Turkish Emissions Trading System (TR ETS): Pilot Phase and Obligations

In 2026, Türkiye's carbon pricing framework moved from paper to practice. The Turkish Emissions Trading System (TR ETS) is based on Climate Law No. 7552 (İklim Kanunu). How it works is set out in the Turkish Emissions Trading System Regulation of 27 August 2026, while the details of the pilot phase were determined by decisions of the Carbon Market Board (Karbon Piyasası Kurulu) and by the procedures and principles published on 1 October 2026.

This guide is based on the official texts in force as of October 2026. The most recent official TR ETS document we could find from the Climate Change Directorate (İklim Değişikliği Başkanlığı, "the Directorate") is its announcement of 14 October 2026 extending the deadline for Monitoring Methodology Plans. For the wider picture, including the link with CBAM, see the main CBAM and Emissions Trading Guide.

Legal basis: three layers

The Regulation repealed the Regulation on Monitoring of Greenhouse Gas Emissions of 17 May 2014 (Sera Gazı Emisyonlarının Takibi Hakkında Yönetmelik) and provides that references to the old regulation are to be read as references to the new one. In other words, for installations that have been preparing monitoring plans and verified emissions reports under the 2014 regulation, the monitoring, reporting and verification (MRV) obligation continues without interruption; what has changed is that these data now form the basis of a market.

Under Article 10 of the Law, the Carbon Market Board is chaired by the Minister of Environment, Urbanisation and Climate Change and is made up of representatives of the relevant ministries, the Capital Markets Board (SPK), the Energy Market Regulatory Authority (EPDK) and the Climate Change Directorate. The Board approves the national allocation plan and decides on the distribution of free allocation and the offsetting ratio. As market operator, Energy Exchange Istanbul (EPİAŞ) runs the transaction registry; market surveillance lies with EPDK.

Pilot phase: 2026 and 2027

2026: reporting only

Under Article 6 of the procedures and principles, only the reporting obligations under the Regulation apply for the 2026 system year. No obligation to surrender allowances arises, apart from the voluntary complementary allowance price mechanism. The complementary allowance price, regulated in Article 20 of the Regulation, is a mechanism that allows an additional price to be applied on the primary market at the operator's request; EPDK will set the procedures and principles for the related auctions. As of October 2026, we have not been able to find any document showing that these procedures and principles have been published.

2027: the first surrender obligation

• Allowances corresponding to verified emissions for the 2027 system year must be surrendered by the last business day of November 2028.
• For 2027, a free allocation rate of 100% applies under the benchmark method; the sectoral activity coefficient is also set at one during the pilot phase.
• Allowances released to the market during the pilot phase can be used only for pilot phase obligations. If an operator fails to meet its obligation, the outstanding amount is added to the first year of the first implementation period.

The Regulation states that the first implementation period following the pilot phase will consist of two sub-periods; however, as of October 2026 we have not been able to find an official decision setting its start and end years. The Board also reserves the right to change the scope and duration of the pilot phase.

Who is covered? Thresholds and pilot activities

The Regulation divides installations carrying out the activities in Annex 1 into three categories based on annual emissions calculated conservatively from installed capacity (excluding CO₂ from biomass, including transferred CO₂):

Schools, universities, hospitals and defence industry facilities are excluded from the ETS, limited to the activities they carry out. Natural gas and crude oil transmission and storage are out of scope, except for MRV, until the end of the first implementation period.

The pilot phase is limited to installations in Categories B and C that carry out the following activities (procedures and principles, Article 2):

• Electricity generation by combustion of fuels in installations with a total rated thermal input of 20 MW or more (electricity sector only)
• Coke production; metal ore roasting, sintering or pelletising (iron and steel and aluminium sectors)
• Production and casting of iron or steel with a capacity of 2.5 tonnes per hour or more; production or processing of ferrous metals with combustion units of 20 MW or more
• Production of primary aluminium or alumina; production of secondary aluminium with combustion units of 20 MW or more
• Production of clinker in rotary kilns with a capacity of 500 tonnes per day or more, or in other kilns with a capacity exceeding 50 tonnes per day
• Production of nitric acid and ammonia

An installation whose main activity is not on this list is outside the pilot phase, even if it generates electricity.

Allocation: how does the benchmark work?

Free allocation is calculated per sub-installation. The formula in Article 13 of the Regulation is:

Free allocation (t) = Benchmark (tCO₂e/unit) × Free allocation rate × Sectoral activity coefficient × Activity level (units)

The installation divides its activities, in order of priority, into product benchmark, heat benchmark, district heating, on-site heating, fuel benchmark and process emissions sub-installations, and attributes the total emissions in its approved monitoring plan to these sub-installations completely and without double counting.

How the benchmark is determined during the pilot phase matters:

• Sectors other than electricity: For each sub-installation, the overall weighted average of emission intensities for the relevant system year only is taken, and a single benchmark is set.
• Electricity generation: The benchmark is set per power plant, using the weighted average intensity over the last five years including the relevant year (2023-2027 for the pilot phase). The total shortfall and surplus in the sector are then balanced by a sectoral correction factor.
• Process emissions, on-site heating and district heating sub-installations: All emissions attributed to them are granted as free allocation.

