Türkiye’s Carbon Market Pilot: 2026 Data Sets Your 2027 Carbon Bill

Türkiye’s Emissions Trading System (TR ETS) regulation entered into force on 27 August 2026. The Carbon Market Board’s first decision (KPK/2026/1) then set a 2026–2027 pilot for Category B and C installations in five sectors: electricity generation, cement, iron and steel, aluminium and fertilisers. 2026 is a reporting-only year, and carbon pricing starts in 2027. First Monitoring Methodology Plans are due by 27 October 2026. Free allocation is 100% of a benchmark, not of actual emissions, so plants that emit above the benchmark will face an allowance gap.

The allocation is 100% of a benchmark, not 100% of what a plant actually emits. Any facility less efficient than the benchmark will be short of allowances once carbon has a price in 2027. The data that decides how short it will be is being collected now, in 2026.

Key takeaways:

Türkiye’s Emissions Trading System (TR ETS) regulation was published in the Official Gazette on 27 August 2026. The Carbon Market Board set the pilot’s scope on 3 September 2026.
The pilot covers 2026 and 2027 emissions from larger installations in electricity generation, cement, iron and steel, aluminium and fertilisers. 2026 is reporting-only, and pricing starts in 2027.
First Monitoring Methodology Plans are due to the Directorate of Climate Change by 27 October 2026.
Free allocation is 100% of a benchmark-based amount. Plants above the benchmark will face an allowance gap, so 2026 data quality directly shapes 2027 costs.
The TR ETS is closely tied to the EU Carbon Border Adjustment Mechanism (CBAM). Because CBAM deducts only the carbon price effectively paid after free allocation, the near-term CBAM benefit for Turkish exporters is smaller than headlines suggest.

What exactly happened, and when?

The pilot has moved from law to live obligation in just over a year. These are the milestones that matter:

July 2025: Türkiye’s first Climate Law establishes the legal basis for a national ETS and creates the Carbon Market Board.
27 August 2026: The TR ETS Regulation is published in the Official Gazette and enters into force.
3 September 2026: The Carbon Market Board’s first decision (KPK/2026/1) fixes the pilot’s years, sectors and free allocation rate.
27 October 2026: Deadline for first Monitoring Methodology Plans.
30 April 2027: Verified 2026 emissions and activity level reports are due.
2027: The price mechanism starts for the pilot’s second year.
2028 to 2035: First full implementation period.

The regulation left three critical questions open: the pilot’s dates, its sector scope and its free allocation rate. As Yeşil Haber reported, the Board’s first decision answered all three, but only on 3 September. That left companies less than eight weeks to prepare a monitoring plan.

A Monitoring Methodology Plan is the document in which an operator sets out how it will measure, calculate and report its greenhouse gas emissions and activity data. It covers data sources, instruments, calculation methods and quality controls.

Who is in scope?

Two tests apply. The installation must operate in one of the five pilot sectors, and its annual emissions must exceed the size threshold.

The regulation sorts installations into three categories by annual emissions, measured in tonnes of carbon dioxide equivalent (tCO₂e). ClearBlue Markets summarises them as follows:

Category A (below 50,000 tCO₂e a year): Not in the pilot, but existing monitoring and reporting duties continue.
Category B (50,000 to 500,000 tCO₂e a year): In scope if in a pilot sector.
Category C (above 500,000 tCO₂e a year): In scope if in a pilot sector.

The earlier draft regulation had listed activities such as glass, ceramics, paper and mineral wool separately. The Board’s decision limited the pilot to five sectors, which makes it narrower than many expected.

Two exclusions are worth checking carefully:

Installations whose main activity is outside the five sectors, but which generate electricity as a secondary activity, are excluded during the pilot. A food or textile plant with on-site generation is not automatically pulled in.
Transmission and storage of natural gas and crude oil are excluded from the ETS for both the pilot and the first implementation period, which runs to 2035. Monitoring, reporting and verification (MRV) requirements still apply to these activities.

