A. Introduction 

The climate crisis is no longer merely an environmental issue; it has become a central concern in the fields of law, economics, and international politics This period is marked by rising average temperatures, forest fires, and droughts, prompting each country to introduce regulations in this field within its domestic legal system. Carbon emissions have become more than just an environmental concern; they are now determinants of international trade, investment, and legal responsibilities. In this context, Türkiye is preparing to join this global transformation through the Climate Law. The Draft Climate Law (“Draft Law”), which expressly sets out its aims to control greenhouse gas emissions, establish mechanisms compatible with climate change, and provide a legal framework for carbon management, was submitted to the Grand National Assembly of Türkiye (“TBMM”) on 20 February 2025. It consists of 20 articles and 2 provisional articles. However, while the legislative process in the TBMM was ongoing, the Draft Law was withdrawn for re-evaluation, and thus, it has not yet acquired the status of a text that has achieved political and institutional consensus. Nevertheless, public debate on the content of the Draft Law continues, and it warrants examination due to its significance for Türkiye’s climate policy.

In its current form, the Draft Law constitutes a “framework law” that, rather than setting out detailed and technical regulations, lays down general principles and objectives, leaving the implementation details to secondary legislation. Accordingly, in this article, key provisions of the Draft Law are examined—particularly those relating to the Carbon Border Adjustment Mechanism and the Emissions Trading System. In addition, the objectives and legal basis of the Draft Law are analyzed through the preambles of the articles. However, it appears that the Draft Law has not yet directly regulated certain areas within the scope of combating climate change, and that its implementation and impact will largely depend on the secondary legislation to be adopted.

B. Key Provisions under the Draft Law

1. Carbon Border Adjustment Mechanism (“CBAM”)m

The Carbon Border Adjustment Mechanism (“CBAM”) is a trade-related climate policy tool developed by the European Union (“EU”) to prevent carbon leakage and was put into effect as of 2023. Through this mechanism, the EU has imposed a carbon cost obligation on imports from countries that are not integrated into the EU Emissions Trading System (“ETS”), do not implement carbon pricing, or have not entered into a specific agreement with the EU in this area. The mechanism envisages calculating the carbon emissions generated during the production of imported goods and reflecting a corresponding carbon cost. Within this framework, authorized companies importing to the EU in carbon-intensive sectors (such as those operating in the cement, iron-steel, and aluminum sectors) will be obliged to submit a specified number of CBAM certificates corresponding to the emissions generated during the production of the imported goods. The unit price of the certificates will be determined in line with the carbon price established in the EU ETS. The CBAM certificates are based on the principle of investing in appropriate carbon reduction projects. These certificates are intended to reflect the importing country’s commitment to mitigating the environmental impact of emissions embedded in the imported goods. As of 2026, the EU plans to gradually phase out free allowances under the ETS and apply carbon pricing (aka carbon tax) to carbon-intensive products.

CBAM is based on the principle of ensuring a level playing field between producers subject to carbon pricing in the EU market and importers. For example, if a producer is subject to carbon pricing and pays a cost per ton of carbon in Türkiye, an importer of the same product from outside Türkiye will likewise be required to pay an equivalent carbon cost. The system seeks to ensure that both domestic producers and importers are subject to the same carbon cost, thereby promoting the commercial advantage of low-carbon production. In essence, additional financial burdens are imposed where carbon intensity is high.

The CBAM as Proposed in the Draft Law

Article 8 of the Draft Law provides the legal basis for the establishment of the CBAM in Türkiye. Pursuant to Article 8(ç) of the Draft Law:

“A Carbon Border Adjustment Mechanism may be established to address embedded greenhouse gas emissions in goods imported into the Turkish Customs Territory. The procedures and principles regarding the reporting, scope, content, and implementation of CBAM shall be determined by the Ministry of Trade in coordination with the relevant ministries.”

This provision envisages the establishment of a national mechanism aimed at preventing carbon leakage by taking into account the carbon costs in foreign trade. The procedures and principles of the CBAM to be established shall be determined through secondary legislation, and the operation of the mechanism is planned to be structured in alignment with the EU framework. Once CBAM is established in Türkiye, domestic producers will pay a carbon cost within Türkiye; this cost will then be declared and offset during exports to the EU, thereby avoiding duplicate payments for the same carbon emissions both in Türkiye and in the EU.

Within the scope of the Draft Law, a legal basis has been created for regulating CBAM in Türkiye; however, as the relevant procedures and principles are to be laid down by the Ministry of Trade through secondary legislation, the content, scope, implementation timeline, and the extent to which it will be aligned with the EU framework remain to be clarified. In this context, it may be stated that the CBAM provisions introduced by the Draft Law currently offer a general framework, and the specifics of implementation will largely be shaped by the forthcoming secondary legislation.

