Türkiye has entered a new era in its fight against climate change with the long-awaited Climate Law, which was published in the Official Gazette on 9 July 2025 (the "Climate Law"). The Climate Law creates Türkiye's 2053 net-zero emission target's legal basis and marks the first step toward establishing a comprehensive framework that includes an emissions trading system ("ETS") and carbon credits. Furthermore, the Climate Law provides an extensive legal and institutional structure to reduce greenhouse gas ("GHG") emissions, achieve the net-zero emission target, and implement the country's green growth vision. By introducing significant obligations for businesses and public institutions, the Climate Law serves as a roadmap for achieving sustainable development and climate resilience goals.
Climate Actions: GHG Emissions Mitigation, Climate Adaptation and Instruments
The Climate Law introduces a broad range of climate action obligations for public institutions and organizations with respect to planning, implementing, and monitoring GHG emissions mitigation and climate change adaptation activities including preservation of marine and terrestrial protected areas, balancing land degradation and efficient management of water resources.
Furthermore, relevant institutions and organizations operating in the sectors specified in the Nationally Determined Contribution of Türkiye are obligated to:
- implement and monitor various mitigation measures aligned with the net-zero emission target and circular economy principles, including energy, water and raw material efficiency, pollution prevention at source, use of renewable energy, reduction of carbon footprint, and the dissemination of clean technologies,
- carry out climate adaptation measures to prevent actual or potential losses and damages related to climate change, minimize associated risks, or benefit from emerging opportunities, in line with the Nationally Determined Contribution of Türkiye, net zero emission target, and published strategy and action plans.
The Climate Law further supports investments through climate finance mechanisms, green and sustainable capital market instruments, insurance and incentives mechanisms. It introduces innovative tools such as the Türkiye Green Taxonomy and the Carbon Border Adjustment Mechanism.
Emissions Trading System and the Voluntary Carbon Market
The Climate Law introduces an ETS covering high-emission sectors such as energy, cement, iron-steel, and aviation, as well as a market platform to be operated by the Energy Markets Operation Company (EPİAŞ). Under the ETS, companies engaged in activities that directly cause GHG emissions will be required to obtain a GHG emission permit from the Climate Change Presidency within three years in order to continue their operations.
In terms of carbon pricing, allowances are defined as fungible, transferable instruments that are issued as dematerialized form granting the right to emit one metric ton of carbon dioxide equivalent within a certain period. Sector specific annual emission caps will be established within the ETS, and companies will be obligated to deliver allowances corresponding to their annual verified GHG emissions. Accordingly, companies are expected to emit less than their allocated emission levels and to trade any allowances, which represent the right1 to emit up to the cap.
The Climate Law introduces for the first time a clear legal definition of carbon credits for the first time: verified and certified units representing one metric ton of carbon dioxide equivalent emission reductions or removals, which may be traded subject to third-party verification. A limited degree of fungibility between carbon credits and allowances will be permitted, combining regulatory control with market-based flexibility.
The rules governing the use and generation of carbon credits, as well as the establishment and operation of the national carbon crediting system, will be set out in secondary legislation to be issued by the Climate Change Presidency. Projects initiated or to be initiated in Türkiye to generate carbon credits with national or international standards within any voluntary carbon market in Türkiye must be registered with the national carbon credit registry system by their project developers.
Conclusion
For businesses, the Climate Law presents both compliance obligations and strategic opportunities. Undertakings subject to ETS must monitor their emissions and secure adequate allowances or credits. Companies undertaking green projects may monetize their climate contributions via carbon credits. Investors may view carbon credits as a new asset class aligned with ESG objectives.
Climate Law is a bold step in Türkiye's climate policy. By integrating carbon credits into the legal and economic framework, the Climate Law opens new pathways for climate finance, corporate responsibility, and regulatory innovation.
Footnote
1 The right to emit, once issued electronically in a dematerialized form, is defined as an allowance and can be traded thereafter.
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