Türkiye's Carbon Market Board clarifies initial national ETS pilot design
On 3 September 2026, Türkiye's Directorate of Climate Change (DoCC) announced the outcomes of the first meeting of the Carbon Market Board, setting the scope and design of the pilot phase for the national emissions trading system (TR-ETS).
The decisions follow Türkiye's adoption of secondary regulations for the TR-ETS in late August, which established the system's overall framework but left many important operational details, including the scope and duration of the pilot phase, to be defined by the Board. This first set of decisions resolves several of those open questions by setting the free allocation rate, the benchmarking methodology, and the sector scope during the pilot phase.
Pilot phase covers five sectors, with reporting-only obligations in 2026
The pilot phase will run from 2026 through 2027 and will apply to a narrower set of sectors than the regulation's general coverage of power and energy-intensive industry. Only five sectors are included: electricity generation, cement, iron and steel, aluminum, and fertilizer. These are five of the six sectors covered by the EU's Carbon Border Adjustment Mechanism (CBAM). The Board excluded a limited number of activities from the pilot phase, including certain electricity generation tied to other industrial processes and gas and oil pipeline compressor stations. Covered entities face only a reporting obligation in 2026.
Supplementary allowance pricing mechanism* under development
A methodology for supplementary allowance pricing is currently under development, with the mechanism itself taking effect in 2027 for 2026 emissions. Under this mechanism, entities may make an additional voluntary payment to the government on top of the cost of acquiring allowances in the primary market. As a novel tool, the supplementary allowance price could prove useful for exporters seeking to demonstrate a higher effective carbon cost paid at home.
Free allocation is set initially at 100%, with different benchmarking approaches
The Board also set the free allocation rate at 100% for all pilot-phase sectors and specified the underlying benchmarking approach. For most sectors, benchmarks will be calculated as a weighted average across all covered installations, while the electricity sector will use plant-specific benchmarks based on each plant's emissions intensity over the past five years.
Offset use remains undecided
The announcement did not address whether entities may use offsets to help meet their obligations during the pilot phase. The Board will make that decision before the pilot's first compliance cycle begins.
* Editor's note: ICAP uses "supplementary allowance pricing mechanism" in this article, reflecting the English-language terminology used by the Directorate of Climate Change. This replaces the "complementary carbon price mechanism," which appeared in ICAP's earlier coverage of the TR-ETS regulation.
