Turkey Success Project

Turkey—Climate Policy Package

Turkey is expected to put into practice the “Climate Policy Package” which involves three policy instruments:

1. Carbon taxation
2. Use of carbon tax revenues for electricity generation from renewables by means of a renewable energy investment fund
3. The promotion gains in energy efficiency by industry

The goal of this Climate Policy Package is to help achieve a 20% decrease in the carbon emission intensity (annual CO2 emission/GDP) of the economy and meet Turkey’s INDC pledge to the Paris Agreement. So far the carbon taxation and tax revenues from renewable energy investments components have not been implemented. However, efforts to promote more energy efficient industries are rapidly proceeding. The government provides support for energy efficiency investments by manufacturing industries with an annual energy consumption of 500 TEP (tons of oil equivalent. To qualify, such industries must pledge to reach a minimum of 20% energy saving per unit product and a maximum return period of 5 years for investment. The incentive includes a value added tax exemption, customs tax exemption, tax reduction, insurance premium support for the employer, and support for interest and assignment of the investment site. The impact of these incentives has not been assessed yet but the actions taken only for industry cannot be enough to meet Turkey’s INDC pledge.

An assessment of Turkey’s economic carbon intensity shows that in order to achieve the 2°C target, the economy’s CO2 emission intensity should be decreased by 60% by 2030. To fully achieve the 2°C target, additional policies and their implementation are required.