CBAM and the Turkish ETS: Two Carbon Prices, One Product for Exporters

Picture a Turkish plant selling rebar, cement, aluminium or fertiliser to the EU. From 2027, that plant's product may be subject to two separate carbon prices. The first is in Türkiye: as an installation covered by the Turkish Emissions Trading System (TR ETS), the plant will surrender allowances for its 2027 emissions. The second is in the EU: the EU buyer importing the same product will surrender CBAM certificates for its embedded emissions.

On paper, the EU Carbon Border Adjustment Mechanism (CBAM) anticipates this overlap. Article 9 of the Regulation allows a carbon price effectively paid in the country of origin to be deducted from the number of certificates. But the inference "Türkiye has an ETS, so the CBAM burden will fall" is premature as of October 2026, for at least three reasons. In this post we unpack those reasons using the official texts. For the basic rules, see the CBAM and Emissions Trading System guide.

Two systems, two payers, two different definitions

The first difference is who pays for what. In the TR ETS, the obligated party is the installation operator in Türkiye, and the subject is the installation's verified direct emissions. Under CBAM, the obligated party is the authorised declarant in the EU, and the subject is the embedded emissions of the imported product: direct emissions, indirect emissions from electricity for cement and fertilisers, and the embedded emissions of precursor goods.

These two definitions do not match one to one. For example, if a rolling mill buys semi-finished product from another installation, the precursor's emissions count as part of the product under CBAM but are another installation's obligation under the TR ETS. That is why the Commission's guidance for non-EU operators asks for the carbon price paid to be attributed to products in the same way as embedded emissions, in euros per tonne of product, and also expects separate information for precursors. In other words, the deduction will work not on the installation's total ETS bill but on an amount attributed and documented at product level.

Reason one: "effectively paid" and free allocation

The Commission's Questions and Answers document of 15 October 2026 makes the deduction subject to two conditions: the price must have been effectively paid, and it must not have been refunded or compensated. The document gives an explicit example: free allowances granted under an ETS count as compensation that reduces the carbon price.

The design of the TR ETS pilot period is decisive here. Under the procedures and principles, the free allocation rate for the 2027 system year is 100%, using the benchmark method. The benchmark, for sectors other than electricity, is the weighted average of the emission intensities of the installations in the sector in the relevant year. The result is as follows:

• For an installation at the Turkish average, free allocation largely covers its emissions; the carbon price effectively paid remains limited.
• An installation above the average covers its shortfall from the market; the payment that could be eligible for deduction equals that shortfall.
• An installation below the average ends up with surplus allowances; in that case it is not realistic to expect any payment to deduct under CBAM.

For one group of exporters the question does not arise at all. The ETS Regulation covers only Category B and C installations, that is, installations whose annual emissions based on installed capacity exceed 50,000 tCO₂e; the pilot period is also limited to five sectors. A smaller steel or aluminium processor in Category A, while it keeps its monitoring and reporting obligations, pays no carbon price in the TR ETS. For these installations' products there is no Turkish price to deduct under CBAM; the only way to reduce the EU buyer's burden is verified actual data and low emission intensity.

There is an ironic consequence too: the low-intensity installation, which is in the most favourable position under CBAM, is the one that will benefit least from Article 9. For that installation the real gain comes not from the deduction but from escaping, through verified actual data, the mark-up added on top of default values.

Reason two: the rules have not been written yet

The Commission writes that it will set out, in an implementing act, the type of evidence, the independent certification, the conversion into euros of a price paid in a foreign currency at the annual average exchange rate, and which refunds will be taken into account, and that it plans to adopt this act in 2026. As of October 2026, the Commission's CBAM legislation page shows no adopted act on this subject; it contains only the summary report of the related consultation process. The Commission is also considering publishing default carbon prices for countries with carbon pricing and making them usable in the first declarations in September 2027.

So today no one can say with certainty exactly how much of an amount paid in the TR ETS will be recognised under CBAM. What we can state is the logic of the rule: an amount that is paid, documented, not refunded and attributable to the product.

Reason three: the calendars don't line up

Putting the two calendars side by side raises a timing question:

For 2026 imports there is structurally no TR ETS payment to deduct, other than through the voluntary mechanism. For 2027 imports, the CBAM declaration deadline falls about two months before the TR ETS surrender deadline. If an installation leaves its surrender to the last day, it may be harder for the EU buyer to document an "effectively paid" price by the declaration date. How the implementing act will deal with timing differences like this is not yet clear; for that reason we see this point not as a certain problem but as a risk to be monitored.

There is also the voluntary complementary allowance price mechanism foreseen for 2026. Article 20 of the ETS Regulation provides that an additional price may be applied on the primary market at the operator's request; the auction procedures and principles will be set by the Energy Market Regulatory Authority (EPDK). Whether a payment made under this mechanism will count as an "effectively paid carbon price" under CBAM also depends on the Article 9 rules. As of October 2026, there is no text on either side that answers this question.

What should exporters do in this situation?

1. Build a single monitoring structure. The TR ETS monitoring plan, Monitoring Methodology Plan and Activity Level Report, and the CBAM product-level emissions report, all use the same meters and the same fuel and material flows. Two separate teams, two separate spreadsheets and two separate verification preparations mean both extra cost and a risk of inconsistency. For details, see our guides on the Turkish Emissions Trading System and the CBAM definitive period.

2. Work out where you stand against the benchmark. Estimate your emission intensity at sub-installation level against the sector average. Will you be short or long? This is the first number that determines both your TR ETS budget and your expected CBAM deduction.

3. Keep records that link payments to products. Document every surrender and purchase in the TR ETS by date, quantity and amount paid, and set up a structure that can map this to production processes and CN codes under CBAM. Building this record retroactively once the rules are clear will be difficult.

4. Prioritise actual data. Default values are applied with a mark-up of 10% in 2026, 20% in 2027 and 30% from 2028 onwards. Whatever the uncertainty around the Article 9 deduction, this mark-up is certain. For most Turkish producers, the real lever that determines the CBAM burden is verified actual data.

5. Think about the contract now. The EU buyer will claim the deduction, but the Turkish installation will make the payment. How this value will be shared commercially, which documents will be provided on which date and what happens in case of delay should be put in writing before the first declaration period begins.

Conclusion

The TR ETS and CBAM can create two carbon prices on the same product; CBAM's deduction rule exists to prevent this double payment. However, 100% free allocation in the pilot period, Article 9 rules that have not yet been adopted and the two systems' different calendars leave the practical effect of the deduction uncertain as of October 2026. Within this uncertainty, two things are certain: verified actual data creates value in every scenario, and companies that bring the data for both systems together in a single structure will be able to move quickly once the rules are clear.

At Alalëa we design CBAM and TR ETS readiness on a single data infrastructure. For details, take a look at our CBAM readiness and ETS readiness pages.