Sequencing Türkiye’s Response to the Carbon Border Adjustment Mechanism
ABSTRACT
The EU carbon border mechanism entered its definitive phase on 1 January 2026. Türkiye has built the legal architecture for a domestic carbon price without activating the financial one, which forecloses the deduction the mechanism provides. This paper sets out a three-step sequence — paid allocation, verified installation-level data, then negotiated recognition — and argues that compliance capacity has become a competitiveness instrument.
1. What changed on 1 January 2026
The Carbon Border Adjustment Mechanism, established by Regulation (EU) 2023/956 and amended by Regulation (EU) 2025/2083, moved from a reporting-only transitional phase to its definitive phase on 1 January 2026. Authorised declarants importing iron and steel, aluminium, cement, fertilisers, electricity or hydrogen into the European Union must now purchase and surrender certificates corresponding to the embedded emissions of those imports, submit an annual verified declaration, and hold authorisation to import covered goods at all.
Three design features determine the commercial impact. The certificate price tracks the EU Emissions Trading System auction price: the Commission published the first quarterly figure on 7 April 2026 at 75.36 euros per tonne of carbon dioxide for first-quarter imports. A de minimis threshold of 50 tonnes of own mass per importer per year exempts roughly 90 percent of importers, principally small enterprises, while retaining coverage of more than 99 percent of embedded emissions. And free allocation to EU producers phases out progressively through 2034, so the CBAM factor applied to imports rises each year — the effective obligation in 2026 is a small fraction of gross embedded emissions and approaches the full amount by the mid-2030s.
The consequence is that 2026 is not the year of maximum cost. It is the year in which the data systems, contractual arrangements and carbon pricing architecture that determine the cost from 2030 onward must be put in place.
2. Türkiye’s exposure
Türkiye’s exposure to the mechanism is unusual in combining scale, concentration and low substitutability. It is the European Union’s largest supplier of steel and among the largest suppliers of cement, and its geographic proximity means that the freight advantage which makes those exports viable does not transfer to distant alternative markets. A cement or long steel producer in Marmara or the Mediterranean basin cannot readily replace European demand with Asian or American demand at comparable netback.
The default-value problem compounds this. Where an exporter does not supply measured, verified installation-level emissions data, the mechanism applies default values calibrated conservatively. For products with low value density and high embedded emissions — cement being the clearest case — the resulting certificate cost can approach or exceed the free-on-board export price of the product itself once free allocation has been substantially withdrawn. The gap between default and actual emissions is therefore not an administrative detail; it is where the commercial outcome is decided.
3. The architecture Türkiye has built, and what it omits
Turkish policy has moved on the legal dimension. Climate Law No. 7552, enacted in July 2025, establishes the statutory basis for a national emissions trading system, together with the institutional framework for monitoring, reporting and verification. This is the necessary precondition for any claim to equivalence.
It is not sufficient. The pilot phase of the Turkish system operates with full free allocation. No installation faces an effective carbon price, because allowances are distributed without charge in a quantity that covers obligations. The mechanism’s provision for deducting carbon costs incurred in the country of origin is drafted in terms of a price actually paid. A system that issues allowances free of charge produces no paid price and therefore no deductible amount, regardless of how sophisticated its monitoring architecture is.
This is the pivot of the entire policy question. Türkiye currently has the appearance of a carbon pricing regime and none of its negotiating value. The distinction is invisible domestically and decisive in Brussels.
4. Step one: move the pilot to partial paid allocation
The first step is to introduce partial auctioning or a benchmark-based allocation shortfall in the covered sectors, so that a positive carbon price is demonstrably paid by installations exporting to the European Union.
The design consideration is that the deduction is bounded by the amount actually paid, so a very low domestic price yields a very small deduction. The counterargument — that a domestic price merely transfers the cost from European importers to Turkish producers — misreads the arithmetic. Under CBAM the cost is incurred either way; the only question is which treasury receives it. Revenue raised domestically can be recycled into industrial decarbonisation, which reduces the underlying obligation over time. Revenue surrendered to the European certificate system cannot.
The sequencing point is that a domestic price must be operating before a recognition negotiation opens, because the negotiation is about equivalence of an existing instrument rather than about a commitment to create one.
5. Step two: build installation-level verified data
The second step is a national programme to produce measured, verified, installation-level embedded emissions data in the covered sectors, in the format the mechanism requires, and to make it available to European importers.
Three elements are required. Accredited verification capacity must exist domestically at sufficient scale, since verification by European bodies is expensive and capacity-constrained. Data governance must resolve the commercial sensitivity problem, because installation-level emissions data reveals process efficiency to competitors and producers will resist disclosure absent a trusted intermediary. And supply contracts must be revised to allocate the CBAM obligation and the data provision duty explicitly, since the legal liability sits with the European importer while the data sits with the Turkish producer, and a contract silent on the point transfers the risk to whichever party has less bargaining power.
The commercial return on this step is immediate rather than deferred. Any producer whose actual emissions fall below the default value captures the difference from the moment verified data is accepted.
6. Step three: negotiate recognition within a broader package
The third step is negotiation, and it should not be conducted as a standalone technical file. The Customs Union modernisation agenda, the exclusion of Turkish firms from European defence industrial funding instruments, and the carbon border mechanism are three expressions of the same structural condition: deep integration in some domains and formal exclusion in others.
Treating them as one package changes the negotiating arithmetic. Türkiye can offer liberalisation in services and public procurement, which the European Commission has identified as areas of mutual gain. It can seek recognition of a functioning domestic carbon price and access to defence industrial instruments. Neither request is likely to succeed in isolation; together they constitute an exchange.
7. Implementation risks
Four risks deserve explicit treatment. Domestic political resistance to a paid carbon price will be substantial in energy-intensive sectors already facing elevated energy costs following the 2026 price shock, and the sequencing therefore benefits from being framed as cost recovery rather than as new taxation. Verification capacity may not scale quickly enough, which argues for early accreditation of domestic bodies. Small and medium producers lack the technical capacity to generate compliant data, and a sector-level support programme is required to prevent consolidation by compliance capability rather than by efficiency. And the mechanism itself continues to evolve, with the omnibus simplification package of 2025 already altering thresholds and penalties, so any Turkish design should be robust to further amendment rather than optimised to the current text.
8. Conclusion
The carbon border mechanism is frequently discussed in Türkiye as an environmental compliance obligation and occasionally as a trade barrier. It is more usefully understood as an industrial policy instrument imposed from outside, which rewards accurate measurement, penalises unmeasured emissions, and confers a deduction only on jurisdictions that price carbon domestically. Türkiye has the legal architecture and none of the financial substance. The sequence is determinate: paid allocation first, because the deduction is available only against a price actually paid; verified installation-level data second, because the default-value gap is where the cost sits; negotiated recognition third, and as part of a package rather than alone.
SOURCES
Regulation (EU) 2023/956 establishing a carbon border adjustment mechanism; Regulation (EU) 2025/2083 (omnibus simplification); Implementing Regulation on default values.
European Commission, Carbon Border Adjustment Mechanism Questions and Answers, updated 27 May 2026.
European Commission, first quarterly CBAM certificate price notice, 7 April 2026.
Republic of Türkiye, Climate Law No. 7552, July 2025.
European Commission and EEAS statements on EU–Türkiye economic relations, High-Level Economic Dialogue, Istanbul, July 2026.
Turkish steel and cement sector export data, TÜİK Foreign Trade Statistics.
Furkan Mahmut Tameroglu