{"id":8553,"date":"2026-10-20T06:42:38","date_gmt":"2026-10-20T06:42:38","guid":{"rendered":"https:\/\/herdemlaw.com\/explore\/\/"},"modified":"2026-10-20T06:42:41","modified_gmt":"2026-10-20T06:42:41","slug":"the-price-that-was-never-paid-turkiyes-emission-trading-system-and-the-cbam-deduction","status":"publish","type":"post","link":"https:\/\/herdemlaw.com\/tr-tr\/kesfetmek\/the-price-that-was-never-paid-turkiyes-emission-trading-system-and-the-cbam-deduction\/","title":{"rendered":"The Price That Was Never Paid: T\u00fcrkiye’s Emission Trading System and the CBAM Deduction"},"content":{"rendered":"

T\u00fcrkiye’s Emission Trading System entered into force on 27 August 2026. A CBAM deduction depends on a carbon price effectively paid, and the Y\u00f6netmelik distributes a substantial part of its allowances free of charge. Those two facts together decide what a Turkish exporter can actually claim.<\/em><\/p>\n\n\n\n

The conclusion most Turkish exporters have drawn from the publication of the T\u00fcrkiye Emisyon Ticaret Sistemi Y\u00f6netmeli\u011fi is reasonable and incomplete. T\u00fcrkiye now has an emissions trading system, the European Union’s Carbon Border Adjustment Mechanism, known in Turkish as the S\u0131n\u0131rda Karbon D\u00fczenleme Mekanizmas\u0131 or SKDM, allows a deduction for a carbon price paid in the country of origin, and so the border cost should fall.<\/p>\n\n\n\n

Each step in that reasoning is correct except the connection between them. The Mechanism does not deduct for the existence of a carbon market. It deducts for a carbon price that has been effectively paid, and the Y\u00f6netmelik is built around a free allocation system under which a large share of covered tonnes carry no payment at all.<\/p>\n\n\n\n

This article works through what the Y\u00f6netmelik establishes, what the EU and UK regimes will actually credit, and where the gap between the two falls for a Turkish producer in a covered sector.<\/p>\n\n\n\n

What the Y\u00f6netmelik established, and over whom<\/strong><\/h1>\n\n\n\n

The T\u00fcrkiye Emisyon Ticaret Sistemi Y\u00f6netmeli\u011fi was published in Resm\u00ee Gazete of 27 August 2026, issue 33353, and entered into force the same day under Article 41. It rests on the \u0130klim Kanunu, Law No. 7552, published on 9 July 2025, and on Article 792\/D of Presidential Decree No. 4. It replaces the 2014 Sera Gaz\u0131 Emisyonlar\u0131n\u0131n Takibi Hakk\u0131nda Y\u00f6netmelik, and references to that instrument are now read as references to this one.<\/p>\n\n\n\n

The system does not cover everyone who emits. Article 5(1) brings into the Emission Trading System only Category B and Category C installations carrying on an Annex 1 activity. Category A installations, with annual emissions calculated prudently from installed capacity at or below 50,000 tonnes of CO2 equivalent, sit outside the trading system. Category B runs above 50,000 and up to 500,000 tonnes, and Category C above 500,000.<\/p>\n\n\n\n

The distinction that matters commercially is that falling outside the trading system does not mean falling outside the obligations. Article 5(3) preserves monitoring, reporting and verification duties for installations excluded under Article 5(2), and Article 27 applies those duties to every Annex 1 activity. Schools, universities, hospitals and defence industry installations are outside the trading system for the activities they perform, and still report. Research and development facilities, installations using biomass exclusively, and military elements are outside the Y\u00f6netmelik altogether under Article 2(2).<\/p>\n\n\n\n

So a Turkish producer in a CBAM sector is likely to be in one of two positions. Either it holds allowances and surrenders them, or it monitors, reports and verifies without ever buying or surrendering anything. The second position produces verified emissions data and no carbon price whatsoever.<\/p>\n\n\n\n

Why a carbon market and a carbon price are different things<\/strong><\/h1>\n\n\n\n

The definition is where this turns. Article 3(29) of Regulation (EU) 2023\/956 defines a carbon price as the monetary amount paid in a third country under a carbon emissions reduction scheme, in the form of a tax, levy or fee, or in the form of emission allowances under a greenhouse gas emissions trading system, calculated on greenhouse gases covered by the measure and released during the production of goods.<\/p>\n\n\n\n

An emissions trading system therefore qualifies in principle. T\u00fcrkiye’s system is capable of generating a creditable price. What the definition requires is that an amount was paid.<\/p>\n\n\n\n

Article 9 then states the condition without qualification. An authorised CBAM declarant may claim a reduction in the number of certificates to be surrendered to account for a carbon price paid in the country of origin, and the reduction may be claimed only if the carbon price has been effectively paid. Any rebate or other form of compensation available in that country which reduces the carbon price is taken into account.<\/p>\n\n\n\n

