İklim Akademisi

Turkey's Climate Law