Falling outside the pilot does not end a company’s obligations. Türkiye has run installation-level greenhouse gas monitoring for energy and industry since 2015, as ICAP documents. Category A installations remain subject to those rules.

Why “100% free allocation” does not mean free

This is the most misunderstood part of the decision, and it will decide who wins and who loses in 2027.

Free allocation is calculated from a formula, not from actual emissions. Under the Board’s decision, the formula is:

Free allocation = verified activity level × benchmark value × free allocation rate (100%) × sectoral activity coefficient

The terms in that formula mean the following:

The activity level is a plant’s verified production, such as tonnes of clinker.
The benchmark is the reference emissions per unit of output.
The sectoral activity coefficient is a sector-specific adjustment factor set by the Board.

The 100% applies to the result of this formula. If a plant’s real emissions exceed that result, the gap must be covered once carbon has a price.

A hypothetical worked example shows the stakes. Assume a clinker benchmark of 0.80 tCO₂e per tonne and a sectoral activity coefficient of 1. Two cement plants each produce 1,000,000 tonnes of clinker, so each receives 800,000 free allowances.

Plant A recently upgraded its kilns. It emits 0.76 tCO₂e per tonne, 5% below the benchmark, for a total of 760,000 tonnes. It holds 40,000 surplus allowances, subject to pilot trading rules.
Plant B runs older equipment. It emits 0.92 tCO₂e per tonne, 15% above the benchmark, for a total of 920,000 tonnes. It is 120,000 allowances short.

At illustrative carbon prices of €10, €25 and €50 per tonne, Plant B’s 2027 gap would cost about €1.2 million, €3 million and €6 million respectively. Both plants are in the same sector, produce the same output and receive the same “100% free allocation”, yet their carbon bills are very different. These figures are illustrative only, because official benchmark values and prices have not been published.

The benchmark approach also differs by sector:

Cement, iron and steel, aluminium and fertilisers will use a weighted average across all covered installations. Plants dirtier than the sector average are the ones likely to face a gap.
Electricity generation will use each plant’s own weighted average emission intensity over the previous five years. This is plant-specific rather than a single sector benchmark.

The numerical benchmark values have not been published yet, so no company can calculate its exact position. Every company can, however, calculate its emission intensity per unit of output and estimate which side of the average it is likely to fall on.

Why 2026 is the most important year of the pilot

It is tempting to treat 2026 as a practice year. There is no carbon price, no allowances to surrender and nothing to pay.

That reading misses how the system is built. The TR ETS uses an intensity-based design, which means the cap is set after verified production and emissions data come in. The data a plant submits for 2026 feeds directly into three things for 2027: the benchmark calculations, the National Allocation Plan (the document that sets the cap and each installation’s allocation) and each installation’s free allocation.

Errors made now carry forward. The most common ones are predictable:

Installation boundaries are drawn incorrectly, especially at sites with several production units or group companies sharing infrastructure.
Production volumes are misclassified or incomplete.
Fuel and process emissions are assigned to the wrong sub-installation. A sub-installation is a defined part of a site linked to a specific product or process.
Measurement instruments, sampling and calibration records cannot be evidenced to a verifier.

Each of these errors can reduce a plant’s free allocation or inflate its apparent emission intensity. In a benchmark system, a data error is not only a compliance problem. It is a cost.

For a Gulf perspective on what verifiers typically challenge, see our blog on building a GHG inventory that survives a verifier. The principles translate directly to TR ETS installations.

How the TR ETS connects to CBAM

The TR ETS is as much a trade policy as a climate policy. The EU is Türkiye’s largest trading partner, and the pilot’s five sectors map closely onto the goods covered by the EU Carbon Border Adjustment Mechanism (CBAM).

