Türkiye's Carbon Market: Guide to Transitioning from the TR-ETS Pilot Phase to Implementation

Türkiye is navigating one of the most critical junctures on its path toward achieving its 2053 “Net Zero” target. The TR-ETS (Türkiye Emissions Trading System), whose legal framework is outlined in Climate Law No. 7552, will enter our lives in its pilot phase as of 2026. So, what lies ahead for companies during this process? What are the differences between the pilot phase and full implementation? Let's take a brief look together.

Pilot and Implementation phases

The TR-ETS process is divided into two main phases to enable companies to adapt to the system:

Phase	Date range	Key features
Pilot Phase	2026 – 2027	Trial period, 80% discount on fines, 100% free allocation.
1. Implementation Phase	2028 – 2035	Full capacity operation, start of carbon pricing, gradually decreasing free allowances.

Pilot period (2026-2027): Learning and preparation

During this period, the system's technical infrastructure will be tested. The most significant advantage for companies is that administrative fines will be applied at an 80% discount. However, this does not mean that obligations can be neglected; on the contrary, it is an opportunity for companies to develop their data collection and reporting capabilities.

Companies' content obligations

Companies covered by TR-ETS (especially Category B and C facilities) must follow a specific cycle:

• Monitoring Plan (MRV): Each facility must prepare a monitoring plan specifying how it will measure its emissions and have it approved by the Climate Change Directorate.

• Verified Reporting: Annual emissions reports must be verified by independent verification bodies and uploaded to the system.

• Emission Permit: It is mandatory to obtain an emission permit within 3 years of the Climate Law coming into force.

• Allocation Delivery: After the pilot period, companies must hold sufficient “allocations” (emission rights) for every 1 ton of carbon they emit and deliver them to the public at the end of the year.

A critical link for exporters: The impact of CBAM

For Turkish companies exporting to the European Union (EU), TR-ETS is not only a local requirement but also a competitive advantage.

• Preventing Double Taxation: The EU's Border Carbon Adjustment Mechanism (CBAM) will come into effect with financial obligations on January 1, 2026. When a carbon price (TR-ETS) is paid in Turkey, this amount can be offset against the tax payable at the EU border.

• Sectoral Priority: The iron and steel, aluminum, cement, fertilizer, and electricity sectors covered by the CBAM are also the primary focus of the TR-ETS. However, the scope is expected to expand rapidly.

• Carbon Leakage Risk: In the absence of a national ETS, the carbon tax paid by Turkish exporters would go to EU funds. Thanks to the TR-ETS, these resources will remain within Turkey and can be used to finance the green transition.

Challenges and opportunities awaiting companies during implementation

With the Full Implementation Period starting in 2028:

• Carbon Cost: Free allowances will gradually decrease, and companies will be required to purchase allowances through auctions.

• Investment Need: Rising carbon prices will shorten the payback period for investments in low-carbon technologies (renewable energy, energy efficiency).

• Market Transactions: Companies will have access to a secondary market (operated by EPİAŞ) where they can sell their surplus allowances.

The pilot phase is a process where there is room for error, but the value of the data is extremely high. After 2028, carbon will become a real cost item on balance sheets.