This factsheet is an extract from BloombergNEF's Turkey Transition Factbook 2026. To access this report, please contact sales.bnef@bloomberg.net.

Turkey is establishing an emissions trading system targeting the power and industrial sectors, partly in an attempt to avoid border costs for products exported to the EU. However, Turkey’s ETS is unlikely to materially reduce near-term exposure to EU carbon costs.

The new market will set emissions intensity thresholds for power and industry sectors, allowing for absolute emissions to grow in line with Turkey’s nationally determined contribution. The pilot phase, likely delayed to launch in 2027, includes 100% free allocation, leaving the effective domestic carbon price close to zero. The ETS also permits the use of domestic carbon credits from the Türkiye Carbon Offsetting System for up to 10% of compliance needs.

Turkey is the world’s fourth-largest supplier of carbon credits and the fifth most popular for offset buyers. Average credit prices stood at $1.80 per metric ton in April 2026, the cheapest out of the 10 largest issuing markets. Turkish offsets come from energy and waste projects, which often face environmental integrity concerns, exposing buyers to greenwashing risks. Only five out of Turkey’s 381 active projects meet high-quality standards in the global voluntary market.

Turkey’s national offsetting system aims to centralize the issuance, trading and monitoring of carbon credits, known as Turquoise credits. The credits could be used for voluntary purchases, the country’s ETS, or international transfers under UN carbon market mechanisms. Allowing the same credits to serve multiple markets could increase trading activity.

BloombergNEF anticipates Turkey's ETS will become the strongest source of demand for Turkish credits. Though this will only represent around half of Turkey's total potential credit supply. Excess credits could be used for UN-led Article 6 mechanisms, where governments and companies globally can trade eligible carbon credits to meet their climate goals.

If Turkey succeeds in aligning its national offsetting system with Article 6, the government could use domestic credits for its own climate targets or authorize them for international transfer. This will require adjustments to ensure no double counting takes place.

Integration with international markets could strengthen Turkey’s strategic role as a major supplier of UN-approved Article 6 credits, supported by competitive prices.