Türkiye's Net Zero Journey With The Climate Law Numbered 7552: Emission Trading, Green Transformation And New Obligations

Ⅰ. INTRODUCTION

This Bulletin contains legal information and assessments regarding the regulations introduced within the scope of the Climate Law No. 7552 ("Law") in order to combat climate change, reduce greenhouse gas emissions, support climate change adaptation efforts and establish planning and implementation mechanisms for these goals in line with the green development vision and net zero emission target.

ⅠⅠ. GENERAL PRINCIPLES AND OBJECTIVES UNDER THE LAW

1. The Law is based on the principles of equality, environmental justice, precaution, participation, integration, sustainability, transparency and fair transition as the basic principles in combating climate change. It is stated that these policies are formulated in line with international conventions and scientific data. It was mentioned that effective implementation tools are used to strengthen the fight and that all stakeholders, especially public institutions, civil society, private sector and citizens, should cooperate to achieve the objectives. This approach is recognised in Article 56 of the Constitution of the Republic of the Türkiye which states that "Everyone has the right to live in a healthy and balanced environment. It is the duty of the State and citizens to improve the environment, to protect environmental health and to prevent environmental pollution." It has been seen that this approach supports the United Nations Framework Convention on Climate Change, which recognises the different capacities and responsibilities of countries and which was ratified by the Law No. 4990 dated 16.10.2003 and published in the Official Gazette No. 25266 dated 21.10.2003.
2. Within the scope of the Law, reduction of greenhouse gas emissions and adaptation to climate change are among the main targets. In line with the mitigation targets, measures are envisaged to increase energy efficiency, encourage the use of renewable energy and reduce emissions on a sectoral basis. Adaptation targets, on the other hand, include strategies such as water management, protection of ecosystems and making infrastructure resilient to climate change in order to identify and minimise the risks arising from climate change.
3. It is detailed in this Law that planning and implementation tools will be established at national and local level within the scope of combating climate change. In summary, it is stated that National Climate Change Strategy and Action Plans will be prepared to reduce greenhouse gas emissions and adapt to climate change. In addition, Article 6 of the Law states that Local Climate Change Action Plans will be developed under the coordination of metropolitan municipalities and governorships. On the other hand, it is stated that economic incentives will be provided to limit emissions by implementing the Carbon Market and Emission Trading System.
4. It is regulated that institutions and individuals are obliged to comply with the measures determined within the scope of combating climate change and that the Climate Change Presidency ("Presidency") is required to report on an annual basis since it is authorised to take the necessary measures and ensure coordination. At the same time, since it is very important to share accurate and timely sectoral data in the fight against climate change, it is stated that data sharing will be organised through the National Geographical Information Platform within the framework of the relevant legislation.
5. Within the scope of Article 6 of the Law, it is stated that financing mechanisms will be established for combating climate change and carbon market will be developed by determining carbon allocations through Emission Trading System. In addition, it was stated that financial support will be provided to climate-friendly projects through the Climate Change Financing Mechanism, as well as contribution will be made to the green transformation process by utilising emission trading revenues and other financial resources through the revolving fund system.

