TR ETS pilot: five sectors, reporting only in 2026, carbon price in 2027

What happened

On 3 September 2026, Türkiye's Climate Change Presidency announced the Carbon Market Board's decisions on the pilot implementation period of the Turkish Emissions Trading System (TR ETS) (KPK/2026/1). The decisions are based on the TR ETS Regulation, which entered into force on 27 August 2026, and on provisional Article 1 of the Climate Law.

The announced decisions:

• Duration: The pilot period covers emissions in 2026 and 2027.
• Scope: Category B and C installations in electricity generation, cement, iron and steel, aluminium and fertilisers.
• 2026 system year: Reporting obligation only; a method will be developed for applying a complementary allowance price.
• 2027 system year: The price mechanism takes effect.
• Free allocation: 100 percent in all sectors, using the benchmark method.
• Benchmark value: In sectors other than electricity, the weighted overall average of all installations in the sector; in the electricity sector, each plant's weighted average emission intensity over the last five years.
• Exclusions: Installations whose main activity is outside these five sectors are out of scope, even if they generate electricity. Pressure reduction, compressor units and stations on natural gas and crude oil pipelines are excluded throughout the pilot period.

The Presidency published the detailed procedures and principles on 1 October 2026 (our news on the procedures and principles).

Who is affected

The pilot sectors largely overlap with the product groups covered by the EU's Carbon Border Adjustment Mechanism (CBAM). Turkish producers in these sectors exporting to the EU will be providing product-level embedded emissions data for CBAM while also taking on installation-level ETS obligations at home. Because allocation is calculated against the benchmark value, 100 percent free allocation means installations more efficient than the sector average will have a surplus, while less efficient ones will have a shortfall.

What companies should do

• Compare your installation's emission intensity with the sector weighted average and calculate your shortfall or surplus scenario for 2027 now.
• Electricity plants should archive generation and emissions data for the last five years in a verifiable form.
• Although 2026 may look like a trial year, remember that reporting quality will directly affect 2027 allocation.
• Set an internal carbon price to bring carbon costs into procurement and pricing processes.

Alalëa supports benchmark comparison and allocation balance analysis: ETS readiness.