2. Emissions Trading System (ETS)

The Emissions Trading System (ETS) is a tool designed to limit greenhouse gas emissions. Under this system, businesses operating in certain sectors are allocated emission allowances (allocations) corresponding to the amount of greenhouse gases they are permitted to release into the atmosphere within a calendar year. These allowances are tradable, offering businesses the options of either reducing their emissions or balancing them through market mechanisms instead of facing excessive emissions. (For a more detailed analysis on this subject, see: “Contemplated Emissions Trading System in Turkey (Carbon Trading)” https://kesikli.com/news-insight/2024-07-29-contemplated-emissions-trading-system-in-turkey-carbon-trading/ ).

The EU ETS is based on the cap-and-trade principle. Under this system, if businesses exceed their emission caps, they are required to participate in emissions trading and obtain additional allowances accordingly.

2.1. The ETS Introduced by the Draft Law

Articles 9 to 11 of the Draft Law establish the legal framework for the implementation of a national ETS in Türkiye. Within this scope, it is rendered a legal obligation for enterprises operating in certain sectors and generating greenhouse gas emissions to obtain an emissions permit from the Directorate of Climate Change. Enterprises subject to the ETS are required to verify the amount of emissions resulting from their operations and report these within specified periods. These data may be shared with relevant public institutions both to ensure market transparency and to facilitate the fair and effective distribution of carbon allowances.

As the ETS is designed not only as a monitoring tool but also as an economic mechanism through which carbon finance and market-based mitigation strategies may be implemented, enterprises are allowed to benefit from offsetting mechanisms in order to fulfill their reduction obligations. In this way, it is envisaged that domestic obligations may be balanced with international carbon credits.

The institutional body envisioned to steer the functioning of the system and ensure price stability in the market is the “Carbon Market Board”. This board is expected to be authorized across a broad spectrum, ranging from the development of carbon pricing instruments to the distribution of allowances and the determination of the quantity of emission rights to be offered to the market via auction. The decisions of the Board must serve mitigation targets in line with the principle of environmental integrity and also ensure a carbon cost allocation that considers a balance across sectors.

The Draft Law also stipulates a sanction regime regarding violations. Enterprises that fail to report emission data, do not fulfill their verification obligations, or act in violation of the requirements may be subject to administrative fines ranging between TRY 500,000 and TRY 5 million. Additionally, in cases where substances that deplete the ozone layer are used contrary to the prohibitions, the fine may reach up to TRY 2.5 million. The Draft adopts a gradual increase approach in its sanction regime, enabling the imposition of more severe penalties for repeated violations.

Article 9 of the Draft Law provides that free allocation may be granted under the ETS; national allocation plans shall be published in the Official Gazette; and transactions related to allowances traded in the ETS market shall not be subject to the provisions of the Public Procurement Law. It is also stated that such allowances may not be subject to collateral agreements.

The authority to determine the general framework of the ETS has been vested in the Directorate of Climate Change. The Directorate is tasked with regulating the main procedures and principles concerning the implementation of the ETS, as well as the monitoring and reporting processes. Within this framework, it is envisaged that the detailed rules governing the technical functioning of the ETS market (e.g. the trading of allowances, market rules, price formation) shall be determined under the coordination of the Ministry of Environment, Urbanization and Climate Change, in cooperation with the Ministry of Energy and Natural Resources, the Capital Markets Board, and the Energy Market Regulatory Authority.

2.2. The Interaction Between the ETS and the CBAM

Article 11 of the Draft Law allows businesses to engage in carbon offsetting to fulfill their allocation obligations under the ETS. Accordingly, under certain conditions, businesses may partially meet their allocation obligations through the use of an equivalent amount of carbon credits (Art. 11/1). This provision is designed to apply not only within the scope of the ETS but also to the commitments of actors participating in voluntary carbon markets.

The second paragraph of the article provides for the establishment of a national carbon crediting and offsetting system, which will enable the generation of carbon credits through emission reduction, removal activities, and the enhancement of carbon sinks. The procedures and principles governing this system shall be determined by the Directorate of Climate Change, which may also cooperate with relevant organizations for the development of national standards and methodologies when deemed necessary (Art. 11/4).