A. REGULATIONS INTRODUCED WITHIN THE SCOPE OF COMBATING CLIMATE CHANGE

1. Within the scope of mitigation of greenhouse gas emissions and adaptation, which are two main axes complementary to each other in combating climate change, in line with Article 5 of the Law, it is stated that national targets are aimed to be implemented through strategies and action plans and that public institutions should cooperate in line with the 2053 Net Zero Emission Target. It is regulated that the obligations to reduce greenhouse gas emissions will be determined in a way to encourage the use of efficiency and clean technologies on a sectoral basis, together with the duty of public institutions to make arrangements in their own plans to achieve green growth and emission targets.
2. As explained in detail in the justification section of the Law, within the scope of the 2053 Net Zero Emission Target, each institution is required to carry out various activities in the areas for which it is responsible in order to achieve the targets set and these activities are as follows Energy, water and raw material efficiency, prevention of pollution at source, increasing the use of renewable energy, reducing the carbon footprint of products, enterprises, institutions and organisations, using alternative clean or low-carbon fuels and raw materials, expanding electrification to be implemented in the sectors included in the National Contribution Declaration, It is regulated that taking mitigation measures such as developing and increasing the use of clean technologies, implementing these measures by considering fair transition requirements, establishing and implementing a zero waste system, taking measures by the relevant institutions and organisations to prevent carbon sink losses in forests, agriculture, pastures and wetlands in order to balance the missions, protecting and increasing sinks and protected areas.
3. In line with the 2053 Net Zero Emission Target, it is aimed that the adaptation strategies and action plans prepared by the relevant institutions will ensure the management of climate change risks in all sectors and the integration of long-term adaptation policies with national policies. In this context, Article 2 of the Paris Agreement, to which our Country became a party in 2021, aims to adapt to the adverse effects of climate change and increase resilience, and Article 7 of the Paris Agreement sets the Global Adaptation Goal, which has provided an important direction for increasing adaptation capacity and reducing vulnerability to climate change in our country. In addition, in accordance with the regulations introduced in Article 6 of the Law, it is regulated that the National Contribution Declaration covers adaptation activities in order to mitigate risks and seize opportunities related to climate change in line with the net zero emission target, and public institutions are obliged to prepare and implement planning tools and risk analyses related to climate change by reviewing their current duties in line with sectoral policies and targets.
4. To mention the obligations mentioned in the above article, it is aimed to minimise the impacts of climate change by taking adaptation measures against natural disasters such as protection and efficient use of water resources and protection of biological diversity. At the same time, it is regulated that early warning systems and disaster management should be implemented effectively in order to minimise the effects of climate change and, if possible, to prevent losses. While addressing the sectors, it is stated that the agriculture sector is one of the areas where the impacts of climate change are felt the most, and therefore, policies have been developed for the cultivation of products resistant to climate change, and the resilience of ecosystems has been increased with nature-based solutions.
5. In order to realise the aforementioned regulations, planning tools at national and local level for combating climate change have been determined in Article 7 of the Law. It is stated that National Climate Change Strategy and Action Plans will be prepared and monitored with relevant institutions under the coordination of the Presidency, and Türkiye's Climate Change Action Plans including greenhouse gas emissions, mitigation targets and adaptation actions will be prepared in each province. In addition, it is regulated that emission trading, carbon pricing, financial instruments and insurance systems will be developed and financing will be provided to private sector investments and local administrations, clean technologies will be disseminated and decision-making processes will be supported through scientific research.
6. Within the scope of Article 7 of the Law, it is stated that the Climate Change and Adaptation Coordination Board will determine and monitor strategies and actions at national and local level, and the Provincial Climate Change and Adaptation Coordination Board will implement action plans at local level. In order to reduce greenhouse gas emissions and adapt to climate change, local climate change action plans will be prepared in each province under the coordination of the Governor, in metropolitan cities by the Municipality, in other provinces by the Municipality and Special Provincial Administration in cooperation, with the participation of relevant institutions and organisations, and will be submitted to the Provincial Climate Change Coordination Board. It is also stated that sectoral vulnerability and risk analyses will be prepared and regularly updated by the Presidency using climate models. In these processes, it is stated that the relevant institutions will share the requested information and data within the legal framework.
7. Within the scope of Article 8 of the Law, the financial, technology and capacity building instruments to be applied in the fight against climate change, which are also specified separately in Articles 9, 10 and 11 of the Paris Agreement, are determined as follows:

is regulated. It is regulated that the details of these applications will be determined by the coordination of the relevant institutions.

8. Regulations regarding the Emissions Trading System ("ETS"), which is a national and/or international market-based mechanism that works based on the principle of setting an upper limit on greenhouse gas emissions and incentivises greenhouse gas emission reduction by buying and selling allowances, are taken into consideration under Article 9 of the Law. Within the scope of the relevant article, it is regulated that the ETS will be established and national allowance plans will be prepared by the Presidency and allowances will be distributed in line with these plans. Furthermore, it is possible to develop flexibility and market stabilisation mechanisms. It is stated that the ETS market will be operated by the market operator.

9. Within the scope of the same Article 9, it has become obligatory for the enterprises that cause greenhouse gas emissions to obtain an emission permit from the Presidency in order to continue their activities. It is regulated that this permit may be updated or cancelled due to changes in the nature or operation of the facility. The enterprises within the scope of the ETS are under the obligation to deliver allowances according to their annual emission values. Enterprises that do not fulfil this obligation are obliged to deliver penalty allowances in accordance with the regulations. Within the scope of the ETS, free allocations were provided to the enterprises and it was regulated that the allocations could be determined based on historical emission data or benchmark values, and the transactions were not subject to the State Procurement Law. In addition, allowances could not be used as collateral, could not be sequestrated and had to be monitored electronically. The cessation of operations or bankruptcy of enterprises did not prevent delivery obligations. Assets in default guarantee accounts could not be used for purposes other than those specified, could not be seized or pledged. With these arrangements, the green transformation process of the enterprises will be secured and will contribute to the climate change targets of our country.