CBAM entered its definitive phase in January 2026. Since then, EU importers must account for the emissions embedded in covered goods. Under Article 9 of the CBAM Regulation, a carbon price effectively paid in the country of production can be deducted from the CBAM obligation. A domestic Turkish carbon price therefore lets Türkiye collect part of that value at home, rather than see it collected at the EU border.

Three points are easy to get wrong:

The deduction is net of free allocation. CBAM counts the carbon price actually paid after free allocation and compensation are taken into account. A Turkish plant receiving 100% free allocation may have little or nothing to deduct in 2027. The benefit grows only as free allocation falls.
Nothing is deductible for 2026. The pilot’s first year is reporting-only, so there is no Turkish carbon price to deduct.
The timing is later than it looks. The first annual CBAM declaration, due by 30 September 2027, covers 2026 imports. A TR ETS price paid on 2027 production would first appear in declarations filed in 2028.

The data overlap is the bigger opportunity. Both TR ETS monitoring and CBAM declarations need the same inputs: installation-level emissions, production volumes and precursor data. On 14 August 2026, the European Commission published ten CBAM guidance documents for non-EU operators, which make the EU’s expectations more concrete. Companies that build one installation-level dataset can serve both regimes. Companies that run them as separate projects will pay for the same data twice.

See our blog on CBAM in 2026 for GCC steel and aluminium exporters for how CBAM costs build over time.

What this means for GCC companies

The TR ETS is a Turkish regulation, but it matters in the Gulf for three reasons.

Competition in the EU market. Turkish and GCC producers sell the same CBAM goods, especially steel and aluminium, into Europe. As Turkish free allocation declines, Turkish exporters will be able to deduct a growing share of their domestic carbon price from CBAM. GCC producers without a domestic compliance carbon price cannot make that deduction. The near-term gap is small, but European buyers will increasingly compare total landed carbon cost, not just product price.

Groups with operations in both regions. Gulf-headquartered groups with Turkish plants now face separate regimes. Their Turkish installations fall under TR ETS and CBAM, while their home operations face emerging MRV rules such as the UAE Climate Law. Group sustainability teams need one consolidated view rather than country-by-country spreadsheets.

A preview of where the Gulf is heading. Türkiye moved from climate law to live trading pilot in just over a year. GCC regulators are also moving from voluntary disclosure towards verified, facility-level data, as our blog on IFRS S1 and S2 in the Gulf shows. For GCC companies weighing their own carbon market strategy, see our blog on Saudi Arabia’s carbon market.

What to do before 27 October 2026

For installations in or near scope, five priorities matter most.

Confirm scope and category. Check the installation’s main activity against the pilot sectors. Calculate annual emissions against the 50,000 and 500,000 tCO₂e thresholds, and confirm installation boundaries, particularly on shared sites.
Submit the Monitoring Methodology Plan on time. Plan around 27 October 2026, not around a possible extension. The plan should cover data flows, responsible staff, measurement instruments, calculation methods, sampling and quality assurance.
Set up sub-installation tracking. Free allocation depends on activity levels at sub-installation level, not just site totals. Production, fuel, raw material, energy and emissions data need to be traceable for the same period and the same boundaries.
Calculate emission intensity now. Even without published benchmark values, plants can estimate emissions per tonne of output and model whether they are likely to sit above or below the sector average.
Model 2027 costs as scenarios, not a single number. Budget for three cases (below, near and above the benchmark) and test each against a range of carbon prices. Evaluate efficiency, fuel switching, electrification and waste heat projects by their effect on emission intensity per unit of output, not just on total emissions.

What is still unknown

The 3 September decision answered the biggest questions, but several details that will set real costs are still pending:

The numerical benchmark values and sectoral activity coefficients.
The National Allocation Plan.
The rules for the additional allowance reserve, which can reach up to 10% of the cap.
Market rules from the Energy Market Regulatory Authority (EMRA, known in Türkiye as EPDK), including auction schedules and collateral. Energy Exchange Istanbul (EXIST) will operate the market and registry.
Offset limits and the treatment of carbon credits.

