CBAM Turkey exposure reaches €19 billion in annual EU exports, placing Turkey as the single most commercially vulnerable non-EU country under Regulation (EU) 2023/956. No other exporting nation combines this volume of CBAM-covered trade with a complete absence of a qualifying carbon pricing scheme. Turkey holds the top position as both the EU's largest cement supplier and a major steel exporter, two sectors where embedded emissions translate directly into growing certificate obligations for EU importers. This article covers the full scope of Turkey's CBAM exposure, the urgent data problem facing Turkish cement producers, the Customs Union argument and why it provides no legal exemption, and the four strategic options available to Turkish exporters today.
Image brief: Infographic showing Turkey's CBAM-exposed export flows to the EU, with cement and steel sector breakdowns. Text overlay: "CBAM Turkey: €19B at Risk." Commission as branded illustration with cbamguide.com logo.
Why Turkey Faces the Highest CBAM Exposure of Any Exporting Nation
Turkey's €19 billion in CBAM-exposed EU exports represents nearly 8% of Turkey's total annual export value, a concentration of risk that no comparable trading partner faces. Turkey exports approximately 3.3 to 4.8 million tonnes of cement and clinker to the EU per year, capturing 35 to 39% of the EU's total cement import market. In steel, Turkey exported approximately 2.59 million tonnes to the EU in 2024, valued at roughly €3.5 billion, making it the fourth-largest steel exporter to the EU by value.
What makes CBAM Turkey exposure uniquely severe is geographic captivity. Turkey cannot easily redirect EU-bound exports to equivalent markets because no comparable demand base exists at the same proximity and price point. The EU absorbs a structurally irreplaceable share of Turkish industrial output. Under the EU carbon border adjustment mechanism, EU importers of Turkish goods must account for the embedded emissions in those goods, and with no qualifying carbon price in Turkey to generate an Article 9 deduction, they bear the full gross CBAM certificate obligation.
Turkey enacted Climate Law No. 7552 on July 9, 2025, establishing the legal basis for a Turkish Emissions Trading System. The pilot phase launched in 2026 with full free allocation, meaning the effective carbon price paid by Turkish producers is near zero. This pilot structure does not satisfy the "effectively paid" standard required for an Article 9 deduction under Regulation (EU) 2023/956. Turkey's ETS development is widely recognized as a direct defensive response to CBAM, but the timeline for achieving a qualifying scheme remains uncertain as of April 2026.
Turkey's CBAM-Exposed Sectors: Trade Volumes, Emission Factors, and Estimated Costs
The four CBAM-covered sectors where Turkey has meaningful EU export exposure are cement, steel, aluminium, and fertilizers. Cement and steel dominate. The table below summarizes the key commercial parameters for each sector at the current EU ETS reference price of approximately €70 per tonne of CO₂.
| Sector | Approx. EU Export Volume | Gross CBAM Cost per Tonne (€70 ETS) | Article 9 Deduction Available | Net Cost in 2026 (2.5% factor) |
|---|---|---|---|---|
| Cement (Portland) | 3.3–4.8 Mt/year | ~€58/t (actual); ~€111/t (default) | No | ~€1.45–€2.77/t |
| Steel (mixed BF-BOF + EAF) | ~2.59 Mt/year | ~€84/t (average) | No | ~€2.10/t |
| Aluminium | Smaller volumes | ~€105/t (primary, direct) | No | ~€2.63/t |
| Fertilizers | Limited volumes | ~€175/t (urea) | No | ~€4.38/t |
Gross costs are before the free allocation adjustment. Net 2026 costs are calculated at the 2.5% CBAM factor (97.5% of free allocation remains in 2026). Net costs rise steeply from 2028 onward as free allocation phases out.
The 2026 net surcharge appears small in isolation. At €2.10 per tonne for steel, the immediate cash impact on EU importers is modest. The planning error Turkish exporters and their EU buyers make is treating 2026 as the benchmark. By 2030, when the CBAM factor reaches 48.5% (as free allocation falls to 51.5%), the net cost for BF-BOF steel reaches approximately €72.75 per tonne at a €75 ETS reference price. For a Turkish steelmaker exporting 500,000 tonnes per year, that translates to €36 million in annual CBAM-linked cost exposure embedded in their EU customers' compliance obligations.
The Cement Data Gap: Why Turkish Producers Face the Highest Default Value Risk in CBAM
Turkish cement producers face a default value penalty that in many cases exceeds the FOB export price of the product itself. The CBAM default value for Portland cement from "other countries" (including Turkey) under Implementing Regulation (EU) 2025/2621 is approximately 1.584 tCO₂e per tonne. Turkish kilns' actual emission intensity is approximately 0.88 tCO₂/t, creating a gap of roughly 80% between actual performance and the default value assigned.