10. Article 10 of the Law regulates the authorities and responsibilities regarding the functioning and management of the Carbon Market:

Article 10 of the Law regulates the duties and responsibilities of the institutions and boards authorised under the ETS. The authorities of actors such as the Carbon Market Board, Advisory Board, Climate Change Presidency, Energy Market Regulatory Authority, market operator and central settlement institution within the framework of ETS and international carbon markets are determined. In addition, regulations on the distribution of free allowances under the ETS, approval of national allowance plans, fulfilment of allowance delivery obligations and financial settlement processes are also included in the scope of the article.

11. Pursuant to Article 11 of the Law, the ETS allows for offsetting with carbon credits. It is stated that part of the allowance obligations can be covered by an equivalent amount of carbon credits. In addition, a national carbon crediting and offsetting system was established that generates carbon credits based on activities to reduce greenhouse gas emissions or increase sinks. The principles of this system were determined by the Presidency and cooperation with relevant institutions was envisaged. It is stated that if errors or fraud are detected in the information and documents submitted regarding offset projects, the offset amount will be deemed invalid and the allocation obligation will be deemed not fulfilled. In addition, the owners of the projects that start to generate carbon credits in the domestic voluntary carbon market are obliged to register their projects in the carbon credit registration system within the period determined by the Presidency.

B. REVENUES, SANCTIONS AND MISCELLANEOUS PROVISIONS

1. Article 12 of the Law stipulates that the revenues to be obtained in line with the purposes determined under Article 12 of the Law shall be recorded as special revenues in the "Revenues to be Continued to be Collected by the Public Administrations within the Scope of Central Government in accordance with the Relevant Legislation" (B) table of the general budget within the scope of the Central Government Budget Law for the Year 2025 determined by the Presidential Strategy and Budget Directorate ("SBB"). These revenues included revenues from the sale of greenhouse gas emission permits, revenues from the sale of allowances in the primary market under the ETS, revenues from the market stabilisation mechanism, half of the revenues from the ETS market and contributions received for carbon credits in international carbon markets. In addition, half of the administrative fines are also counted among these revenues. All of these revenues are set as special appropriations in the budget of the Presidency. The Presidency is authorised to establish a revolving capital enterprise with a capital of 10 million Turkish Liras and the President of the Republic can increase this amount up to 5 times. The procedures and principles regarding all activities, revenues, expenditures and auditing of the revolving capital enterprise are regulated by a regulation to be issued by the Presidency with the approval of SBB and the Ministry of Treasury and Finance.
2. At the same time, Article 12 stipulates that up to ten per cent of the revenues can be used for activities to be carried out within the scope of fair transition practices. In this context, it has been determined that the resources allocated to the budget of the Presidency as special appropriation can be transferred to the administrations within the scope of general budget as special appropriation to be used exclusively for fair transition practices and to other administrations within the scope of central government within the framework of the relevant legislation. Article 21 of the Public Financial Management and Control Law No. 5018 dated 10.12.2003 and numbered 5018 ("Public Financial Management and Control Law") stipulates that the transfers made within this framework shall not be subject to the limitations on appropriation transfers set forth in the central government budget law for the year. In addition, the President of the Republic is authorised to record the amounts transferred to the administrations within the scope of the general budget within this scope and not spent within the year as appropriations in the following year's budgets
3. Article 13 of the Law states that in order to support Türkiye's green transformation and fight against climate change, it is essential to support green investments with high potential to reduce greenhouse gas emissions or adapt to climate change. In addition, activities that contribute to meeting the need for research and technological transformation required for green growth are also supported. According to the decisions of the Carbon Market Board, appropriate mechanisms have been established for legal entities and public institutions operating in strategic priority sectors, especially in the sectors covered by the ETS, to benefit from the support for green transformation and combating climate change. Revenues of institutions and organisations can be used to encourage climate investments, reduce risk perception and develop financial instruments. In addition, the stock amount of annual commitments in the use of green transformation and climate change supports has been calculated by increasing with certain ratios and limited not to exceed twice the special revenue realisations of the last four years. The procedures and principles regarding the implementation of this article have been determined in line with the opinions of the relevant institutions.