Companies should track each of these. None of them is a reason to delay the monitoring plan or 2026 data collection.

Why this matters beyond the pilot

The pilot is designed as a learning phase, and scope may widen after 2027. Sectors listed in the earlier draft, such as glass, ceramics and paper, have good reason to prepare now rather than wait.

It is also worth watching COP31 in Antalya, which Türkiye hosts in November 2026. Carbon markets and Article 6 of the Paris Agreement, which governs international carbon credit cooperation, will be on the agenda. The host country will want its own ETS to be seen working.

How Coral helps

Coral is an AI-native emissions management and ESG reporting platform serving enterprise and government clients across the GCC and Türkiye. For carbon-intensive industrials, Coral provides one installation-level dataset that can feed every regime that needs it.

The Coral Emissions Management System does the following:

Captures Scope 1, 2 and 3 emissions with supporting evidence and a full audit trail.
Connects to ERP, finance and operational systems through APIs and structured uploads.
Runs a CBAM workflow covering CN codes, embedded direct and indirect emissions, mass balance, precursors and tracking of measured versus default values, with schema-validated CBAM declaration exports.
Supports ISO 14064-1 and the GHG Protocol, with group consolidation across parent and subsidiary entities. A group with plants in Türkiye and the Gulf can see one consolidated picture.

Coral ESG Reporting maps the same data to frameworks including IFRS/ISSB, GRI and CSRD/ESRS. The numbers a plant reports to its regulator then match the numbers its investors and EU customers see.

Frequently asked questions

When does Türkiye’s ETS pilot start?

The pilot covers 2026 and 2027 emissions. 2026 is a reporting-only year, and carbon pricing starts in 2027. The first full implementation period runs from 2028 to 2035.

Which sectors are in the TR ETS pilot?

The pilot covers electricity generation, cement, iron and steel, aluminium and fertilisers. Within those sectors, it applies to installations in Category B (50,000 to 500,000 tCO₂e a year) and Category C (above 500,000 tCO₂e a year).

What is a Monitoring Methodology Plan?

It is the document in which an operator explains how it will monitor and report its emissions and activity data. It covers data sources, measurement instruments, calculation methods, sampling and quality controls. It is the foundation for the verified reports due each 30 April.

What is the deadline for the Monitoring Methodology Plan?

In-scope installations must submit their first plan electronically to the Directorate of Climate Change by 27 October 2026. That is two months after the regulation entered into force on 27 August 2026.

Does 100% free allocation mean the pilot costs nothing?

No. The 100% rate applies to a benchmark-based calculation, not to actual emissions. Installations that emit more than the benchmark will face an allowance gap once pricing starts in 2027.

Does the TR ETS remove CBAM costs for Turkish exporters?

Not automatically. CBAM allows a deduction only for the carbon price effectively paid after free allocation, and there is no Turkish carbon price in 2026. With 100% free allocation in the pilot, the deduction is likely to be small at first.

Why should GCC companies care about the TR ETS?

GCC and Turkish producers compete in the same EU markets for CBAM goods. As Turkish free allocation falls, Turkish exporters will be able to offset more of their CBAM bill with a domestic carbon price. Gulf groups with Turkish plants also now have a second regime to report into.

27 October is the first test. Start with the data.

The TR ETS pilot rewards the plants that know their numbers. The Monitoring Methodology Plan deadline is only the first step. The real stakes arrive in 2027, when every tonne above the benchmark has a price.

Book a demo with Coral to see how your team can build one installation-level emissions dataset for TR ETS monitoring, CBAM declarations and investor reporting. You can also explore Coral’s regulations hub to track the rules that apply to your operations in Türkiye and the GCC.

This article is for general information and does not constitute legal or compliance advice. TR ETS rules are still being finalised; confirm current obligations with the Directorate of Climate Change.