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Türkiye has been preparing for the use of carbon pricing instruments to help achieve its mitigation targets with efforts gathering pace in 2023. These include the submission of an Updated First NDC, which has explicit references to the Turkish Emission Trading System (TR ETS), and an announcement from the Directorate of Climate Change (DoCC) during COP28 that a pilot ETS is planned to launch in October 2024 with the publication of the National Allocation Plan. Moreover, following its publication in the Official Gazette in December, the Grant Agreement with the World Bank PMI program supporting the implementation of the pilot ETS came into force. The program will assist Türkiye in assessing various design options through modelling studies and provide support during the pilot as well as the first implementation phases of the new system.

These developments follow the advisory decisions of the Climate Council (a multi-stakeholder consultation event with broad participation) in 2022, which included the launch of the pilot ETS in 2024 aligned with the country’s 2053 Net-Zero Target. The intention to develop an ETS has also been reflected in Türkiye’s annual Medium-Term Programs (MTPs) since 2022.  Moreover, the high-level planning outlined in the 12th Turkish Development Plan (2024 to 2028) takes the year 2053 as a long-term reference in the country’s green and digital transformation agenda and considers the TR ETS as an instrument of this transformation.

In preparation for the launch of the pilot ETS, Türkiye is finalizing a draft Climate Law creating the legal basis for the main features of TR ETS. The draft law is expected to be submitted to Parliament in 2024. Although the precise details are not final yet, the announcement by the DoCC during COP28 envisions the determination of the cap and allocation approach in late 2024 with the publication of the National Allocation Plan which will ensure transparency and predictability during implementation. Thereafter, market operations will commence early in 2025.

The pilot ETS will leverage data collected under Türkiye’s comprehensive mandatory Monitoring, Reporting and Verification (MRV) System which has been in place since 2015. It is expected to cover around 130 installations in energy and industry sectors with emissions greater than 500,000 tCO2e per year. The pilot phase is expected to run for two years initially.

Türkiye is a candidate for EU accession and as a part of this process, the country is planning to commence an Instrument for Pre-Accession Assistance (IPA III) project in 2024 for the transposition of the EU ETS legislation into secondary legislation which will define national ETS’ technical features following the pilot phase.