C. ADMINISTRATIVE FINES

1. Article 14 of the Law includes administrative sanctions:

• It is stated that those who do not submit the verified emission report in due time may be imposed an administrative fine from 500.000,00 Turkish Liras to 5.000.000,00 Turkish Liras.
• It is foreseen that double the above penalty will be applied to the enterprises within the scope of ETS.
• Those who use, import or trade ozone depleting substances shall be fined 2.500.000,00 Turkish Liras.
• Those who provide maintenance, repair and service services will be fined 250.000,00 Turkish Liras.
• Those who do not comply with the labelling provisions will be fined 120.000,00 Turkish Liras.
• Those who use or trade fluorinated greenhouse gases will be fined 2.500.000,00 Turkish Liras and HFC Control (Hydrofluorocarbons Control Certificate) Certificate will not be issued for 3-6 months.
• Imports of hydrofluorocarbons exceeding the quota will be fined 1.000.000,00 Turkish Liras and the quota will be cut.
• Those who do not comply with the labelling provisions will be fined 120.000,00 Turkish Liras.
• Those who do not notify the database will be fined 120,000.00 Turkish liras.
• Those who interfere with equipment containing fluorinated gas will be fined 120.000.00 Turkish lira.
• It is regulated that those who do not submit a verified emission report will be penalised with a transaction barrier penalty.
• Those who operate without an emission permit:
• If there is a verified report, a fine of 5,00 Turkish lira per tonne will be imposed
• If there is no verified report, an administrative fine from 1.000.000,00 Turkish Liras to 10.000.000 ,00 Turkish Liras will be imposed.
• It is stated that those who do not deliver allocations will be fined twice the market prices.
• It is regulated that the emission permit of the enterprises that do not fulfil the obligations continuously will be cancelled.
• Article 11 stipulates that the owners of projects in violation of Article 11 will be fined 120.000,00 Turkish Liras.
• Those who do not fulfil their obligation to provide information and documents or make misleading statements will be fined 170.000,00 Turkish Liras.
• It is stated that the Energy Market Regulatory Authority will impose administrative sanctions on those who violate the electricity market legislation.
• It is stated that the penalties of the acts that constitute offences according to the Turkish Penal Code and other laws are reserved.
• It is regulated that the penalties for the same act will be increased one-fold for the first repetition and two-fold for the second and subsequent repetitions within three years following the notification.
• It is regulated that the Ministry of Environment, Urbanisation and Climate Change ("Ministry") may give a period of one year to correct the violations, and if the violations are not corrected by the end of the period, the activity will be suspended.
• It is stated that the administrative fine to be imposed for each act shall not exceed 50.000.000,00 Turkish Liras.

It is also regulated that the authority to impose these administrative sanctions belongs to the Presidency.

2. Without prejudice to the provisions of the Electricity Market Law No. 6446 ("Electricity Market Law"), in the event that the obligations specified in this Law are not fulfilled, the authority to audit belongs to the Presidency, when on-site inspection and audit is required, the Presidency will carry out the audit through the provincial organisation of the Presidency in cooperation with the relevant units, and the relevant persons are obliged to provide the necessary environment for the audit, to provide all requested information and documents, data and emission reports on activities that may cause climate change to the Presidency or the authorised audit unit, to provide convenience during the audit and to cover the expenses of the analyses to be made .Article 15 of this Law regulates this obligation.

3. Within the scope of Article 16 of the Law, it is regulated that the Presidency will record the transaction with the minutes prepared by the audit staff regarding the acts requiring the imposition of the administrative sanctions mentioned above. It is stated that upon the submission of the report to the Presidency, the Presidency will evaluate the report and issue the administrative sanction decision. This decision will be notified to the relevant person in accordance with the Notification Law No. 7201 ("Notification Law") and it is determined that a lawsuit can be filed against the administrative sanction decisions in the administrative judiciary, but filing a lawsuit will not stop the collection of the fine and the collection of administrative fines will be made according to the Misdemeanour Law No. 5326 ("Misdemeanour Law").

4. As stated in Article 17 of the Law, unless otherwise provided, the procedures and principles regarding the implementation of this Law shall be determined by the Presidency and in cases where there is no provision in the Law, the provisions of the Environmental Law No. 2872, Misdemeanour Law, Electricity Market Law, Law No. 4628 on the Organisation and Duties of the Energy Market Regulatory Authority and other relevant laws shall be applied to the extent appropriate to their nature.

