Türkiye's first Climate Law was passed by the Grand National Assembly of Türkiye on the night of July 2nd.
The Law regulates issues such as combating climate change, mitigation and adaptation targets, establishing an emissions trading system, voluntary carbon markets, allowances and permitting for greenhouse gas emissions, revenue budgeting, as well as audits and penalties for enforcement thereof.
The objective delineated in the Law is to regulate the mitigation of greenhouse gas emissions, facilitate adaptation to climate change, and oversee the planning and implementation of strategies to address climate change in alignment with the vision of green development and the target of achieving net zero emissions.
It can also be said that companies operating in the international trade sector may be directly affected by the Law and the changes it introduces, as the Law states that a Carbon Border Adjustment Mechanism aimed at managing greenhouse gas emissions from imported goods may also be established.
ETS
According to the Law, a national market-based emissions trading system (ETS) will be established, which operates on the principle of establishing a cap on greenhouse gas emissions. This system aims to facilitate the limitation or encouragement of reducing greenhouse gas emissions in a cost-effective manner through the trading of allowances.
Carbon markets shall be established as systems and marketplaces that are operated and/or managed by the designated market operator. Together with primary and secondary markets within the ETS, these markets shall be organized and operated to trade allowances and/or other standardized contracts pertaining to emissions trading.
According to the Law, Enerji Piyasaları İşletme A.Ş. shall be responsible for operating the ETS and carbon markets.
Permit for greenhouse gas emissions
According to the Law, enterprises that fall within the scope of the ETS must obtain a greenhouse gas emission permit within three years from the date the law enters into force. During this three-year period, enterprises will have a one-time greenhouse gas emission permit in order to continue their operations under the ETS.
Voluntary carbon markets
Voluntary Carbon Markets—where carbon credits are bought and sold on a voluntary basis—will also be established. It is mandatory to register voluntary carbon market projects in the system to ensure traceability and to support the development of policies in international carbon trading. These mechanisms are preparing the institutional infrastructure for Türkiye to gradually implement carbon pricing instruments.
Penalties, and taxes
The Law regulates that administrative sanctions and fines shall be imposed for failure to fulfil the obligations specified in the law.
According to the Law, the cap for an administrative fine is TRY 50,000,000. However, the Law also stipulates the cancellation of permits and/or limitations on acquisition of new permits for several months.
As for sanctionable acts of non-compliance, several examples include: failure to submit the verified greenhouse gas emission report in due time; failure to comply with regulations on ozone depleting substances, fluorinated greenhouse gases, and hydrofluorocarbons; failure to submit or update notifications and reports to the database set forth in the law in due time; failure to operate within the ETS without obtaining or having a valid permit for greenhouse gas emission; or failure to deliver the required amount of allowances in due time.
However, according to a provisional article of the Law, before the ETS is fully implemented, there will be a pilot implementation period where the administrative fines imposed pursuant to the Environment Law for failure to fulfil the obligations specified in the Law within this period will apply with an 80% reduction.
The Law authorizes the Directorate of Climate Change to introduce supplementary carbon pricing policies, including the implementation of market based carbon pricing mechanisms.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
