Environment and Climate Policies: Where Does Turkiye Stand?
Environment and Climate Policies: Where Does Turkiye Stand?
The Turkish Government, in its statement at the United Nations General Assembly, had given signals beforehand that it would submit the Paris Climate Agreement [“Paris Agreement” or “Agreement”], for parliamentary approval which it signed long ago, on April 22, 2016. Following its statement, the Agreement entered into force with the Law on Approval of the Paris Agreement and the Presidential Decision, both published on the same day, on October 7, 2021 in the Official Gazette.
What is the Paris Agreement About?
The Paris Agreement is a legally binding international agreement on climate change, drawn up by 196 countries that came together within the body of the Conference of the Parties to the United Nations Framework Convention on Climate Change (COP21) in December 2015. The agreement’s goal is to combat climate crisis, which is fast worsening, and to ensure compliance with the conditions determined in a cumulative manner in order to prevent a catastrophe. Accordingly, it is aimed to limit the global warming to 2°C, and preferably to 1.5°C compared to the pre-industrial levels. The most effective way to achieve this objective is stated as reducing the emissions.
The Paris Agreement is considered to be a landmark as it is the first multilateral binding agreement to gather all nations together around a single goal, namely combating climate change and adapting to its effects.
Providing financial support from developed countries to developing countries in order to improve adaptation to climate change and transition to renewable energy, as well as to reduce the amount of greenhouse gas emissions resulting from human activities to a level that nature can absorb naturally and consequently ensuring that does not threaten food production are the prominent objectives of the Paris Agreement.
Parties determine how and when they will commit to reducing their emissions on a voluntary basis. Commitments to reduce emissions fall under four main groups: (i) Absolute Reduction, (ii) Ceiling Emission Year, (iii) Reduction from the Reference Scenario, and (iv) Emissions Intensity Goal.
What Does Paris Agreement Mean for Turkiye?
Turkiye is among those who made a commitment of “Reduction from the Reference Scenario”. Accordingly, with the implementation of the Paris Agreement, the amount of greenhouse gases that would be released into the atmosphere if the current policies continued to be applied, should be considered as the reference scenario, and emissions should be reduced below this level. Therefore, it is essential for Turkiye to make an energy transition in the industrial sector and to determine long-term emission mitigation policies.
Moreover, export to the European Union [“EU”] will not be jeopardized if the harmonization policies required by the Paris Agreement are followed as it is necessary to produce from clean sources in order to take part in the transformation -which is also known as the green market- initiated by the EU.
What are Turkey’s Obligations Under the Paris Agreement?
First of all, it should be noted that the Paris Agreement is completely on a voluntary basis. In other words, the contracting parties set their own contribution goals for the achievement of the contractual objectives. In this regard, no reservations can be made to the Agreement as per Article 27, as the Paris Agreement already contains provisions encouraging parties to set more ambitious goals rather than being coercive.
On the other hand, Turkiye ratified the Agreement with the statement of “on the basis of equity, common but differentiated responsibilities and respective capabilities, and recalling the resolutions adopted at the Conference of the Parties to the United Nations Framework Convention on Climate Change, and within the framework of nationally determined contribution statements, provided that the Agreement and its mechanisms do not prejudice the right to economic and social development as a developing country”. The concepts stated in the declaration are basically the repetition of the principles already set forth in the preamble and various articles of the Agreement, and therefore the statement has no practical value. However, the emphasis on the signing of the Agreement as a “developing country” can be interpreted as a message that expectations should not be raised too high in terms of Turkiye’s ambition and determination to implement the Paris Agreement.
Following the COP27, Turkiye submitted its first updated Nationally Determined Contribution [NDC] on April 13, 2024, in accordance with Article 4, paragraph 12 of the Paris Agreement, where it confirmed “to reduce its greenhouse gas emissions by 41% through 2030 (695 Mt CO2 eq in year 2030) compared to the Business as Usual (BAU) scenario given in Turkiye’s first NDC (also INDC) considering 2012 as the base year (reference year) and set the net zero target to 2053.