D. AMENDED, REPEALED PROVISIONS AND TEMPORARY PROVISIONS

1. Article 18 of the Law also includes some amended provisions of the Law:

• In the Environmental Law dated 9/8/1983 and numbered 2872: a) It is intended to add the following sentence to Article 12 after the phrase "by the Ministry": "The authority to inspect whether the provisions of this Law are complied with or not shall belong to the Ministry. When necessary, this authority shall be delegated by the Ministry to the Presidency of Climate Change, special provincial administrations, municipalities establishing environmental inspection units, Undersecretariat of Maritime Affairs, Turkish Environment Agency, General Directorate of Security, Gendarmerie General Command and Coast Guard Command (...) Audits shall be carried out within the framework of the audit procedures and principles determined by the Ministry.".
• b) Subparagraph (çç) of Article 20 "çç) In violation of the prohibitions or limitations on the monitoring of greenhouse gas emissions
• 1) 24.000 Turkish lira for those who do not submit their greenhouse gas emission monitoring plan or do not update it in due time
• 2) 36.000 Turkish lira for those who do not submit the verified greenhouse gas emission report within the time limit
• administrative fine is imposed."

is intended to be repealed.

• Article 5 of the Law on the Organisation and Duties of the Energy Market Regulatory Authority dated 20/2/2001 and numbered 4628 is amended as "Except for the powers granted to the Authority personnel by the Ministry of the Board, all decisions of the Authority shall be taken by the Board. The duties and authorities of the Presidency are as follows:" A new subparagraph related to the Emission Trading System is intended to be added to the sixth paragraph.
• Within the scope of Article 16 of the Electricity Market Law dated 14/3/2013, a paragraph has been added under the title of "Sanctions and procedure in the implementation of sanctions" and it is aimed to regulate administrative fines for market disruptive behaviours.

2. Within the scope of Provisional Article 1 of the Law, a pilot period is envisaged before the implementation of the ETS. The scope, duration and implementation procedures and principles of the pilot period were determined by the Carbon Market Board by taking the opinions of relevant institutions, organisations and non-governmental organisations. During the pilot period, administrative fines imposed on those who did not fulfil their obligations were reduced by 80%. In addition, it is obligatory for the enterprises within the scope of the ETS to obtain greenhouse gas emission permits within 3 years from the date of entry into force of this Law. During this three-year period, it is accepted that the enterprises have emission permits. If deemed necessary, the Carbon Market Board may extend this period for two more years.

3. Provisional Article 2 of the Law stipulates that the preparation and adaptation obligations regarding the legislation and planning tools specified in Articles 5 and 6 of the Proposal must be fulfilled by the relevant institutions and organisations until 31/12/2027 at the latest, and the President of the Republic is authorised to extend this period by one year. It is also stated that the local climate change action plans referred to in the fourth paragraph of Article 7 shall be prepared until 31/12/2027 at the latest and this period may be extended by one year by the Ministry.

ⅠⅠⅠ. CONCLUSION

Climate change, as a global threat, has increased its impact all over the world and in Türkiye. Since Türkiye is located in the Mediterranean basin and is a developing country, it is among the countries that will be most affected by climate change. In this context, transition to a low carbon economy, green transformation, reduction of greenhouse gas emissions and increasing the capacity to adapt to climate change were required. In addition, impacts such as drought, disasters and food security have revealed that it should not be late in the struggle.

In order to combat climate change, Türkiye became a party to the UN Framework Convention on Climate Change and the Paris Agreement and set a Net Zero Emission Target for 2053. In line with this target, it is aimed to prepare local climate change action plans and implement strategies such as circular economy, renewable energy and zero waste by ensuring that public institutions, private sector and local administrations act in cooperation. In addition, it is stated that greenhouse gas emissions will be monitored and green investments will be encouraged through new regulations such as Emission Trading System (ETS) and carbon credits.

The Law aims to raise public awareness in combating climate change, protect natural resources and increase the capacity to adapt to climate change. In addition, it is aimed to clarify the responsibilities of local governments and the private sector in combating climate change, to regulate sanctions and supervision mechanisms related to climate change, and for Türkiye to assume a leading role in the fight against climate change at national and international level.

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.