ETS Readiness

In Türkiye, a carbon price is no longer a forecast. It is an obligation with a calendar. The Türkiye Emissions Trading System (TR ETS), established by Climate Law No. 7552, became operational with the regulation that entered into force on 27 August 2026. The Carbon Market Board's KPK/2026/1 decisions and the Procedures and Principles published on 1 October 2026 then fixed the scope and dates of the pilot period.

For an installation in pilot scope, the coming months are busy: a Monitoring Methodology Plan by 27 January 2027, a verified emission report and Activity Level Report by 30 April 2027, and the first allowance surrender in November 2028 for 2027 emissions. Alalëa's Turkish ETS consulting helps you build each of these documents on the right data foundation and see your allowance balance before it becomes a cost.

This page is for operators in Türkiye and those overseeing them from abroad: group teams of multinationals with Turkish plants, foreign investors in Turkish heavy industry, and EU customers assessing the carbon cost their Turkish suppliers now face.

Who is in scope during the pilot period?

The Regulation sorts installations carrying out the activities in its Annex 1 into three categories, based on annual emissions calculated conservatively from installed capacity. Biomass CO₂ is excluded from this calculation; transferred CO₂ is included.

The pilot period covers only category B and C installations in five sectors: electricity generation, cement, iron and steel, aluminium and fertilisers. Under the Procedures and Principles, the covered activities in these sectors are:

• Electricity generation by fuel combustion in installations with a total rated thermal input of 20 MW or more
• Coke production; roasting, sintering or pelletising of metal ore
• Production and casting of iron or steel at 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
• Clinker production in rotary kilns of 500 tonnes per day or more, or in other kilns exceeding 50 tonnes per day
• Production of nitric acid and ammonia

An installation whose main activity lies outside these sectors stays outside the pilot period even if it generates electricity. Being out of scope does not remove the MRV obligation, and the Board keeps the power to change the scope and duration of the pilot period.

Obligations and deadlines

The documents

Compliance revolves around four documents:

One rule shapes everything: total emissions in the ALR must equal the total in the verified emission report for the same year. In practice, two teams cannot prepare them in separate spreadsheets.

The calendar

Under provisional article 3 of the Regulation, the MMP deadline was originally two months from entry into force, and the Presidency may extend it by up to six months. On 14 October 2026 the Presidency moved the deadline to 27 January 2027. The extension covers only the MMP; all other dates are unchanged.

The general deadline for the emission report is 30 April each year, and the Presidency may extend it by no more than one month. Records must be kept for at least 10 years.

Allocation and surrender

2026 is a reporting year only. Apart from the voluntary complementary allowance price mechanism, no surrender obligation arises for it. For 2027, the free allocation rate is 100% under the benchmark method, and allocation is calculated per sub-installation as:

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

A 100% rate does not mean every installation's emissions are fully covered. Outside electricity, the benchmark is the weighted average of emission intensities for the relevant year. An installation above the average runs a shortfall and buys the difference in the market; one below it ends up with surplus allowances. For electricity generation, the benchmark is set per plant from the weighted average intensity of the last five years and balanced with a sectoral correction factor. Benchmarks will be announced in the National Allocation Plan after the verified reports are in, and free allocation applications are due within 30 days of the plan's publication.

Under the Regulation, carbon credits from projects within Türkiye may be used for surrender up to a ratio to be set by the Board. As of October 2026 we had not found a decision setting that ratio. For the credit side, see our carbon markets advisory.

How penalties are structured

Penalty amounts are set in the Law and the Regulation, tiered by installation category; for current amounts, refer to the text in the Official Gazette. The structure is:

• Late reporting: a tiered administrative fine based on category and capacity, applied at double the rate to installations in the ETS. Until the report is submitted, accounts in the transaction registry are blocked for everything except surrender; the block lifts on submission, but the fine stands.
• Operating without a permit: for installations without a valid greenhouse gas emissions permit, a per-tonne fine based on the highest emissions of the last five years where verified reports exist, or a category-based fine where they do not.
• Shortfall in surrender: for every allowance not surrendered, a fine of twice the higher of the weighted average primary and secondary market prices in the last three months of the relevant year; the missing quantity is added to the following year's obligation.
• Persistence: an operator that fails to meet at least 80% of its obligation on time for three consecutive years loses its permit.
• Repetition: fines increase for violations repeated within three years.
• Pilot period reduction: under provisional article 1 of the Law, administrative fines for failing to meet obligations under the Law during the pilot period are applied with an 80% reduction.

The reduction lowers the fine but not the account block or the carry-over of a shortfall, so the pilot period is no "penalty-free trial".

How we work

1. Confirming scope and category

We update the conservative capacity-based emissions estimate, confirm your category and check your main activity against the pilot list. Where several activities run, deciding which one is decisive is the first and most important call.

2. Building the sub-installation structure

The Regulation requires activities to be split, in order of priority, into product benchmark, heat benchmark, district heating, in-installation heating, fuel benchmark and production process sub-installations. Total emissions in the approved monitoring plan must be attributed to these sub-installations completely and without double counting. On site, we trace energy and material flows to draw sub-installation boundaries and decide which meter, weighbridge or production record supplies each activity level.