That last sentence deserves attention on its own, because it reaches beyond the obvious case. A scheme that charges and then returns value through another route does not produce a deduction equal to the charge. The question the Mechanism asks is what the producer was left out of pocket by, not what the headline instrument says.<\/p>\n\n\n

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\u00dccretsiz tahsisat, and the tonne that carries no price<\/strong><\/h1>\n\n\n\n

Article 13 governs free allocation (\u00fccretsiz tahsisat), and it is the provision a CBAM analysis has to start from.<\/p>\n\n\n\n

Allocation is made on a benchmark basis at sub-installation level. The installation identifies its sub-installations (alt tesisler) as product benchmark, measurable heat benchmark, fuel benchmark or process emission types, and attributes its verified annual emissions among them. Article 13(7) then sets the calculation: the free allocation equals the benchmark value (k\u0131yas de\u011feri) announced by the Ba\u015fkanl\u0131k, multiplied by the free allocation ratio (\u00fccretsiz tahsisat oran\u0131), multiplied by the sectoral activity coefficient (sekt\u00f6rel faaliyet katsay\u0131s\u0131), multiplied by the sub-installation’s activity level (faaliyet seviyesi). Article 13(11) allows sectoral correction factors to enter the same calculation as a further multiplier.<\/p>\n\n\n\n

The variable that decides the CBAM outcome is the free allocation ratio. Under Article 13(8) it is fixed for each activity by the Karbon Piyasas\u0131 Kurulu, for each implementation period, and may differ between sub-periods within a period. It is a Turkish policy decision taken activity by activity.<\/p>\n\n\n\n

Follow that through to the border. Where the ratio is high, a Turkish installation receives most of the allowances it needs without payment, surrenders them, and complies fully with Turkish law. It has also paid nothing on those tonnes, so under Article 9 there is nothing to deduct in respect of them. Where the ratio is low, the installation buys allowances in the primary market auctions run under Article 17 or in the secondary market under Article 18, and the amount it pays is capable of supporting a deduction.<\/p>\n\n\n\n

The relationship is uncomfortable but it is the plain reading. The more generous T\u00fcrkiye is to its own industry domestically, the smaller the credit that industry carries to the European border. Relief at home and relief at the border are not additive. They are, in substantial part, alternatives.<\/p>\n\n\n

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COMPANY A<\/strong><\/p>\n\n\n\n

Company A is a Turkish producer in a CBAM covered sector, classified as a Category C installation, exporting a significant share of output to the European Union. It completes its first full year inside the Turkish system, receives free allocation calculated under Article 13(7) covering most of its verified emissions, buys a modest volume at auction to close the gap, and surrenders on time in November.<\/p>\n\n\n\n

Its European customer asks what carbon price should be reflected in the CBAM return. The commercial team’s first answer is the full carbon cost of the year’s emissions, because that is what the system covers. The answer that survives Article 9 is much smaller, because it is limited to the tonnes actually bought and paid for.<\/p>\n\n\n\n

The difference is not a drafting point. A producer that budgeted on the first figure and priced its export contracts accordingly has mispriced the year. The calculation that matters is the ratio between purchased allowances and total verified emissions. Under Article 13(3) the benchmark values are announced before the implementation period begins and the free allocation ratio is published for each activity, so the ratio is normally knowable in advance. The first implementation period is the exception, because Ge\u00e7ici Madde 4 provides that its first sub-period benchmarks are announced in the Ulusal Tahsisat Plan\u0131 only after the sub-installation verification reports have been filed.<\/p>\n\n\n\n

The timing problem, which is separate and more immediate<\/strong><\/h1>\n\n\n\n

Even where a price is paid, it has to have been paid in respect of the right year, and the two calendars are not aligned.<\/p>\n\n\n\n

On the European side the definitive regime began on 1 January 2026. Regulation (EU) 2025\/2083, in force since 20 October 2025, replaced the previous low value consignment exemption with an annual threshold of 50 tonnes per importer and confirmed that certificates are bought and surrendered from February 2027 in respect of 2026 imports. The first real bill therefore lands in early 2027 and is calculated on goods that crossed the border during 2026.<\/p>\n\n\n\n

On the Turkish side the system opens with a pilot implementation period. Ge\u00e7ici Madde 1 provides that the Emission Trading System begins with that pilot, and leaves its scope, duration and implementing rules to be determined by the Karbon Piyasas\u0131 Kurulu after consulting institutions and civil society organisations. Those parameters were not fixed by the Y\u00f6netmelik itself.<\/p>\n\n\n\n