At €70 per tonne of CO₂, using the default value costs EU importers of Turkish cement approximately €111 per tonne in gross CBAM obligation, against approximately €62 per tonne using verified actual data. The difference of €49 per tonne is the direct financial cost of the data gap. In a market where Turkish Portland cement commonly trades at FOB prices of €40 to €80 per tonne, the default value CBAM obligation can exceed the product's entire trade value. This is a structural threat to market access, not a compliance technicality.
The CBAM cement sector is the most data-intensive sector for Turkish exporters to navigate because both direct and indirect emissions are priced under CBAM for cement (it is not listed in Annex II of Regulation (EU) 2023/956). Turkish cement producers must calculate and report the clinker-to-cement ratio, the direct process emissions from limestone calcination, and the indirect electricity-derived emissions from kiln operations. Historically, Turkish cement facilities have not maintained the granular monitoring systems that CBAM verification requires, leaving a documentation gap that takes 6 to 18 months to close through accredited measurement and verification.
The default value mark-up schedule compounds this urgency. In 2026, default values carry a 10% mark-up above the calculated default. In 2027, this rises to 20%. From 2028 onward, the mark-up is 30%. Turkish cement producers who delay submitting verified actual emissions data face not only higher base defaults but an escalating penalty structure that grows with each year of inaction.
Turkish cement producers can submit actual emissions data through the CBAM Operators Portal. EU importers then use this data in their CBAM declarations. The key practical step is engaging an accredited verifier to audit the production installation and certify the embedded emissions figure. Accredited verifiers become eligible for registration from September 1, 2026 under the amended regulation.
How CBAM Affects Turkish Steel Exporters
Turkish steel exporters sent approximately 2.59 million tonnes to the EU in 2024, carrying embedded emissions that vary significantly by production route. Turkey's steel sector uses a mix of blast furnace and basic oxygen furnace (BF-BOF) production and electric arc furnace (EAF) scrap-based production. BF-BOF route steel carries embedded emissions of approximately 2.0 tCO₂ per tonne, while EAF scrap-based steel produces approximately 0.5 tCO₂ per tonne. The average across Turkey's export mix works out to approximately 1.2 tCO₂ per tonne, giving a gross CBAM cost of approximately €84 per tonne at €70 ETS.
For Turkish steel, the default value risk is less acute than for cement because the gap between actual and default is smaller. However, the CBAM steel sector still creates strong financial incentives for Turkish producers to provide verified actual data, particularly for EAF-route producers whose actual emissions are well below the BF-BOF benchmark. A Turkish EAF producer with actual emissions of 0.5 tCO₂/t facing the BF-BOF benchmark of 1.370 tCO₂e/t would pay €95.90/t gross under default values versus €35/t gross under verified actual values, a difference of over €60/t that grows substantially as the CBAM factor increases through 2034.
Turkish steel producers must provide actual emission data to their EU customers via the CBAM Operators Portal. The data covers direct emissions only for steel (steel is listed in Annex II of Regulation (EU) 2023/956, meaning indirect electricity emissions are excluded). The first CBAM declaration covering calendar year 2026 is due September 30, 2027, under Article 6 as amended by Regulation (EU) 2025/2083.
Image brief: Split illustration showing a Turkish steel mill on one side and a cement kiln on the other, with emissions monitoring data flows highlighted. Text overlay: "Verified Data vs. Default Values." Commission as branded illustration with cbamguide.com logo.
Does the EU-Turkey Customs Union Exempt Turkey from CBAM?
The EU-Turkey Customs Union does not exempt Turkey from CBAM obligations, and no formal legal ruling has changed this position. Turkey has argued bilaterally that CBAM contradicts the 1995 EU-Turkey Customs Union Agreement by introducing a discriminatory measure against Turkish goods. The argument centers on the principle of free movement of industrial goods that forms the foundation of the Customs Union. No formal WTO challenge has been filed by Turkey as of April 2026. Turkey has instead pursued bilateral diplomatic channels and may seek resolution through the EU-Turkey Joint Customs Union Committee.
The EU's position is that CBAM applies on the basis of embedded carbon content, not on the national origin of goods per se. Any country whose producers supply verified actual emissions data and whose government establishes a qualifying carbon pricing scheme can reduce or eliminate the effective CBAM burden. The mechanism targets carbon intensity, not Turkish exports specifically. The EU argues this is consistent with the non-discriminatory principle because it applies equally to all non-EEA imports.
In practical terms, Turkish exporters cannot rely on the Customs Union argument to reduce their compliance obligations today. EU importers of Turkish goods have CBAM obligations under current law regardless of the bilateral dispute. Turkish producers who want to minimize their EU customers' compliance costs must act on data provision and emissions measurement, not on diplomatic resolution timelines.
What Other Countries Face Similar CBAM Exposure to Turkey?
