Turkey has an ETS regulation now, but Turkish exporters still earn no CBAM deduction

Turkey's Emissions Trading System Regulation was published in Official Gazette No. 33353 on August 27, 2026, and entered into force on publication. Thirteen months after Climate Law No. 7552 created the legal basis for a Turkish carbon market, the implementing regulation finally sets out the permit, allocation, and monitoring machinery, as confirmed in a client alert by Istanbul law firm Pekin Bayar Mizrahi dated September 2, 2026.

What the regulation does not do is put a price on a single tonne of Turkish CO₂. That distinction decides the money question for EU importers: under the EU's draft Article 9 implementing regulation, a CBAM deduction requires a carbon price effectively paid in the third country, and Turkey's new system creates no payment obligation yet. EU importers of Turkish steel, cement, and aluminium therefore keep carrying the full gross certificate cost on roughly €19 billion in annual CBAM-exposed trade.

What the August 27 regulation actually establishes

The regulation establishes the administrative skeleton of the Turkish ETS: emission permits, installation categories, a National Allocation Plan process, and monitoring, reporting, and verification obligations, while delegating the pilot phase itself to the Carbon Market Board. It implements Climate Law No. 7552, which Turkey enacted on July 9, 2025.

The key elements, per the published text as summarized by Pekin Bayar Mizrahi, are listed below.

• Coverage by installation category. The ETS applies to Category B installations (annual emissions above 50,000 and up to 500,000 tCO₂e) and Category C installations (above 500,000 tCO₂e). Schools, universities, hospitals, and defense organizations are excluded from the ETS but keep monitoring and reporting duties.
• Emission permits. Operators need a greenhouse gas emission permit from the Directorate of Climate Change, valid for five years, with a separate permit per installation. Operators have three years from the Climate Law's entry into force to obtain one.
• Pilot phase delegated. The regulation does not fix the pilot phase's dates or design. It delegates the scope, duration, and implementation of the pilot phase to the Carbon Market Board. The final text is notably less prescriptive than the July 2025 consultation draft, which had envisaged a fixed 2026 to 2027 pilot window and an explicit 100 percent free allocation design.
• Free allocation on application. The National Allocation Plan will be published within 60 days following verified emission reports, and operators seeking free allocation must apply electronically within 30 days of the plan's publication.
• MRV and surrender. Operators report emissions by April 30 each year, verification runs through accredited bodies via the MEDAS system, and allowances must be surrendered by the last business day of November of the relevant compliance year.

Nothing in that list obliges a Turkish steel mill or cement kiln to pay anything for its emissions today. The allowance price, the auction share, and the pilot calendar all wait on Carbon Market Board decisions.

Why the Turkish ETS earns no deduction under the draft Article 9 rules

Under the draft rules, a CBAM deduction exists only where a carbon price has been effectively paid on the same embedded emissions, and a pilot ETS built on free allocation with no live allowance market produces no effectively paid price. The CBAM carbon price deduction framework rests on Article 9 of Regulation (EU) 2023/956 and Article 3(29)'s narrow definition of a carbon price: a tax, levy, or fee, or allowances under a binding emissions trading system.

The Commission published the draft implementing regulation on how that deduction is calculated on May 13, 2026. The public feedback window closed on June 10, 2026, and member states are expected to vote on the text in September 2026, according to Carbon Pulse reporting that cites a Commission official. No vote outcome has been reported and no adoption is confirmed as of September 22, 2026, so every deduction rule remains provisional.

Two features of the draft close the door on Turkey's new system for now.

1. The "effectively paid" test. The draft recognizes four pathways for foreign carbon prices, and the ETS pathway requires proof that allowances were actually surrendered at a real cost, evidenced through auction or secondary market prices. A permit regime without allowance trading generates no such evidence.
2. The rebate rule. Article 8 of the draft counts free allowances, baseline exemptions, tax rebates, and indirect cost compensation against the price effectively paid. Even once Turkey's pilot trades, a phase in which covered installations receive their allowances for free on application would reduce the recognized carbon price toward zero.

The result under the draft rules: Turkish goods enter the EU with an Article 9 deduction of zero, exactly as they did before August 27.

What this means for EU importers of Turkish steel, cement, and aluminium

EU importers of Turkish goods continue to owe the full gross CBAM certificate obligation, with no deduction line in their 2026 declaration math. The table below shows the per-tonne picture at the Q2 2026 certificate price of €75.28/tCO₂e, before and after the 2.5 percent CBAM factor that applies in 2026.

The gross column is the number that matters for planning. The 2.5 percent factor climbs every year as EU ETS free allocation phases out, so a deduction that does not exist in 2026 becomes an eight-figure annual question for large Turkish supply chains by 2030. The cement rows also show why data strategy dominates deduction strategy for now: the gap between actual and default values dwarfs any plausible near-term Article 9 relief, a dynamic covered in detail in our analysis of the cement default value trap. Importers can model their own product mix with the CBAM cost calculator.

The full country picture, including the €19 billion exposure figure, sector volumes, and the Customs Union question, is maintained on the CBAM Turkey country page.

What happens next

Three decisions determine whether Turkey's ETS ever generates a deduction: the EU member state vote on the draft Article 9 rules, the Carbon Market Board's pilot phase design, and the free allocation share once allowances exist. The September vote, if it proceeds as reported, would fix the evidentiary standard Turkey has to meet. The Carbon Market Board then controls the variable that matters most: whether covered installations ever pay a real, non-rebated price per tonne.

Until both align, the sequencing is unfavorable for Turkish exporters. An ETS regulation in force is a necessary first step, but under the draft rules the deduction follows the payment, not the paperwork.