The Climate Law No. 7552, which has drawn significant public attention, entered into force upon its publication in the Official Gazette (“Resmî Gazete”) on Wednesday, 9 July 2025. Considering Turkey’s location in the Mediterranean basin, one of the regions expected to be most affected by global climate change, and in these times when we clearly observe that the consequences of climate change—such as forest fires, drought, and floods—are increasing in frequency and severity, and that climate change threatens natural resources and biodiversity, the enactment of this new law is highly significant.
In 2021, Turkey ratified the international Paris Agreement, which aims to limit global warming and, for the first time on a global scale, commits all signatory countries to reduce greenhouse gas emissions. Turkey has pledged to achieve net zero emissions by 2053 and to reduce its greenhouse gas emissions by 41% from the projected increase by 2038. The Paris Agreement is a historic milestone, aiming to keep the increase in global temperature below 2°C and preferably limited to 1.5°C, ensuring that countries combat climate change with common but differentiated responsibilities. To fulfil these commitments and implement the necessary transformation properly, significant steps must be taken, and the highest level of diligence in implementing these steps is of critical importance.
In this regard, while the comprehensiveness and adequacy of the Climate Law in terms of its objectives and requirements have been criticised in certain aspects, it is widely considered an important step as a framework regulation for reducing the factors causing climate change and adapting to its impacts. However, as with every new piece of legislation, the provisions of this law must be implemented sincerely, equally for all, transparently, and in a manner open to supervision.
Who Does the Climate Law Cover?
The Climate Law imposes binding obligations on public institutions, private sector companies, and natural and legal persons. However, these obligations are not the same for every company. When we classify companies into four groups based on these obligations, the picture that emerges is as follows:
Facilities Directly Emitting Emissions
We foresee that companies operating particularly in the sectors listed below will be included in the Emissions Trading System (**ETS** – *Emisyon Ticaret Sistemi*) and will be required to report emissions annually:
- Energy production (e.g., thermal power plants, natural gas combined cycle plants)
- Cement
- Iron and steel
- Glass, ceramics, aluminium
- Refineries, petroleum products, etc.
Industrial Sector Above a Certain Capacity
Production facilities with an annual energy consumption of more than 20 MW and heavy industry enterprises exceeding a certain capacity, especially in cement and iron-steel, stand out in this regard.
Importer Companies
Particularly within the sectors covered by the European Union’s Carbon Border Adjustment Mechanism Iron and steel
- Aluminium
- Cement
- Electricity
- Fertiliser
The sectors highlighted above are particularly prominent regarding carbon content reporting requirements.
Companies Above a Certain Turnover/Size
Although the law specifies as operators those conducting activities that directly cause greenhouse gas emissions within the scope of the ETS as determined by regulation, we foresee that the Ministry will expand obligations based on turnover and size thresholds determined through further regulations. Initially, large-scale enterprises, especially energy-intensive sectors, are expected to be covered, with smaller enterprises to be included in subsequent years.
For now, some small and medium-sized enterprises (SMEs) that are not directly within the scope—particularly those supplying goods or services to carbon-intensive sectors—may be required to conduct carbon reporting indirectly.
Corporate Governance and Climate Compliance Now a Legal Obligation
With the Climate Law, companies’ obligation to develop and implement strategies against climate change has become part of internal governance functions. Companies:
- Must obtain greenhouse gas emission permits for their operations.
- Will be subject to systems for monitoring, reporting, and verifying emissions.
- Must conduct annual environmental reporting in an auditable manner and in compliance with national systems.
Emissions Trading System (**ETS** – *Emisyon Ticaret Sistemi*): Carbon Now Has a Legal Value
The most critical innovation for companies is the obligation to operate within the Emissions Trading System (ETS). The ETS is a market-based mechanism, at national and/or international level, that sets a cap in line with the net zero target and incentivises emission reductions through the buying and selling of emission allowances (allocations “tahsisatlar”).
- An allocation represents the right to emit one tonne of carbon dioxide equivalent over a certain period; it is transferable, fungible, and issued in book-entry form.
- The ETS will be established by the Climate Change Presidency (“İklim Değişikliği Başkanlığı”), which will prepare national allocation plans and distribute annual allocations to operators.
