Türkiye’s New Carbon Trading System and the Trade Pressures Reshaping Its Climate Strategy

Why Türkiye Is Launching an ETS Now: CBAM Exposure, US Tariffs, and Energy Security

Türkiye is moving from climate policy design to implementation. Its 2025 Climate Law created the legal basis for a national Emissions Trading System, carbon pricing instruments, and a carbon market board, all tied to the 2053 net-zero target.

The timing is not accidental. The EU’s CBAM moves into its definitive phase in 2026 after the 2023 to 2025 transition period, and it initially covers iron and steel, cement, aluminium, fertilisers, electricity, and hydrogen.

Türkiye has also been explicit about why it is building an ETS. Official work has framed ETS development as a response to CBAM competitiveness risk, with iron and steel identified as the most exposed sector and cement as the second most affected.

This is also an industrial policy move. World Bank-backed financing and the Türkiye Industrial Decarbonization Investment Platform are meant to protect export competitiveness and support lower-carbon capital spending in heavy industry.

For buyers, traders, and policy teams, the key question is no longer whether Türkiye will carbon-price industry. It is how quickly allowances, MRV, and pass-through costs will change export pricing and sourcing decisions.

How the System Could Affect Steel, Cement, and Aluminum Exporters to the EU

Steel is the clearest first-order exposure. Turkish steel exports reached 13.4 Mt in 2024, with 5.9 Mt shipped to the EU, and 2025 trade data still shows the EU absorbing a very large share of Turkish volumes.

Cement and aluminium are also vulnerable because they sit inside CBAM scope and are usually traded on thin margins. Even modest carbon-cost differences can change supplier rankings in EU procurement.

The practical issue is embedded carbon disclosure. Exporters will need product-level emissions data, verified MRV, and possibly plant-specific benchmarks if they want to avoid being treated as high-carbon suppliers in tenders and long-term contracts.

Türkiye’s own CBAM analysis suggests domestic carbon pricing could reduce the burden passed through at the border. One study estimated CBAM costs could fall to EUR 56 million per year in 2027 if Türkiye introduced a domestic carbon price of EUR 20/tCO2e.

For EU-facing exporters, the commercial question is simple. Will ETS compliance become a cost of market access, or a competitive advantage through lower embedded emissions and better contractability?

What Türkiye’s Carbon Market Means for Domestic Industry Costs, Competitiveness, and Investment

A domestic ETS can shift the carbon burden inward. Instead of paying indirectly through CBAM, firms would face domestic abatement, efficiency upgrades, and fuel-switching decisions.

The impact will vary by sector. Integrated steel, clinker, and primary aluminium are capital-intensive, so the real effect will depend on free allocation rules, benchmark design, and whether the system is phased in gradually or with sectoral exemptions.

This is where competitiveness becomes a financing issue. Turkish industrial decarbonization programmes, backed by World Bank and EBRD-linked capital, are meant to unlock furnace retrofits, electrification, waste heat recovery, and lower-carbon process change.

Buyers should also expect higher operating complexity. Verified emissions reporting, allowance surrender, and carbon management software will become part of normal industrial overhead.

The next strategic issue is broader than domestic pricing. It is how that pricing interacts with Europe’s border regime and the wider trade environment, especially if tariff and trade-friction risks widen beyond carbon alone.

How the New ETS Fits Into Europe’s Carbon Border Policy and Wider Global Trade Shifts

Türkiye’s ETS is effectively a defensive alignment tool against EU climate trade policy. CBAM is designed to prevent carbon leakage, and the EU is already simplifying implementation while keeping coverage on core industrial sectors.

In practice, Türkiye is moving toward a carbon-pricing architecture that can be treated as equivalent in trade discussions. That matters because it can reduce the risk that exporters pay twice, once through domestic compliance and again at the border.

The wider trade context matters too. Europe is tightening border carbon rules while reassessing industrial competitiveness, and Türkiye is also facing external trade pressure from tariff volatility and supply-chain reconfiguration.

For multinational buyers, the procurement effect is likely to be fragmentation. Lower-carbon suppliers may gain preference in EU-bound contracts, while higher-emissions producers may face discounting, shorter tenors, or loss of preferred-supplier status.

That leaves one central question for traders and policymakers. How fast can carbon-market infrastructure, MRV credibility, and cross-border recognition be built before the 2026 CBAM regime hardens market behaviour?

What International Carbon Market Players, Traders, and Policymakers Should Watch Next

Implementation design is the immediate watch item. Allowance allocation, registry setup, MRV rules, and sector coverage will decide whether Türkiye’s ETS becomes a real price signal or mainly a reporting framework.

International traders should watch liquidity and price discovery. Early carbon markets are often thin, which can create wide spreads, compliance risk, and arbitrage opportunities between domestic pricing and embedded border costs.

Policymakers should also track whether CBAM recognition mechanisms expand. The European Parliament and Commission are already discussing simplification and possible future scope changes, which could affect Türkiye’s export strategy.

Carbon project developers and investors should watch whether ETS revenues are recycled into industrial decarbonization. That will shape demand for abatement technology, carbon services, and transition finance.

The main conclusion is straightforward. Türkiye’s ETS is not just climate policy. It is a trade-defense mechanism, an industrial financing channel, and a positioning tool in the next phase of carbon-constrained global commerce.