If it is determined that the data or documentation used in the projects carried out under this framework are erroneous or fraudulent, the related carbon credits may not be used to fulfill allocation obligations and the relevant obligation shall be considered unfulfilled. In such cases, the project owner will be subject to sanctions pursuant to Article 14/4(c) of the Draft Law. Under this provision, in the event of failure to submit the required allocation within the prescribed period under the ETS, an administrative fine shall be imposed in an amount equivalent to twice the higher of the weighted average allocation price in the primary market or the weighted average allocation price in the secondary market, both calculated based on the last three months of the year to which the verified greenhouse gas emission report pertains.

Furthermore, voluntary market actors who have generated or intend to generate carbon credits within the territory of Türkiye in accordance with national or international standards are obliged to register their projects in the carbon credit registry system within the period prescribed by the Directorate (Art. 11/5).

3. Planning and Implementation Instruments

Article 7 of the Draft Law provides the legal basis for the key strategic documents and planning instruments that shape Türkiye’s national climate policy. Within this framework, the “National Climate Change Strategy” and the “National Climate Change Action Plan” prepared to implement this strategy shall form the foundation for mitigation and adaptation measures to be adopted nationwide. These documents will include targets such as the reduction of greenhouse gas emissions, the development of climate-resilient infrastructure, and the enhancement of adaptation capacity. The same article also envisions the preparation of “local climate change action plans” at the regional and local levels, which must be prepared by the relevant authorities and submitted for approval by the Directorate of Climate Change. The preparation and approval of these local plans are made mandatory under the Draft Law.

Article 8 of the Draft Law sets forth a range of technical instruments to support and operationalize the implementation of these strategic documents. Accordingly, relevant public institutions and organizations will be required to develop roadmaps, sectoral risk analyses, and strategic plans aimed at reducing greenhouse gas emissions and adapting to climate change in the sectors under their responsibility. In addition, nature-based solutions are included among the implementation tools that may be employed in addressing climate change. These encompass practices such as ecosystem-based infrastructure interventions, the expansion of green areas, and the preservation of areas with high water retention capacity. The article also stipulates the preparation of emission projection models, the establishment of monitoring systems for national emission targets, and the development of technical capacity for analyzing climate risks. Through these provisions, planning is defined not merely as the process of document preparation, but as a data-driven decision-making infrastructure based on sectoral and spatial foundations.

4. Monitoring, Reporting and Verification (“MRV”) System

The system known as the MRV System refers to a process based on the principle of transparency and accountability, forming the core technical infrastructure of emissions trading systems and carbon markets. The functioning of the system can be briefly summarized as follows:

Monitoring: The emission sources of operators are identified and the emissions are measured or calculated in accordance with technical guidelines.

Reporting: Emission data is reported annually to the competent authority (e.g., the Ministry of Environment).

Verification: The reported emissions are reviewed by independent, accredited verification bodies, and the technical validity of the report is confirmed.

Although not extensively regulated, the MRV System is implicitly referred to in various provisions as an essential component ensuring the effective implementation of the system. For example:

• The obligations concerning the acquisition of emission permits and the delivery of allowances under the ETS (Articles 9 and 10) require the monitoring and verification of emissions.
• The verification requirements and sanctions related to incorrect or fraudulent data in the carbon crediting system (Article 11) indirectly highlight the significance of MRV.

C. Conclusion

The Draft Climate Law may be considered as an attempt to implement a comprehensive climate legislation framework, the absence of which has long been felt in Türkiye. ETS envisaged under the Draft aims to reduce greenhouse gas emissions through a market-based approach, while the CBAM, which is anticipated to be established by the Ministry of Trade, provides a strategic regulatory framework to manage the carbon-related costs Türkiye may face in international trade. In theory, the simultaneous implementation of the ETS and CBAM is intended not only to support the achievement of national climate targets, but also to prevent potential competitiveness losses in Türkiye’s economic relations with the EU.

However, the fact that the Draft Law leaves many core regulations at a mere framework level and delegates the implementation details largely to secondary legislation necessitates a multi-dimensional process that requires institutional coordination, administrative capacity, and technical expertise at the implementation stage. In particular, matters such as the methods of allowance allocation under the ETS, the functioning of carbon markets, verification procedures, the MRV infrastructure, and the technical parameters of CBAM remain undefined. Therefore, the effectiveness of the Climate Law will not only depend on the framework established at the legislative level but will also be directly influenced by regulations to be issued, institutional structuring, and market oversight mechanisms.

In conclusion, while the Draft Climate Law seeks to provide an institutional foundation for Türkiye’s climate legislation, realizing this potential will require a holistic, consistent, and transparent secondary regulatory process. The Draft, currently under re-evaluation by the Commission, can only be transformed into an effective climate policy through the timely preparation of these regulations in coordination among relevant institutions.

Av. Dr. Ömer KESİKLİ

Av. Çağla BARUT