Türkiye’s planned emissions-trading system is set to introduce new carbon regulation for domestic producers supplying European markets. Pilot arrangements issued at the end of September and publicised in early October 2026 set out procedures for sectoral participation, emissions benchmarks, free allocation and monitoring. The framework is expected to affect exporters of steel, cement, aluminium and fertilisers.
The pilot covers the system years 2026 and 2027. Its first year is structured primarily around emissions reporting rather than an immediate obligation to pay for carbon allowances. This design is relevant for how Turkish manufacturers may communicate carbon costs to European customers. It also affects whether payments under a future domestic market can be recognised under the EU Carbon Border Adjustment Mechanism (CBAM).
ETS reporting requirements and conditions for CBAM carbon-price recognition
The introduction of a national ETS can create a framework for recording installation-level emissions and supporting industrial decarbonisation incentives. For CBAM, however, any potential deduction depends on a qualifying carbon price that has actually been paid and documented. The distribution of free allowances does not, by itself, constitute a carbon payment for this purpose.
Even after Türkiye’s market becomes operational, eligibility for recognition under CBAM may vary by sector. Differences in sector coverage, emissions verification and compensation arrangements can affect the amount of domestic carbon costs that qualify. For Turkish steelmakers and other industrial groups, this links national emissions reporting with product-level calculations required under CBAM.
Domestic ETS monitoring may track emissions at individual installations. In contrast, the EU mechanism requires embedded emissions to be attributed to specific imported goods and their precursors. As a result, a steel producer operating multiple furnaces or an aluminium manufacturer using intermediate materials from multiple facilities cannot rely on a single national compliance document for all product-level questions raised by EU importers.
Monitoring, reporting and verification data for export compliance
The pilot’s monitoring, reporting and verification requirements are intended to support more complete records for manufacturers. These records can include fuel consumption, material inputs, process emissions and production output. Such inventories can provide a basis for external verification and for calculating emissions associated with individual products.
Companies may also invest in metering equipment, digital registers and process-control systems to supply verified actual emissions data to European customers. This approach is described as relevant where exporters would otherwise rely on default values that may be less favourable for their products. The pilot’s structure is therefore tied to how installation-level information can be translated into product-level figures.
The reporting-only structure for 2026 has implications for commercial disclosures. Turkish exporters can state that their installations fall within the ETS pilot and have started emissions reporting. They cannot claim solely on that basis that they paid a tradable allowance price on production during 2026.
Distinguishing ETS registration, allocation and evidence of payments
EU buyers are expected to distinguish between ETS registration, allowance allocation and evidence of actual carbon payments. For commercial tenders, exporters could separately disclose three categories of information: verified direct installation emissions, emissions attributed to CBAM-covered products, and carbon charges actually paid after applicable relief. The pilot is described as improving transparency of emissions data while leaving CBAM financial outcomes dependent on later market operation.
The potential benefit under CBAM will depend on how Türkiye’s domestic market operates next and on EU rules governing recognition of domestic carbon costs. Buyers are also positioned to compare Turkish supplies with products from Serbia, the EU and Asian markets using those disclosed categories of information. This comparison depends on the availability of verified installation data and product-attributed emissions calculations.
Allowance prices, free allocation relief and residual CBAM exposure
The relationship between Turkish and EU carbon prices is identified as another factor affecting exporters. If Türkiye’s ETS results in an effective allowance cost significantly below EU ETS prices, companies may continue to face residual CBAM liabilities on goods entering the European market. A rise in domestic allowance prices would increase carbon payments made by Turkish producers.
An increase in domestic allowance prices would also require documentation of those payments for potential recognition under CBAM. The comparison is not limited to headline prices between the two markets because free allocation and other forms of relief must be considered when calculating effective costs borne by producers. These cost expectations are linked to investment planning across energy-intensive industries.
The source notes that expansions in electric-arc furnace steelmaking, production of lower-carbon cement blends and aluminium recycling facilities require substantial capital. These investments depend partly on expectations about future carbon costs shaped by the ETS framework. While the pilot includes implementation milestones intended to help assess those costs, uncertainty remains until rules governing allowance trading, surrender and payment operate in practice.
Changes in EU CBAM requirements affecting Turkish exporters
Turkish exporters are also expected to account for changes in EU CBAM requirements. The developments referenced include downstream products considerations alongside a proposed adjustment to the timetable for phasing out free allocation under the EU ETS. These changes could affect how domestic carbon costs are treated when calculating CBAM liabilities.
The financial significance of Türkiye’s emerging carbon market for exporters is described as depending on payments made under the domestic system. It also depends on the conditions under which those payments can be recognised by the EU mechanism under CBAM rules.