The primary carbon market is regulated by Articles 11 to 17 of the Draft Regulation. Allowances are determined annually and tendered. The minimum tender bid size is one lot which corresponds to 500 allowances; one allowance corresponds to one tonne of carbon dioxide and the equivalent in greenhouse gas emissions. The Market Operator will act as the sole seller and market participants will only be able to submit buy-side bids.
The secondary carbon market is regulated under Articles 18 to 25 of the Draft Regulation. In spot carbon markets, contracts are opened for trading by the Market Operator and Market participants may submit buy and/or sell offers. A sell offer up to the sum of allowances in the IKS and allowances purchased in the spot carbon market in the same session is allowed. The minimum size of a buy or sell offer is one lot (where one lot is equal to 1000 allowances).
Transactions in the primary and secondary carbon markets are conducted through the Emissions Trading Market Management System.
The Draft Regulation also regulates financial features of the carbon markets. Article 29 requires market participants to provide collateral to ensure cash flows in the event of a failure to perform their obligations, and to ensure that creditors are secured in the event that market participants fail to make payments on time.
Launch of the Carbon Market Development Project
The Türkiye Carbon Market Development Project ("Carbon Market Project"), which is included in the World Bank's Implementation Programme and is the first of its type, was officially launched on 30 April 2024. Its objective is to contribute to the achievement of net zero emissions by 2053 and to the use of carbon markets in line with climate objectives. It also aims to establish a national ETS thereby forming a strong link with the Draft Regulation. With regard to voluntary carbon markets, the Carbon Market Project aims to contribute to the establishment of national carbon crediting and offsetting systems, the acquisition of carbon credits, and creation of a carbon markets strategy. It is anticipated that implementation of the Carbon Market Project will accelerate the Draft Regulation's entry into force.
Conclusion
The finalisation and entry into force of the Draft Regulation and the active operation of carbon markets will be an important tool in Türkiye's fight against climate change and the reduction of greenhouse gas emissions.
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