3. Preparing the Monitoring Methodology Plan

The MMP sets out the sub-installation structure, data sources, calculation methods, conservative estimates for data gaps and control procedures. 27 January 2027 may look comfortable, but sub-installation data for all of 2026 must be recoverable retrospectively; finding a missing meter or an unsplittable energy flow now buys time to fix it.

4. Preparing the emission report and ALR together

We produce the 2026 emission report and ALR from one data set, checking that totals match at every stage. Where there is an electricity sub-installation, rebuilding the 2023, 2024 and 2025 ALRs from archives is a separate workstream, so we check early whether that data was archived verifiably.

5. Verification readiness

We prepare the verifier's evidence file: consistency with the monitoring plan and MMP, instrument calibration records, accredited laboratory analyses, data flow diagram, calculation sheets, internal control and change logs, and stay with you until findings are closed. Our list of the top 10 things checked in emissions verification is a useful primer.

6. Allowance balance and carbon cost planning

We calculate your emission intensity per sub-installation and estimate your likely position against the sector average. With benchmarks not yet announced this is a scenario analysis, but it lets budgets and procurement reflect a likely 2027 shortfall or surplus early. We connect this analysis to internal carbon pricing and decarbonization strategy work.

How long this takes depends on the number of installations and sub-installations, the maturity of the monitoring plan, metering, historical data archives and verifier scheduling.

Internal readiness: data systems and roles

Turkish ETS compliance is a permanent process inside the installation, not a one-off deliverable, and the pilot period is the moment to set it up.

Data systems. Emissions data is usually spread across production, energy, procurement and laboratory systems. We recommend a single "source of truth" for each source stream and sub-installation, written rules on who collects data and how often, fewer manual transfers and a log of every change. The same data model can serve CBAM and the corporate inventory.

Roles. At a minimum, these responsibilities need a clear owner:

Control environment. Verifiers examine how a result was reached, not just the result; written procedures, a calibration schedule, data gap management and change logs directly affect the number of findings.

Common mistakes in the pilot period

Given how the rules are built, these carry the most risk:

• Treating 2026 as a trial year. There is no surrender for 2026, but verified 2026 data feeds into the benchmark calculation. A poorly reported year affects your allocation and your sector's.
• Writing the MMP at a desk. If sub-installation boundaries do not match the meters and weighing points on site, the plan stays on paper; at ALR stage the data is missing and conservative estimates are needed.
• Preparing the ALR and emission report separately. The equal-totals rule means both reports must come from one calculation file. Separate reports produce reconciliation findings at verification.
• Overlooking heat flows. Where measurable heat moves between sub-installations or leaves the installation, attribution errors directly distort the allocation calculation.
• Looking for historical data too late. Installations with an electricity sub-installation must submit verified 2023-2025 ALRs by 30 June 2027; if missing archive data is only discovered during verification, time may run out.
• Forgetting the permit. During the three-year transition from the Law's entry into force, operators are deemed to hold a permit on a one-off basis; the Board may extend this by up to two years. A permit is valid for five years, and renewal must be requested at least six months before expiry. The end of the transition belongs in the calendar now.

Why EU ETS experience matters

The TR ETS architecture uses the same concepts as EU ETS free allocation. In the EU, Delegated Regulation (EU) 2019/331 defines product benchmark, heat benchmark, fuel benchmark and process emissions sub-installations, and ties allocation applications to a verified baseline data report and a monitoring methodology plan approved by the competent authority. The Turkish MMP and sub-installation approach follow the same logic.

Years of EU ETS experience with sub-installation splits, heat flow attribution and data gap management therefore transfer directly to installations in Türkiye, and multinational groups with plants in both systems can reuse much of their internal know-how. Exporters to the EU, knowing that the CBAM free allocation adjustment uses EU ETS benchmarks, can plan both systems' data needs together. The differences matter too: TR ETS pilot benchmarks are not EU benchmarks but the weighted average of installations in Türkiye, and verifier accreditation runs through TÜRKAK.

Thinking about CBAM at the same time

The five pilot sectors overlap heavily with the CBAM product groups. An installation in these sectors that exports to the EU will generate installation- and sub-installation-level data for the Turkish ETS and product-level data for CBAM in the same period. The deadline for the 2026 TR ETS emission report and ALR is 30 April 2027, and CBAM verifications are expected to peak in early 2027. Because the two verifications have different accreditation requirements, the calendars need to be planned together. See our CBAM readiness service for the EU side.

In practice, one measurement and data infrastructure should produce three outputs: installation totals and sub-installation split for the Turkish ETS, embedded emissions per product for CBAM, and a Scope 1 and 2 inventory for corporate reporting. Boundaries differ, so calculations cannot replace one another, but the raw data is the same. Collecting fuel use, raw material inputs, production volumes and laboratory analyses once, in one place and traceably, reduces verification effort and the risk of inconsistent reports.

What is still open

As of October 2026 we had not found official decisions on: pilot period benchmarks and the National Allocation Plan, EPDK procedures for the complementary allowance price auction, the ratio of credits usable for offsetting, the primary market auction calendar, and the years of the first implementation period. These gaps are a reason to build flexible data infrastructure, not to wait.

To discuss your installation's scope, MMP preparation or your 2027 allowance balance, contact Alalëa through our contact page.