Turkey set to close EU loophole with its own emissions trading scheme

Turkey is advancing its carbon pricing system, similar to the EU Emissions Trading System (ETS), which will prevent shipowners from using Turkish ports to bypass carbon tariffs.

The ETS imposes a 50% tax on emissions from non-European vessels that call at EU ports. Previously, a ship travelling from Asia could make a stop in Turkey to avoid these fees.

Ports located within 300 nautical miles of EU waters, such as Tangier Med, are already subject to a special ETS amendment. There is also concern about ports that are further away but still relatively close, such as Egypt’s Port.

Turkey’s Asya port was considered a potential option for avoiding ETS fees and has seen a significant increase in transhipment traffic this year. In Q1, container throughput at Asya port rose by 50.9% year on year to 545,000 TEU, while nearby Aliaga saw a 33% increase to 501,800 TEU, and Izmir experienced a 24% rise to 572,800 TEU. This growth was also fueled by EU nearshoring and the Red Sea crisis.

However, if Turkey’s President Erdoğan approves the new carbon pricing system, it will close this loophole, bringing around 10 million tonnes of annual CO2 emissions under regulation.

As a country aspiring to join the EU, Turkey’s parliament is working to align its emissions regulations with those of the EU. While this move might reduce the economic benefits Turkish ports have gained from shipowner tax avoidance, Turkey values its relationship with the EU, one of its largest trading partners, with €96 billion in exports, and has become a key near-shoring destination for EU companies. Turkey’s Minister of Energy and Natural Resources, Alparslan Bayraktor, emphasized the importance of the emissions trading system, stating that it is a crucial tool in the fight against climate change.