Carbon pricing is spreading across the globe, whether in rich or poor countries, as one of the most significant tools to combat climate change as the world is still far from meeting the 2015 Paris Agreement’s goal of limiting warming to 1.5 degrees Celsius and emissions are continuing to rise.

With international debates on the advantages and disadvantages of carbon pricing gaining heat, Türkiye’s green transformation and policies to fight global warming are also taking shape.

An Emissions Trading System (ETS) is the well-suited tool for carbon pricing for Türkiye, according to technical studies, Professor Halil Hasar, Director of Climate Change Presidency of Türkiye, told Daily Sabah in an exclusive interview.

"Technical studies conducted in the scope of the Partnership for Market Readiness (PMR) Project supported by the World Bank show us the emissions trading system is the most cost-effective carbon pricing option for Türkiye. Furthermore, an advisory decision was taken for the development of a National Emissions Trading System in the Climate Council, organized in 2022" he elaborated.

Both the 12th Development Plan which reflects the country’s 2053 net-zero goal, as well as the Medium-Term Program mirror the strategic dimension of an ETS, Prof. Hasar said, reminding that in Türkiye’s Nationally Determined Contributions submitted within the scope of the Paris Agreement, ETS is among the main implementation tools for reducing greenhouse gas emissions in the industry and electricity production sectors.

Carbon pricing places a fee on carbon emissions and thus encourages lower pollution. Experts agree that initially, carbon pricing can affect the economy and raise energy prices, however, in the long-term, the benefits outweigh the disadvantages while the revenue gained from ETS can be used to spend on and invest in new green projects.

As the World Bank put it, "allows emitters to decide to either transform their activities and lower their emissions, or continue emitting and paying for their emissions."

Prof. Hasar explained that carbon pricing emerges with two main forms of implementation, one of which is ETS, and the other is carbon taxing.

"To speak about global carbon pricing instruments, according to the report published by the World Bank in May, there are 73 active implementations. Again, as of 2022, approximately $100 billion of revenue has been generated from carbon pricing practices. Through these, 23% of global greenhouse gases were covered and approximately 40% of the revenues were used for green transformation purposes," Prof. Hasar said.

On the EU’s Carbon Border Adjustment Mechanism (CBAM), which aims to bring in climate tariffs on imports, and affect Türkiye’s trade with the bloc, Prof. Hasar said that the adoption of ETS will facilitate Ankara’s goals toward becoming a green, digitalized and competitive economy.

The director pointed out that Türkiye has been working on ETS for around ten years while the project on Carbon Market Readiness conducted with the World Bank was finalized in 2021.

"With this project, capacity building was achieved in many areas such as monitoring emissions, analysis of policy options, simulation and recording system," he underlined.

As a next step, Türkiye has currently also entered the stage of working on capacity needs in coordination with the Partnership for Market Implementation (PMI), which assists countries in designing and implementing pricing instruments suitable for their development priorities.

"Outputs such as design elements of the emission trading system, sub-legislation draft studies, economic impact modeling and registration system will be obtained," Prof. Hasar continued, highlighting that ETS necessitates working together and negotiating with several institutions of other fields.

A working group has started work on carbon pricing and developed a range of suggestions. Furthermore, the Green Deal Action Plan, led in coordination with the Trade Ministry also has a unit on carbon pricing.

"Due to our position as a candidate country for the European Union, a separate project has been scheduled to ensure the compliance of the national ETS with EU legislation," he said further.

"The planned schedule is to complete the emission cap determination, which is one of the design elements of the ETS, and the completion of the allocation plans of the facilities included in the system, in October 2024, and to begin full implementation with market transactions at the beginning of 2025."

Prof. Hasar emphasized that Türkiye’s work on carbon pricing constitutes an example of the country’s efforts within the scope of the principle of "common but differentiated responsibilities," which summarizes Ankara’s fair and inclusive approach to combating climate change.

Türkiye’s Climate Law

Being one of the countries that is most vulnerable to global warming and located in the Mediterranean basin, Türkiye has also stepped up efforts to draft a climate law. The draft law prepared by the Environment, Urbanization and Climate Change Ministry determines activities to primarily decrease greenhouse gas emissions as well as policies for climate change adaptation.

"Considering the importance of activities to be carried out locally, the draft makes it obligatory to prepare Local Climate Change Action Plans across Türkiye’s 81 provinces. Moreover, regulations have been made regarding the ETS, which will be implemented for the first time in our country. Works based on the principle of setting an upper limit on greenhouse gas emissions have been introduced, and it has become mandatory for businesses to obtain a greenhouse gas emission permit," Prof. Hasar pointed out.

"Along with all these regulations, the draft also includes the determination of green investments, which is one of the important cornerstones in the fight against climate change – the legal basis for climate finance, climate change incentives and national green taxonomy studies has been established," he said.

Climate change is an issue that goes beyond politics and affects every part of society with its environmental, economic and social impacts. Hence, Türkiye this year rolled up its sleeves for urgent and efficient measures to fight climate change. Located in the Mediterranean basin, one of the most sensitive regions in terms of climate change impact, the country has witnessed disasters, air pollution, heat waves, wildfires, droughts and low precipitation.

From "Water Efficiency Mobilization" early in January, "International Zero Waste Day" which was observed for the first time this year toward "Environment Week" celebrations and lastly, the COP28 climate summit – Türkiye witnessed a tide of significant environmental endeavors and achievements in 2023.