Turkey needs ETS that aligns with EU

Turkey must establish a carbon market that is aligned with the EU’s Emissions Trading System (ETS) to ensure its competitiveness in the export arena, Borcelik general manager Kerem Çakır tells Kallanish.

“In order to maintain the country’s competitiveness in export markets, Turkey needs to follow closely the green transition trend,” says Çakır, who is also chair of the board of Turkey’s Association of Cold Rolled, Galvanized and Coated Coil Manufacturers (SOGAD). He sees Turkey as a natural trade partner of the EU due to its proximity, and important hub within the EU’s global logistics chain.

The EU Carbon Border Adjustment Mechanism (CBAM), an extension of ETS, will be implemented in October 2023, with financial obligations commencing from 2026 following a transition period.

“The green transition will become more serious in our country and will be accelerated with an Emission Trading System,” Çakır says.

“In the steel sector, we already have an advantage because the majority of crude steel production in Turkey is EAF-based compared to other countries. The biggest outcome of the ETS will be the fund created from carbon tax revenues. This fund must be transparently and rapidly transferred back to the sustainability projects of the relevant sectors’ green transitions. Otherwise, companies will face a financial burden they cannot cope with, and in this case, no industrial or commercial organisation can support ETS,” Çakır adds.

The executive proposes five factors that should be integral to the Turkish ETS. The system must be established and harmonised with the EU ETS. Carbon taxes should be set at the same level as those in the EU to avoid additional tax payments for CBAM. It should adopt the “polluter pays” principle, ensuring that carbon taxes are paid at the source of production.

Moreover, carbon tax funds should be transparently and promptly allocated to research and development projects focused on sustainability and zero-emission targets in the industrial sector. Finally, investment should be encouraged into unlicensed renewable energy projects.

Elina Virchenko UAE