Two deadlines are fixed. Under Ge\u00e7ici Madde 3, installations within the pilot period must submit their first Monitoring Methodology Plan (\u0130zleme Metodolojisi Plan\u0131) electronically to the Ba\u015fkanl\u0131k within two months of entry into force, which falls on 27 October 2026, with a possible extension of up to six months. Installations inside Article 5(1) that did not file during the pilot must file by the end of the calendar year preceding the first implementation period. Under Ge\u00e7ici Madde 2, installations that will fall within the system must obtain a greenhouse gas emission permit (sera gaz\u0131 emisyon izni) within three years of Law No. 7552 entering into force, and are treated as holding one in the interim, with the Ba\u015fkanl\u0131k able to extend that period by up to two years.<\/p>\n\n\n\n

Set the two calendars side by side and the practical conclusion for 2026 imports is uncomfortable. A Turkish producer exporting in 2026 should plan on the basis that there is no Turkish carbon price to deduct against that year’s CBAM liability, and should treat any deduction that becomes available as a recovery rather than a budgeted saving.<\/p>\n\n\n

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What the SKDM evidence requirement actually demands<\/strong><\/h1>\n\n\n\n

A deduction is a documentary exercise as much as a substantive one, and the standard is higher than a verified Turkish emission report.<\/p>\n\n\n\n

Article 9(2) requires the declarant to keep documents demonstrating that the declared embedded emissions were subject to a carbon price in the country of origin and that the price was effectively paid, together with evidence of any rebate or other compensation and of the relevant third country legislation. That documentation must be certified by a person independent of both the declarant and the authorities of the country of origin, whose name and contact details appear on it. Article 9(3) requires the records to be kept until the end of the fourth year after the year in which the CBAM declaration was or should have been submitted.<\/p>\n\n\n\n

The Turkish system produces part of this and not all of it. Article 30 of the Y\u00f6netmelik makes verification of the greenhouse gas emission report (sera gaz\u0131 emisyon raporu) compulsory before submission to the Ba\u015fkanl\u0131k, performed by a verifier (do\u011frulay\u0131c\u0131 kurulu\u015f) appointed through the central electronic assignment system. Article 33(2) requires those verifiers to be accredited to ISO\/IEC 17029, with accreditation carried out by T\u00dcRKAK. Article 37 requires installations to retain data and records for at least ten years, which comfortably exceeds the CBAM retention period.<\/p>\n\n\n\n

What the Turkish process does not produce is proof of payment attributed to particular tonnes of particular goods. The verified emission report establishes emissions. The deduction requires a demonstrable link from those emissions to allowances that were bought rather than received, and from those allowances to the goods that crossed the border. That link is built by the producer, in its own records, and it has to be constructed as the year runs rather than reconstructed afterwards.<\/p>\n\n\n\n

COMPANY B<\/strong><\/p>\n\n\n\n

Company B is a Category B installation supplying several European customers. Its Turkish compliance is sound. The monitoring plan is approved, the emission report is verified on time by an appointed verifier, and allowances are surrendered by the November deadline.<\/p>\n\n\n\n

When its largest customer begins preparing a CBAM return, it asks Company B for documentation showing that a carbon price was effectively paid on the embedded emissions of the specific goods supplied, certified by an independent person. Company B can produce a verified emission report for the installation as a whole and auction settlement records for the year. It cannot readily show which payments relate to which production, because nothing in its Turkish obligations ever required it to make that connection.<\/p>\n\n\n\n

The gap is real and it is a records problem rather than a legal one. It is closed by deciding, in advance, how purchased allowances are attributed across production and across customers, and by documenting that method consistently. A producer supplying several European customers also needs that method to be coherent across all of them, since the same tonne cannot support a deduction twice.<\/p>\n\n\n\n

The United Kingdom asks a different question<\/strong><\/h1>\n\n\n\n

Turkish exporters serving both markets should not assume one analysis answers both, because the UK mechanism is constructed on a different principle.<\/p>\n\n\n\n

The UK Carbon Border Adjustment Mechanism applies from January 2027 across aluminium, cement, fertilisers, hydrogen, and iron and steel. Electricity, which the EU regime covers, is not included, and glass and ceramics may be added later. Registration is triggered at \u00a350,000 of in scope imports over a rolling twelve month period. The rate is set sector by sector, reflects the UK Emissions Trading Scheme price and Carbon Price Support, is adjusted quarterly, and takes into account the adjustments, exemptions and compensation available to domestic UK producers.<\/p>\n\n\n\n

The treatment of an overseas carbon price follows from that structure. Where the country of origin applies a carbon price, the importer pays the difference between that price and the UK rate, rather than claiming a deduction against a separately calculated liability. Only explicit prices count, meaning a market based emissions trading system or a fixed rate carbon tax, and third country prices are referenced quarterly.<\/p>\n\n\n\n