- Operators within the ETS must surrender allocations annually corresponding to their verified greenhouse gas emissions.
- The ETS market will consist of primary and secondary markets where allocations and/or standard contracts eligible for emissions trading can be bought and sold; these markets will be organised and operated by Enerji Piyasaları İşletme A.Ş.(“EPİAŞ”).
- Serious administrative sanctions will be imposed on operators conducting activities without an emission permit, potentially leading to suspension of operations.
- Under the Climate Law, measurement, reporting, and verification of emissions is mandatory for the private sector. ETS-covered operators must report their annual greenhouse gas emissions through authorised verifiers and submit these data in the prescribed format. Failure to meet monitoring, reporting, and verification obligations will result in high-value administrative fines, and in severe cases, revocation of emission permits and suspension of operations.
In this context, carbon has become not only an environmental but also a financial and legal asset of strategic importance. Companies must address carbon management not only as a compliance requirement but also as a component of competitive advantage and risk management.
Access to Finance, Incentives, and Green Investment Classification
One of the most strategic aspects of the Climate Law for the business world is the growing importance of “green compliance.”
- Green Taxonomy and Participation in Carbon Markets: The promotion of green taxonomy-compliant investments and increased participation in carbon markets have become key priorities of Turkey’s climate policies. The green taxonomy is a classification system that defines environmentally sustainable economic activities and integrates them into the financial system. In this respect, access to finance for environmentally friendly investments is facilitated, and private sector participation in green transformation is supported through tools such as public support for low-carbon projects, green bonds, incentive mechanisms, and tax advantages.
- It is foreseen that the Türkiye Green Taxonomy (“Türkiye Yeşil Taksonomisi” *Taksonomi*) and the Türkiye Green Taxonomy Regulation (“Türkiye Yeşil Taksonomi Yönetmeliği”) will be introduced as classification systems that define principles and criteria for economic activities contributing to the fight against climate change in line with environmental targets, thus contributing to mobilising climate finance.
Carbon Border Adjustment Mechanism (“Sınırda Karbon Düzenleme Mekanizması” – *SKDM*) for Importer Companies
It is anticipated that, under the Climate Law, a Carbon Border Adjustment Mechanism (SKDM)— a system for managing greenhouse gas emissions associated with imported goods within the customs territory — may be established. Such a mechanism could be set up to address the embedded greenhouse gas emissions of goods imported into the Turkish Customs Territory. The reporting requirements, scope, content, procedures, and principles regarding the CBAM are expected to be determined by the Ministry of Trade in coordination with the relevant ministries.
Voluntary Carbon Markets and Offsetting: A New Market Opportunity?
The Climate Law also allocates special attention to voluntary carbon markets. These are markets where carbon credits are traded on a voluntary basis. By defining “carbon credit” and “project owner” in its definitions section, the law aims to integrate actors operating in voluntary carbon markets into the national system.
Offsetting refers to the use of carbon credits to meet obligations under the ETS or voluntary commitments. Article 11 of the Climate Law regulates that obligations may be “offset” by using carbon credits to a certain extent under the ETS. This provision enables carbon credits obtained from the voluntary market to be used for meeting legal obligations, provided they meet appropriate criteria.
Sanctions for Companies Failing to Comply with Obligations under the Climate Law: For companies that fail to comply with the obligations introduced under the Climate Law, various sanctions may be imposed, including administrative fines ranging from TRY 120,000 to TRY 10 million, permit revocations, prevention of operations, suspension of activities in the event that necessary corrections are not made, application of the Turkish Penal Code and other laws where a criminal offense is constituted, and restrictions in export processes.
The Climate Law marks the beginning of a new era for the business world in line with Türkiye’s 2053 net-zero emissions target, becoming a binding norm that also affects corporate reputation management. Companies—particularly those operating in high-emission sectors or engaged in trade with the EU—are required to conduct their carbon management processes in a transparent, planned, and compliant manner. Not delaying this transformation is of great importance to prevent financial and legal risks and to operate in an ethically sound manner.
You can access the full text of the Law here: https://www.resmigazete.gov.tr/eskiler/2025/07/20250709-1.htm
Buse Ceylin Şahin