A New Era in Turkey's Climate Policy
Climate Change Law No. 7552, which came into force in July 2024, is a landmark legislative development in Turkey's climate policy. This law is not a declaration — it is a statute that introduces direct obligations, establishes institutional structures, and provides a broad authorization framework to be detailed through secondary legislation (Official Gazette of the Republic of Turkey, 2024).
The law's significance stems not only from its provisions but also from its position in Turkey's climate governance history. Turkey ratified the Paris Agreement in 2021 and announced a 2053 net-zero target, but the legal infrastructure for these commitments had been missing. Law 7552 fills this gap: for the first time, monitoring, reporting, and verification (MRV) of greenhouse gas emissions becomes a legal obligation, and legal authorization is granted for an emissions trading system (ETS).
For businesses, this means the "voluntary era of climate policy" is over.
Core Obligations Introduced by the Law
Monitoring, Reporting, and Verification (MRV) Requirements
The law's most immediate impact is MRV. Facilities above certain thresholds face these obligations:
- Monitoring: Systematic measurement or calculation of greenhouse gas emission sources. Each facility will operate according to an approved monitoring plan.
- Reporting: Submission of annual emission reports to the regulator in a standard format.
- Verification: Approval of the emission report by an accredited third-party verifier.
This structure takes the EU's Monitoring and Reporting Regulation (MRR — 2018/2066) as its model. This model choice is not coincidental — it is a strategic choice for both international compatibility (especially in the CBAM context) and potential future linking with the EU ETS.
The sectors and threshold values to be included in the scope will be determined through secondary legislation, but energy generation, cement, iron and steel, glass, ceramics, paper, and petrochemicals are expected to be prioritized. Technical work under the World Bank's PMR/PMI program is supporting the scope determination process (World Bank, 2024).
Emissions Trading System (ETS) Authorization
The law's most strategic component is granting legal authority for establishing a national ETS. This authorization covers:
- Authority to create and distribute allowances
- Authority to establish a market mechanism (trading platform)
- Authority to impose administrative sanctions
- Authority to link with international carbon markets
The ETS's operational details — cap, allocation method, pilot and definitive phase timelines — continue to take shape through the draft regulation. However, the legal authorization framework is now in place, meaning the regulator has the legal basis to take all necessary steps.
Institutional Structures and Authority Distribution
The law assigns climate policy coordination to the Ministry of Environment, Urbanization, and Climate Change and distributes sectoral regulatory authorities to relevant institutions. The establishment of the Climate Change High Council aims to address policy coordination at the highest level.
What the Law Does and Doesn't Do
For expectation management, it is important to clearly distinguish what the law does and does not do:
| What the Law Does | What the Law Doesn't Do |
|---|---|
| MRV becomes a legal obligation | Specific sector thresholds not determined (left to secondary legislation) |
| Legal authorization for ETS establishment | Does not set an ETS price or cap |
| Institutional structures defined | Does not set concrete emission reduction targets |
| Administrative sanctions framework created | Penalty amounts not detailed |
| International cooperation framework provided | Does not revise Paris Agreement NDC targets |
This structure shows that the law is a "framework law." Details will come through secondary legislation. This provides both flexibility (rapid adaptation) and uncertainty (businesses do not yet know the exact rules).
Sector-by-Sector Practical Implications
Energy-Intensive Industry: The Most Direct Impact
Cement, iron and steel, glass, ceramics, and energy generation facilities will be the first to face MRV obligations. For these facilities, the law's practical meaning:
Investment planning. Building MRV infrastructure requires investment — continuous emissions monitoring systems (CEMS), data management software, personnel training, and verification costs. This investment needs to be completed before the pilot period.
Operational processes. Monitoring plan preparation, annual reporting cycle management, and verification process coordination add significant workload to environmental management teams.
Strategic decision-making. Since every tonne of CO2 will have a cost under the ETS, carbon cost is now a parameter in investment decisions. Energy efficiency projects, fuel switching, and process improvement investments require carbon price inclusion in payback calculations.
Companies Exporting to the EU: The CBAM Strategic Connection
Law 7552 is a strategic lever for Turkish exporters in the context of CBAM (Carbon Border Adjustment Mechanism). Under Article 9 of the CBAM Regulation, the carbon price paid in the country of origin can be deducted from CBAM certificate costs (European Parliament and Council, 2023).
This connection takes TR-ETS beyond being an environmental regulation: for Turkish companies exporting steel, cement, aluminium, fertilisers, and electricity to the EU, every Euro of carbon price paid under TR-ETS will be deducted from the CBAM financial obligation. If the national carbon price approaches the EU ETS price, the CBAM cost can approach zero.
Activation of this mechanism depends on TR-ETS becoming operational. However, building MRV capacity now and being able to provide verified emissions data lays the foundation for the cost advantage in the definitive period.
Financial Sector: Indirect but Strong Impact
Although the law does not directly cover banks, the indirect impact is strong:
Credit risk dimension. Banks that lend to sectors covered by the ETS must assess the impact of carbon costs on borrowers' repayment capacity. The risk profile of loans to high-emission-intensity facilities changes with carbon pricing.
BRSA expectations. The BRSA's sustainable banking guidance principles expect banks to integrate environmental risks into their management processes (BRSA, 2022). The Climate Law entering into force accelerates the concretization of these expectations.
Green finance opportunity. The decarbonization investments envisaged by the law offer banks opportunities to develop green lending and green bond products.
Supply Chain Companies: Data Requests Will Increase
Companies not directly subject to MRV obligations but participating in EU supply chains are also indirectly affected. EU customers' requests for value chain emissions data under CSRD and embedded emissions data requirements under CBAM make MRV capacity critical throughout the supply chain.
What to Expect from the Secondary Legislation Process
The law's implementation depends on secondary legislation. Expected regulations include:
- MRV regulation: Which sectors and thresholds? What monitoring plan format? How will verification accreditation criteria be determined?
- ETS regulation: Pilot period timeline, allocation mechanism, market rules
- Sanctions regulation: Administrative fines and other sanctions for non-compliance
- Sectoral guides: Specific monitoring and reporting requirements for each sector
This legislative process offers companies the opportunity to actively participate in regulatory consultation. Communicating operational realities to the regulator — through industry associations or direct engagement — enables them to be reflected in the legislation.
Preparation Prioritization
With the law now in force, steps companies should take in order of urgency:
Immediate (0-6 months):
- Complete Scope 1 and 2 emissions inventory in accordance with ISO 14064-1
- Assign an MRV responsible person or team
- Assess existing data collection infrastructure
Short term (6-12 months):
- Prepare a draft monitoring plan
- Establish initial contact with verification bodies
- Include carbon cost scenarios in financial planning
Medium term (12-24 months):
- Complete the first MRV process cycle
- Prepare for the ETS pilot period
- Develop a decarbonization roadmap
Action Item: The Climate Law is in force and the secondary legislation process continues. Use this window to build data infrastructure and develop emissions-based decision-making capacity. When secondary legislation is finalized, companies that have prepared will reduce their compliance timeline from months to weeks.
See how enterprise teams prepare for Turkey's emissions trading system.