EU ETS Revision Marks Turning Point for Turkish Exporters' Carbon Costs

The EU Emissions Trading System (ETS) revision draft is set to reshape the trajectory of carbon costs for Turkish exporters in the industrial sector.

Breath of Relief in the EU Carbon Market

■Emission cap reduction rates will be lowered from 4.3% to 3.7% (2031‑2035) and to 1.7% (2036‑2040).

■Carbon allowance supply will tighten more slowly, easing upward price pressure.

■Current ETS price sits at €82/ton, while the CBAM certificate price is set at €75.28/ton.

Cost Outlook for Turkish Exporters

■CBAM certificate expenses will rise more gradually, mirroring the softened ETS price trajectory.

■Sectors such as steel, aluminium, cement, and fertilizer face critical cost implications to maintain EU market competitiveness.

■Obligations under CBAM become effective from 2027, compelling firms to revisit cost planning.

Extension of Free Allocations and Sectoral Impact

■Free carbon allocations, originally slated to end in 2034, are now extended to 2038.

■Sector‑specific benchmarks aim to preserve higher free allocation levels and provide an additional €6 billion in support.

■This extension acts as a buffer against sudden cost shocks for EU producers and, by extension, Turkish exporters.

Strategic Implications and Market Dynamics

■Final adoption after EU Parliament and Council negotiations will directly affect Turkey’s trade cost structure.

■A softer rise in carbon prices could stabilize profitability margins in high‑emission industries.

■Companies must forecast long‑term carbon expenses and align R&D investments accordingly.

Ufuk Tepe – Senior Analyst, Automotive & Heavy Industry: The ETS revision opens a window of opportunity for Turkey’s heavy‑industry exporters. A moderated carbon cost trajectory will help high‑emission players such as battery manufacturers and steel mills preserve their competitive edge. Yet, the extension of free allocations demands strategic planning and carbon‑footprint optimization, forcing firms to manage both cost efficiency and sustainability targets in tandem.