The Regulation covers the monitoring, reporting and verification of greenhouse gas emissions arising from the activities listed in ANNEX-1, including energy production and fuel combustion, petroleum refining, coke production, metal ore processing, iron and steel and aluminium production, cement and lime production, glass, ceramics, mineral fibre, pulp, paper and cardboard production, as well as the production of various chemical products, together with the acts and procedures relating to the implementation of the TR ETS. For certain activities, thresholds based on production capacity or total rated thermal input are also prescribe. Accordingly, for the purposes of the Regulation, the determining factor is not the trade name of the company or the general sector in which it operates, but whether the specific installation carries out any of the activities listed in ANNEX-1 and which of the emission categories under the Regulation it satisfies.
Under the Regulation, installations are divided into three categories according to their emission levels:
– Category A installations are those with annual emissions equal to or less than 50,000 tonnes of CO₂ equivalent;
– Category B installations are those with annual emissions exceeding 50,000 tonnes of CO₂ equivalent and equal to or less than 500,000 tonnes of CO₂ equivalent;
– Category C installations are those with annual emissions exceeding 500,000 tonnes of CO₂ equivalent.
The TR ETS covers Category B and Category C installations carrying out the activities listed in ANNEX-1. Accordingly, the principal target group of the Regulation in terms of emissions trading and allowance surrender obligations consists of installations carrying out ANNEX-1 activities and whose annual emissions exceed 50,000 tonnes of CO₂ equivalent.
However, installations belonging to schools, universities, hospitals and defence industry organisations are excluded from the scope of the TR ETS, limited to the activities they perform. Nevertheless, the obligations of such installations to monitor, report and verify greenhouse gas emissions arising from ANNEX-1 activities continue to apply.
B. Greenhouse Gas Emissions Permit
Undertakings falling within the scope of the TR ETS are required to obtain a greenhouse gas emissions permit from the Presidency of Climate Change in order to carry out activities that cause greenhouse gas emissions. As a rule, undertakings operating more than one installation must obtain a separate permit for each installation; where more than one installation is located at the same address, a single permit may be obtained.
A greenhouse gas emissions permit is valid for five years. Undertakings must apply for renewal at least six months before the expiry of the permit. Any change in the activity, nature or operation of the installation, the category of the installation or the permit holder must be notified to the Presidency of Climate Change within thirty days.
C. Allowance System and Undertakings’ Surrender Obligation
Under the Regulation, an “allowance” means the right to emit one tonne of carbon dioxide equivalent greenhouse gas. The TR ETS cap will be determined on the basis of emission intensity and will be announced under the National Allocation Plan to be published in the Official Gazette within sixty days following the deadline for submission of verified emission reports.
Allowances may be issued in the Registry System and offered for sale on the primary market or allocated free of charge. The amount of free allocation will be calculated by taking into account the benchmark value for the relevant sub-installation, the free allocation rate, the sectoral activity factor and the activity level.
Undertakings are required to surrender, through the Registry System by the last business day of november of the compliance year, allowances corresponding to the amount of emissions stated in the verified greenhouse gas emissions reports on an installation basis. Any allowances not surrendered are added to the obligation for the following year, and the sanctions prescribed by the Law are also applied.
D. Monitoring, Reporting and Verification Obligations
Undertakings carrying out the activities listed in ANNEX-1 are required to monitor their greenhouse gas emissions in accordance with a monitoring plan approved by the Presidency of Climate Change. The monitoring plan must be submitted to the Presidency of Climate Change for approval at least six months before the date on which greenhouse gas emissions are first monitored.
Undertakings are required to report to the Presidency of Climate Change, by 30 April each year, their greenhouse gas emissions and activity levels for the preceding calendar year. The greenhouse gas emissions report must be verified before it is submitted to the Presidency of Climate Change. Verification procedures will be carried out by verification bodies accredited in accordance with the principles set forth in the Regulation.
E. Pilot Implementation and Transition Period
The TR ETS will commence with a pilot implementation period. The scope, duration and procedures and principles governing the implementation of the pilot period will be determined by the Carbon Market Board.
Undertakings that will fall within the scope of the TR ETS are required to obtain a greenhouse gas emissions permit within three years from the date on which Climate Law No. 7552 entered into force. During this three-year transition period, such undertakings will, on a one-off basis, be deemed to hold greenhouse gas emissions permits. Where deemed necessary, this period may be extended by up to two years.
Undertakings included in the pilot implementation period are required to submit their initial Monitoring Methodology Plans electronically to the Presidency of Climate Change within two months from the date on which the Regulation entered into force. The Presidency of Climate Change may extend this period by up to six months where deemed necessary.
F. Administrative Sanctions
The Regulation provides that the administrative sanctions prescribed under Climate Law No. 7552 will apply in the event of a breach of the relevant obligations. Where a verified greenhouse gas emissions report is not submitted within the prescribed period, administrative fines ranging from TRY 627,450 to TRY 6,274,500 are stipulated depending on the category of the installation. For undertakings falling within the scope of the TR ETS, these fines will be applied at twice the relevant amount.
For undertakings within the scope of the TR ETS that operate without obtaining a greenhouse gas emissions permit, or continue their operations with an expired or revoked permit, administrative fines ranging from TRY 1,254,900 to TRY 12,549,000 are stipulated depending on the capacity and category of the installation.
G. Conclusion
The Regulation on the Türkiye Emissions Trading System introduces new permit, monitoring, reporting, verification and allowance surrender obligations, particularly for installations carrying out the activities listed in ANNEX-1 and whose annual emissions exceed 50,000 tonnes of CO₂ equivalent. Accordingly, following the entry into force of the Regulation, it is important for undertakings carrying out ANNEX-1 activities to assess, on an installation basis, their emission categories, existing monitoring and reporting processes, and the transition timetable applicable to greenhouse gas emissions permits.