Several countries share Turkey's structural challenge of high CBAM-exposed export volumes without a qualifying carbon price, though none matches Turkey's absolute exposure level. CBAM India presents the closest comparison: India exports approximately €3 to 5 billion in CBAM-covered goods to the EU annually, with no qualifying carbon pricing scheme in place under the Carbon Credit Trading Scheme pilot. India's steel exports to the EU fell 24.4% in fiscal year 2024 to 2025, partly in anticipation of CBAM costs embedding into EU buyer decisions.
The key structural difference is that Turkey's geographic and economic dependence on EU markets is deeper than India's. India's industrial sector has larger domestic and alternative export markets to absorb redirected volume. Turkey's cement industry, in particular, has limited alternative markets capable of absorbing the scale of exports currently flowing to the EU.
Does Turkey Have a Qualifying Carbon Price for CBAM Deduction?
Turkey does not currently have a qualifying carbon pricing scheme for the purposes of the Article 9 deduction under Regulation (EU) 2023/956. The Turkish ETS pilot (launched 2026 under Climate Law No. 7552 from July 9, 2025) operates with full free allocation, meaning no "effectively paid" carbon price exists that EU importers could deduct from their certificate obligations. Article 9 deductions require the exporting country's producers to have actually paid a carbon price on the embedded emissions of their exported goods, at a level the European Commission has assessed as qualifying. Turkey's pilot ETS does not meet this standard as of April 2026. The bilateral discussions between Turkey and the EU Commission on ETS recognition remain unresolved.
What Are the Four Strategic Options for Turkish Exporters Under CBAM?
Turkish exporters have four primary strategic responses available, each with different feasibility and cost profiles.
The four strategic options for Turkish exporters are described below:
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Submit verified actual emissions data. This is the most immediately actionable option for most Turkish producers. Where actual emissions are below the CBAM default value (which is common for Turkish cement and EAF steel), providing verified data directly reduces the CBAM cost embedded in the EU importer's compliance obligation. This requires engaging an accredited verifier to audit the production installation.
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Accelerate Turkish ETS development toward qualifying status. If Turkey's ETS establishes an effective carbon price (by moving beyond the pilot phase's full free allocation), Turkish producers' payments into that system could qualify for Article 9 deduction. This is a medium-term option dependent on policy decisions by the Turkish government under pressure from exporters who face competitive disadvantage.
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Invest in production decarbonization. Reducing actual embedded emissions directly reduces CBAM liability, and remains the only option that provides durable competitive protection as the CBAM factor rises through 2034. DRI-EAF steel production, kiln efficiency improvements, and clinker substitution in cement are the primary technical routes. This is a long-horizon investment option with 3 to 10 year payback periods.
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Negotiate CBAM cost sharing with EU buyers. Turkish producers may pass some of the compliance cost burden to EU importers through pricing negotiations. The feasibility depends on market power, product substitutability, and the degree to which EU buyers have alternative suppliers. For cement, where Turkey holds 35 to 39% of EU import market share, there is meaningful negotiating leverage in the short term before alternative supply chains develop.
Is Turkey Exempt from CBAM Due to the Customs Union?
Turkey is not exempt from CBAM due to the Customs Union. The EU-Turkey Customs Union Agreement covers free movement of industrial goods but does not create an exemption from environmental measures that apply on the basis of carbon content rather than origin. EU importers of Turkish goods have legal obligations under CBAM from January 1, 2026 regardless of the ongoing bilateral dispute. The Turkish government has raised this conflict in diplomatic channels, but no binding resolution or exemption has been issued as of April 2026.
How Should Turkish Exporters Use the CBAM Operators Portal?
Turkish exporters provide embedded emissions data to EU importers through the CBAM Operators Portal, operated by DG TAXUD under the same authentication framework (UUM&DS) as the EU ETS registry. The portal allows non-EU producers to upload installation-level emissions data, including the production route, emission factors, and fuel consumption inputs, which EU importers then reference in their CBAM declarations. The key steps for CBAM compliance for exporters are to register the production installation, engage an accredited verifier (available from September 1, 2026), upload verified actual emissions data, and provide the verification certificate to the EU importer. This data chain must be in place before the EU importer files their first CBAM declaration, due September 30, 2027.
How Do CBAM Certificates Work for Goods Imported from Turkey?
CBAM certificates are purchased by the EU importer, not by the Turkish exporter, under Regulation (EU) 2023/956. The certificate price equals the weekly average EU ETS auction clearing price, approximately €70 per tonne of CO₂ as of late March 2026. EU importers must hold certificates equal to at least 50% of cumulative embedded emissions since the start of the calendar year (the quarterly holding requirement under Article 22(2) as amended by Regulation (EU) 2025/2083). Certificate sales begin February 1, 2027. For Turkish goods, the number of certificates required equals the verified embedded emissions per tonne multiplied by the import volume, with no Article 9 deduction available until Turkey establishes a qualifying carbon pricing scheme. The penalty for failing to surrender sufficient certificates is €100 per tonne of CO₂e not covered.