The practical consequence: a 100% free allocation rate does not mean every installation's emissions are fully covered. Because the benchmark is based on the Turkish average, an installation with above-average intensity will be short, and one below the average will be left with surplus allowances. Benchmarks will be announced in the National Allocation Plan after the verified reports for sub-installations have been submitted; the plan is published in the Official Gazette within 60 days of the deadline for verified reports. Applications for free allocation are made within 30 days of the plan's publication.

Market instruments

• Primary and secondary market: Allowances are sold by auction on the primary market; the secondary market operates by continuous trading.
• Additional reserve: Available under certain conditions and only for meeting the surrender obligation; its use on the primary market cannot exceed 10% of the ETS cap. For installations using the additional reserve, the deadline is the last business day of December.
• Market stability mechanism: Triggered on the basis of price and supply assessments; banking and borrowing flexibilities are provided for.
• Offsetting: Only carbon credits from projects in Türkiye may be used, up to a percentage to be set by the Board.
• Linking: The Regulation allows for mutual recognition agreements and electronic linking with other emissions trading systems.

Monitoring, reporting and verification (MRV)

Greenhouse gas emissions permit: Operators covered by the ETS obtain a permit from the Directorate; it is valid for five years, and renewal applications must be made at least six months before expiry. During a three-year transition period from the Law's entry into force, operators are deemed, on a one-off basis, to hold a permit; the Board may extend this period by up to two years.

Monitoring plan and emissions report: The monitoring plan is submitted for approval at least six months before monitoring is due to begin. Emissions and activity levels for the previous year are reported by 30 April each year; the Directorate may extend this deadline by up to one month. Before being sent to the Directorate, the report is verified by a verification body assigned through MEDAS. Verifiers are accredited by TÜRKAK, the Turkish Accreditation Agency, under ISO/IEC 17029, and accredited laboratories are used for calculation factors. Records are kept for at least 10 years.

Documents specific to the pilot phase: The Monitoring Methodology Plan (İzleme Metodolojisi Planı, İMP), which describes how sub-installations and the data underlying free allocation will be monitored, and the Activity Level Report (Faaliyet Seviyesi Raporu, FSR), which shows activity levels and attributed emissions per sub-installation. The total emissions in the Activity Level Report must equal the total in the verified emissions report for the same year.

Pilot phase timeline

Sanctions

Article 14 of the Climate Law and Article 35 of the Regulation set out the main sanctions as follows:

• Failure to submit the verified report on time: An administrative fine graded by installation category and capacity; for operators covered by the ETS these fines are doubled. In addition, until the report is submitted, no transactions other than surrender can be made on the operator's accounts in the transaction registry.
• Operating without a permit: Operators continuing activity without a permit, or with an expired or revoked permit, are fined per tonne based on the highest emissions of the last five years if they have verified reports, or by category if they do not.
• Shortfall in surrender: For each allowance not surrendered, a fine is imposed equal to twice the higher of the weighted average primary and secondary market prices in the last three months of the relevant year; the quantity not surrendered is added to the following year's obligation.
• Persistent non-compliance: An operator that fails, in each of three consecutive years, to meet at least 80% of its obligation on time has its permit revoked.
• Pilot phase reduction: Under Provisional Article 1 of the Law, these fines are reduced by 80% during the pilot phase.

The fine amounts are set out in detail in the Regulation by installation category; refer to the text in the Official Gazette for current amounts.

Still unclear (October 2026)

• Pilot phase benchmarks and the National Allocation Plan: to be announced after verified 2026 and 2027 data.
• EPDK's procedures and principles for complementary allowance price auctions.
• The percentage of carbon credits that may be used for offsetting.
• Decisions on the primary market auction calendar and price corridor.
• The years covered by the first implementation period.
• How a carbon price paid under the TR ETS will be taken into account under the EU CBAM; this depends on the implementing act on the EU side. For details, see the CBAM definitive period guide.

What should companies do now?

1. Check scope: Update your conservative emissions calculation based on installed capacity and confirm your category. Make sure you know whether your main activity is on the pilot list.
2. Prepare your Monitoring Methodology Plan without waiting for 27 January 2027: Sub-installation boundaries, measurement points and activity level data must be collectable retrospectively for the whole of 2026. If you have missing meters or energy flows that cannot be separated, you need to find out now.
3. Estimate your position against the benchmark: Calculate your own emission intensity per sub-installation. Since the benchmark will be a weighted sector average, if you think you are above the average, start planning now for a possible shortfall in 2027.
4. Bring your verification schedule forward: The 2026 emissions report and the Activity Level Report are due on the same date, 30 April 2027. If you export to the EU, CBAM verification will also be needed in the same period.
5. Link carbon cost records to products: Every surrender and purchase under the TR ETS may later be requested as evidence under CBAM. Keep records by product and production process.

For sector-specific boundary questions, our cement and iron and steel boundary guides can help. For support with TR ETS monitoring plans, Monitoring Methodology Plans, Activity Level Reports and verification readiness, see our ETS readiness service, and for the EU export side, our CBAM readiness service. Alalëa helps you build the data for both systems in a single monitoring structure.