Carbon, just like any other commodity, is being tracked and traded for some time now. Though experienced in the voluntary carbon markets, an institution to steer Turkey through the carbon marketplace is essential for the country to carve out a niche for itself within the new climate regime. A workshop on State’s Vision and Role on Carbon Project Mechanisms was held in Ankara in January to discuss the possible paths Turkey could take to become a major player in global carbon markets during the new climate regime.

Organized in the scope of Capacity Building for Climate Change Management in Turkey project, the workshop featured presentations by UNDP consultants Amit Bando, Malik Amin Aslam as well as legal consultant for carbon projects, Nursel Atar. Both Bando and Aslam who were in Turkey to facilitate the creation of framework for positioning Turkey firmly in the global carbon marketplace, underlined the unique opportunity the country has in being at the right place at the right time and take advantage of existing uncertainties that have come about as a result of the unraveling of the Kyoto Regime.

Attended by approximately 60 participants, the workshop was mainly for public institutions such as Ministry of Energy and Natural Resources, Ministry of Environment and Forestry, Ministry of Agriculture and Rural Affairs, Ministry of Transportation, Ministry of Public Works and Settlement, Ministry of Industry and Trade, Ministry of Foreign Affairs, EU Secretariat General and Undersecretariat of Treasury and for other stakeholders including Union of Chambers and Commodity Exchanges of Turkey (TOBB) and Board of Capital Markets of Turkey. . In his opening speech, Mustafa Şahin, Head of Air Management Department from Ministry of Environment and Forestry, emphasized the need for capacity building in Turkey in terms of carbon trading. Sedat Kadıoğlu, Deputy Undersecretary of the Ministry of Environment and Forestry stressed that there is a need for legislative action in Turkey and he announced that a climate change department has been established within the Ministry including a carbon trading focused division. UNDP Turkey Deputy Resident Representative Ulrika Richardson-Golinski said that carbon trading mechanism creates new opportunities for private sector and creates new jobs. She thanked State Planning Organization (SPO) for providing major funds to the project, , to Ministry of Environment and Forestry for their valuable partnership and also to the Turkish Industrialists’ and Businessmen’s Association (TUSIAD) for their contributions to the project.

What is needed in Turkey?

Volkan Ediger, Energy Advisor to the President of Turkey who was the moderator of the discussion outlined the needs of Turkey in carbon trading as follows:

International expert on carbon markets Amit Bando briefed the participants on carbon projects registry systems and international carbon regulations. Pointing to the fact that only non-Annex I parties are eligible for Clean Development Mechanisms (CDM), which form a staggering 95% of the carbon market. He emphasized that until the new climate regime arrives, CDM market mechanisms can only be used as examples for Turkey since Turkey is an Annex I country and not eligible for the mentioned flexible mechanisms. He also stressed the necessity of a legal support system as operations of carbon markets should rely on transparent and systematic process. Bando also exemplified different types of registry systems and said that the best way to choose a registry system was to have an open platform to share ideas mentioning that most registries in the world are publicly operated.

The lack of a common registry system in Turkey led to a disagreement in the number of carbon projects in the country which highlighted the need for common action as recognized by all participants.

An international expert specializing in carbon finance policy Malik Amin Aslam mainly talked about regulations and designated national authority structures. Previously the State Minister for Environmental Affairs in Pakistan, Aslam gave examples of carbon trading from his own country. When the Prime Minister realized that the revenue from one carbon project was more than the total budget of the Ministry of Agriculture, Aslam decided to establish a committee to work on necessary regulations and mechanisms to be established and headed the committee himself.

Uluslararası Uzmanlar Yeni Ufuklar’ın sorularını yanıtladı:

In expressing their first impressions about the Turkey’s carbon market, Bando and Aslam said they were impressed with the private sector’s proactive approach and knowledge in the field, however, both agreed that more work is needed to ensure the establishment of the required mechanisms in the public sector and the government. According to Bando, the private sector in Turkey is active. He believes that “this is encouraging from a capacity building perspective because it indicates that they don’t really need a lot of help. They also know their issues and their shortcomings and they seem to know the gaps in the system so they’re very specific about what they think is needed to move forward.” On the flipside however, Bando also argues though the government counterparts have a general understanding of carbon-related issues, they need more direction and guidance to create a full-fledged authority in dealing with carbon trading.