Two differences follow for a Turkish producer. The UK builds its own domestic free allocation into the rate it charges at the border, so the comparison is between a Turkish price and an already adjusted UK figure rather than between a Turkish price and a gross liability. And because the UK references third country prices on a quarterly published basis rather than installation by installation, the Turkish market price itself carries more weight and the individual producer’s purchasing pattern carries less. The two regimes reward different things, and a producer optimising for one is not thereby optimising for the other.<\/p>\n\n\n

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Article 26, and the only route that changes the answer<\/strong><\/h1>\n\n\n\n

Everything above treats the Turkish allowance as something to be valued and deducted. Article 26 of the Y\u00f6netmelik contemplates a different relationship. It provides that agreements may be concluded for the mutual recognition of allowances between the T\u00fcrkiye Emission Trading System and other emissions trading systems, and that an electronic link between systems may be established for allowance trading, with implementing rules to be issued by the Ba\u015fkanl\u0131k.<\/p>\n\n\n\n

Linking is the only mechanism that converts a Turkish allowance into something recognised rather than merely credited, and it would change the border analysis at its root rather than at its margin. It is also a negotiated outcome rather than a technical step, and the European experience of the proposed link between the EU and UK systems illustrates both the appetite and the timescale. An intention to work towards a link has been announced and no link is yet in operation.<\/p>\n\n\n\n

The sensible position for a producer is therefore to treat Article 26 as relevant to a medium term strategy and irrelevant to the next two compliance years. Nothing in the article creates a right, and nothing in it affects the calculation a declarant will make in February 2027.<\/p>\n\n\n\n

What a Turkish producer should be doing now<\/strong><\/h1>\n\n\n\n

Four steps follow, and they are sequenced rather than optional.<\/p>\n\n\n\n

The first is to establish the installation’s category accurately against the Annex 1 activity and installed capacity, because that single determination decides whether the installation holds allowances at all or only monitors, reports and verifies. It also determines the exposure under Article 35, where the administrative fines are set by category and are doubled for installations inside the trading system.<\/p>\n\n\n\n

The second is the Monitoring Methodology Plan, and for pilot period installations the date is 27 October 2026. The plan is not a formality. It fixes the parameters on which activity levels and therefore free allocation will be calculated for the period, and changes to it must be notified within thirty days under Article 13(4).<\/p>\n\n\n\n

The third is to build the SKDM evidence file alongside the Turkish verification rather than after it. The question to answer in the design of that file is the one Article 9(2) asks: which tonnes were paid for, at what price, attributable to which goods, and who independent of the company will certify it.<\/p>\n\n\n\n

The fourth is commercial. Export contracts for 2026 and 2027 deliveries should allocate the certificate cost expressly between the parties, identify who bears the risk that a deduction proves smaller than assumed, and provide for the information the European or British counterparty will need. A supply contract that is silent on all three leaves the allocation to be decided by whoever has the stronger position when the first bill arrives.<\/p>\n\n\n\n

HERDEM advises Turkish producers and their counterparties on this interface: category determination and emission permit obligations under the Y\u00f6netmelik, review of monitoring plans and Monitoring Methodology Plans before filing, construction of the Article 9 evidence file and the allowance attribution method behind it, allocation of carbon cost in export contracts, and the registration and threshold questions that arise on the United Kingdom side.<\/p>\n\n\n

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The question worth asking now<\/strong><\/h1>\n\n\n\n

The publication of the Y\u00f6netmelik has been received, correctly, as a significant development. It establishes a cap, a benchmark based allocation method, primary and secondary markets, a market stability reserve, offsetting against domestic carbon credits, and a penalty regime with figures attached. It is a complete system.<\/p>\n\n\n\n

What it does not do is automatically reduce anyone’s border cost, because the Mechanism on the other side asks a narrower question than whether a system exists. It asks what was paid.<\/p>\n\n\n\n

So the question worth putting internally is this. For the goods the company shipped into the European Union this year, what proportion of their embedded emissions was covered by allowances the company actually bought, who can evidence that proportion, and does the answer match what the company told its customers when it priced the contract? Where those three answers line up, the deduction is real and worth claiming. Where they do not, the deduction is a figure in a forecast, and the difference will be found by the customer rather than by the producer.<\/p>\n\n\n\n

This article reflects the T\u00fcrkiye Emisyon Ticaret Sistemi Y\u00f6netmeli\u011fi published in Resm\u00ee Gazete of 27 August 2026, issue 33353, Regulation (EU) 2023\/956 as amended by Regulation (EU) 2025\/2083, and publicly available material on the United Kingdom Carbon Border Adjustment Mechanism, as at October 2026. The scope and duration of the pilot implementation period had not been determined at the date of writing. Company A and Company B are composite illustrations constructed from publicly documented fact patterns and do not describe identifiable persons or matters. This article is provided for general informational purposes and does not constitute legal advice on any specific matter.<\/em><\/p>\n\n\n\n

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