Latest reports suggest that Turkey has published the much-anticipated Climate Law No. 7552, marking a significant milestone in the country’s environmental policy and business landscape.
Aiming for net-zero emissions and green growth, the law introduces transformative regulations impacting both local companies and foreign investors operating in Turkey.
A key component of the Climate Law is the establishment of a national Emission Trading System (ETS). Companies engaged in activities generating direct greenhouse gas emissions must now obtain emission permits from the newly formed Climate Change Authority. These permits, known as allowances, will be distributed either free of charge or via auction.
Businesses failing to comply with allowance limits will face substantial financial penalties, calculated based on prevailing ETS market rates. Consequently, sectors such as energy, manufacturing, and transportation will need to strategically realign their operational models to mitigate compliance risks and costs.
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Echoing the EU’s Carbon Border Adjustment Mechanism (CBAM), Turkey’s new law also provides for the potential implementation of a similar mechanism known as the Border Carbon Adjustment Mechanism (BCAM). This mechanism targets imported goods, assessing their carbon footprint and potentially imposing additional tariffs or fees.
This development presents significant implications for import-dependent businesses and international trade partners, requiring careful monitoring and proactive adjustment of supply chain strategies.
The law establishes comprehensive regulations around carbon credits, allowing companies to partially meet their ETS obligations through carbon offsets. Investments in renewable energy projects, carbon sequestration initiatives, and energy efficiency improvements could thus offer substantial economic incentives.
Firms positioned to develop, certify, or trade carbon credits are expected to experience growth opportunities, attracting both local and international investments into green projects within Turkey.
To facilitate Turkey’s green transition, the law outlines robust financial support mechanisms. It promotes the development of green financial products, such as sustainable bonds and green loans, while also incentivizing insurance instruments and investment guarantees.
Companies that engage in environmentally sustainable projects, particularly in sectors prioritized by Turkey’s national strategy, will benefit from reduced financing costs and additional public funding opportunities.
Story was adapted from Mondaq.