An economic expert in the area of clean technologies, Bando explained the various registry systems in the carbon marketplace from which Turkey can take examples. The country’s unique situation where it is listed among developed countries under Annex I of the UNFCCC while being a country which does not have quantified emission reduction commitment, “makes it difficult to identify with any specific set of guidelines”. This difficulty, however, is also identified as one of Turkey’s biggest opportunities in that the country is currently a blank canvas which can learn from the experiences of others. As technical expert Aslam puts it, “The carbon marketplace has been out there for some time and Turkey is in a position to learn from what other countries did and which ones worked and which ones did not”. Instead of “reinventing the wheel”, Turkey which operates in the voluntary carbon market defined by a lack of regulatory drivers, has to take existing guidelines from other countries operating in compliance markets and implement them so as to acquire a stronger standing in the carbon marketplace.

One of the three market-based mechanisms to contribute to emission reduction efforts outlined in the Kyoto Protocol, the Clean Development Mechanism (CDM), may be a guiding model for Turkey in acquiring this position, as Bando suggested during his presentation. The CDM allows emission-reduction (or emission removal) projects in developing countries to earn certified emission reduction (CER) credits, each equivalent to one ton of CO2. CER credits are high in demand as they are four times as valuable as a credit traded in the voluntary credit market. The market is currently dominated by China, India and Brazil and heavily backed by government infrastructure making it comparatively stable against the voluntary carbon markets occupied 70-80% by Turkey.

Given the perplexity of the carbon market, Bando and Aslam agree that UNDP can be most beneficial in orienting the messages through media and outreach campaigns to raise awareness of what is being done in Turkey to strengthen its place in the carbon market. Bando adds “the beneficiaries need to know what kind of a framework or institution is being suggested, what this new structuring will bring and how it will operate”. Secondly, he draws attention to the fact that currently only a limited number of departments within the Ministry of Environment and Forestry and the Ministry of Energy and Natural Resources are involved actively in the process related to the carbon markets but involvement of other ministries such as Foreign Affairs is also vital for awareness activities. Bando stresses the fact that Turkey’s place in the carbon market place is not “merely a climate issue” but a “national issue in terms of growth, employment, accession to the EU and other social and economic issues”.

Similar to a commodities market, carbon trading is a mechanism to regulate the amount of carbon dioxide (CO2) in the atmosphere. The carbon markets go back to the Kyoto Protocolwhich was adopted in 1997 and ratified by over 189 countries and EU, including Turkey. The legally binding protocol is an international agreement linked to the United Nations Framework Convention on Climate Change (UNFCCC). Setting binding targets for 38 industrialized countries and the European community for reducing greenhouse gas (GHG) emissions, the Protocol resulted in the re-evaluation of the consumption of carbon intensive products and services and energy production in terms of energy efficiency. While the more lenient United Nations Framework Convention on Climate Change sets an overall framework for intergovernmental efforts to tackle the challenge posed by climate change,and encourages industrialized countries to stabilize GHG emissions, the Protocol commits them to do so.

Turkey’s carbon efforts may be balanced through Nationally Appropriate Mitigation Actions (NAMAs). Aslam says that a NAMA is “basically a voluntary action where a country decides on its own appropriate mitigation actions and reports them to the UNFCCC”. Turkeys target to increase share of renewables by 2023 in the national energy resources mix would be a good candidate for NAMA.

Carbon trading is here to stay

“The rules of the international climate regime may keep changing however, the instrument of choice would still be carbon trading” concludes Aslam Khan when asked what his predictions are in terms of carbon markets in the future. Outlining the two major uncertainties in Turkey as the lack of regulations to govern carbon trading at the national level, and its special circumstances at the international level, Aslam Khan stresses the vibrancy Turkey brings to voluntary carbon markets and applauds the private sector’s efforts in diving into such ambiguities. Seeing this as an important opportunity, Aslam Khan says that the private sector can cater to uncertainties and make Turkey an important player in the international climate regime.

To view Amit Bando's Carbon Project Registry Systems and International Carbon Market Regulations presentation, please click here.
To view Malik Amin Aslam's presentation CDM & JI Regulations/Project Cycles & DNA Structures please click here.
To view Project Legal Advisor Nursel Atar's presentation on Terms which may affect the Carbon Market in Turkey (Turkish), please click here.
Please click here for State Planning Organization's İzzet Arı's Voluntary Emissions Trading Outcomes presentation.