Turkey Subsidies

Turkey–Exact amount not available, estimated between US $ 300 million and $ US 1.6 billion

It is difficult to record the actual amount that Turkey spends on fossil fuel subsidies. According to a report published by Oil Change International and 350.org in 2015; Turkish government provides an estimated US$300 million to US$1.6 billion (TRY 683 million to TRY 3.6 billion) per year in fossil fuel producer subsidies. Given the number of subsidies for which data is not available, this estimate is likely highly conservative.

In 2013, Turkey provided some US$500 million in public funding specifically for fossil fuel exploration. In addition, the government provided between $250 and $400 million in support to hard coal enterprises. Turkey’s government-funded coal exploration program has increased coal reserves by over 50% since 2005, opening up 5.8 billion tons of new coal to be mined.

Turkey also receives international public finance to support fossil fuel operations. Between 2007-2015, fossil fuel projects in Turkey have received more than US$5 billion (TRY 11.38 billion). Of this total, over US$1.5 billion (TRY 3.4 billion) went to coal projects.

The 2012 New Investment Incentives Regime provided a higher level of subsidies to oil and coal investments than to renewable energy – encouraging carbon-intensive infrastructure projects over clean energy sources. The elevated incentives represent a potential subsidy for coal alone of US$11.6 billion (TRY 26.4 billion) based on a planned new lignite coal power plant capacity of 14.5 GW for 2012 to 2030.

Government guarantees for loans and power purchase agreements involving fossil fuels represent significant contingent liabilities for the central budget. Such liabilities can ultimately threaten the country’s credit rating and, hence, cost of borrowing.

In fact, the problematic area in Turkey in terms of climate change is not fossil fuel production, it is fossil fuel consumption. While the contribution of Turkey to world fossil fuel production was 1.7%, the consumption share approached 1%. Its share in world oil consumption is 0.8%, in natural gas consumption it is 1.2%.

If Turkey wants to make a contribution in the area of climate change, it should focus on consumption, not only fossil fuel production. However, the cost of increasing energy efficiency is not lower than the incentives given to research and production. The extent to which developed countries will assume responsibility for the aid of developing countries in meeting these costs is still in the bargaining process.

Parallel to this assistance, steps to be taken by Turkey are:

To end government-funded fossil fuel exploration activities
Eliminate tax exemptions for exploration activities
Exclude coal exploration from the Mining Fund’s below-market rate loans
Exclude fossil fuel projects from government guarantees
Set a timeline to phase out all producer fossil fuel subsidies starting with coal. A strategic transition is a must by ensuring new employment opportunities for miners.

Learn More

Acar S., Kitson L. “Türkiye’de Kömür ve Yenilenebilir Enerji Teşvikleri” International Institute for Sustainable Development, 2015
WWF Turkey and Istanbul Policy Center “Low Carbon Development Pathways and Priorities for Turkey”, 2015
Oil Change International and 350.org, “The Cost of Subsidizing Fossil Fuel Production in Turkey: Why Turkey Should Implement the G20 Commitment to Phase Out Fossil Fuel Subsidies” 2015