In order to achieve the national contribution goals within the framework of the Agreement, first and foremost, an energy transformation in the industrial sector, as well as the development of long-term emission reduction measures are required. In this context, after submission of the Paris Agreement to Parliament for approval, the Turkish Industry and Business Association [TUSIAD] stated that the public and private sectors should work together for the transformation introduced by the Paris Agreement. A ‘green bulletin’ has also been launched on the Istanbul Chamber of Industry’s website, where the activities carried out within the scope of green transformation in the industrial sector are shared with the public on a regular basis.
Furthermore, Turkish Ministry of Energy and Natural Resources stated that the ratification of the Paris Agreement also brought digital transformation, therefore, the Paris Agreement, the European Green Deal and digital transformation should be carried out simultaneously. In this context, it has been announced that the Digital Transformation Office has been established, with its scope of operation encompassing all sectors of e-Government, artificial intelligence, and cyber security.
However, the Agreement’s requirements should not be viewed solely from an environmental aspect. According to Article 7 of the Agreement: “Parties acknowledge that adaptation action should follow a country-driven, gender responsive, participatory and fully transparent approach, taking into consideration vulnerable groups, communities and ecosystems, and should be based on and guided by the best available science and, as appropriate, traditional knowledge, knowledge of indigenous peoples and local knowledge systems, with a view to integrating adaptation into relevant socioeconomic and environmental policies and actions, where appropriate.” In this context, the issue should not be considered independently of social policies.
Where Does Turkey Stand in Terms of Compliance with the European Green Deal?
It can be said that the EU has taken the Paris Climate Agreement objectives one step further and materialized it in terms of method, by addressing the issues of greenhouse gas emissions, global warming and climate change with the European Green Deal published in November 2019. The said deal is important for all countries that have economic and geographical interaction with the EU, since new financial and tax regulations regarding imports are introduced in order to protect the newly established green market. The agreement generally aims to reduce greenhouse gas emissions to net zero by 2050 and to reduce net greenhouse gas emissions by %55 by 2030 compared to 1990 levels.
The Green Deal Action Plan for harmonization with the European Green Deal was published by the Turkish Ministry of Commerce in 2021, just before the ratification of the Agreement. The action plan explained how to achieve the transformation that would enable the transition to a sustainable and green economy under three main headings -scope, goals and calendar- in line with Turkiye’s development plan. An annual activity report is also being published by the Turkish Ministry of Commerce summarizing the progress made in the relevant year.
In the 2022 Annual Report, adaptation to carbon border adjustment mechanism [“CBAM”], which is an important strategy in achieving the targets set in the Green Deal, is also extensively addressed, setting out the studies conducted to prevent competitiveness losses due to CBAM. Turkiye’s success on the latter is yet to be seen, following the adoption of the CBAM by the EU Parliament (May 2023) and the start of the CBAM transitional period (October 2023).
The statements made by the Ministry of Commerce indicate that the steel industry will be the most affected industrial area within the framework of CBAM and that a change has begun in Europe by producing steel from clean sources. It is suggested that industries such as steel and aluminum would be given precedence in terms of transition to clean energy generation, but green transformation will eventually be mirrored in industries such as cement, electricity, and textile.
At the same time, the Ministry of Environment has begun to develop the infrastructure of the emissions trading system [“ETS”] and emissions in the sectors covered by the ETS are targeted to be reduced by 62% in 2030 compared to 2005. The CBAM tax is the most crucial issue on the agenda, since if harmonization is not reached, the tax liability that would take effect in 2026 might have a significant burden for Turkiye.
Finally, the Banking Regulation and Supervision Agency [“BRSA”], started conducting studies for the development of sustainable finance. Among the topics on the agenda are the publication of a “Environmental, Social, and Governance” [ESG] guide for banks, supporting the environmental labeling application for financial products and services, strengthening international cooperation [Membership of the Network for Greening the Financial System], and ensuring active participation in “National Green Taxonomy” studies as part of the transition to a sustainable economy. In this respect, the BRSA shared the Sustainable Banking Strategy Document setting a 4-year plan (2022-2025) with public on December 27, 2021, followed by the publication of Green Debt Instrument, Sustainable Debt Instrument, Green Lease Certificate, Sustainable Lease Certificate Guideline by Turkish Capital Market Board on February 24, 2022.
