COP31 in Antalya: Will Companies in Turkey Pay for Carbon Twice?

Key facts at a glance

What does COP31 change for companies in Turkey — and what does it not?

COP31, held in Antalya from 9 to 20 November 2026, is a UN negotiating conference. It does not amend Turkish tax law, the Turkey ETS Regulation or the EU CBAM Regulation. What it changes is attention: as host, Turkey showcases its new carbon market, and EU buyers, lenders and auditors will ask Turkish suppliers for verified carbon data.

The arrangement for this COP is unusual. Turkey hosts the conference and holds the COP Presidency, with Murat Kurum, Minister of Environment, Urbanisation and Climate Change, as COP31 President. Australia’s Chris Bowen chairs the negotiations as President of Negotiations. Heads of state meet at the World Leaders’ Summit on 11–12 November. The agenda is global — national climate targets, adaptation and a just transition — and its outcomes reach company accounts only slowly, through future legislation.

The rules that reach a 2027 budget were all in force before the first delegate arrived:

• Climate Law No. 7552 (Official Gazette No. 32951, 9 July 2025) — the legal basis of the Turkey ETS and of its administrative fines (Article 14).
• Turkey ETS Regulation (Official Gazette No. 33353, 27 August 2026) — scope, permits, free allocation, surrender and reporting deadlines.
• EPDK regulation on operating the ETS market (Official Gazette No. 33407, 21 October 2026) — EPİAŞ auctions and spot market, registry accounts, collateral and the supplementary allowance price mechanism.
• EU CBAM Regulation (EU) 2023/956, as simplified by Regulation (EU) 2025/2083, with its implementing regulations on default values and the free-allocation adjustment.

Turkey ETS vs EU CBAM: which one costs your company money first?

For most companies in Turkey, the EU CBAM costs money first. Turkey’s ETS pilot makes 2026 a reporting-only year and allocates 100% of benchmark-based allowances for 2027, with the first surrender due in November 2028. The EU CBAM already applies to goods imported in 2026, and EU importers start buying those certificates on 1 February 2027.

Two consequences are easy to miss. First, the systems use different yardsticks. In the Turkish pilot, free allocation for most sectors is measured against a benchmark calculated as the weighted average of covered Turkish installations; electricity uses plant-specific benchmarks based on each plant’s emissions intensity over the past five years. The EU CBAM uses its own CBAM benchmarks. A plant can therefore hold surplus allowances at home and still face a large CBAM bill in the EU.

Second, the legal obligation and the economic cost sit in different places. The CBAM obligation belongs to the EU declarant, but the declarant will price it into the purchase price, ask for a contractual recharge or move volume to a supplier with better data. For a Turkish exporter, CBAM is a revenue and margin issue before it is a compliance issue.

Will you pay twice? How the CBAM “carbon price paid” deduction treats Turkish carbon costs

Article 9 of Regulation (EU) 2023/956 lets the EU declarant reduce the CBAM certificates it surrenders by the carbon price effectively paid in the country of origin, net of rebates and compensation. In Turkey’s pilot, allowances are allocated 100% free, so most plants will have little or no price effectively paid. The 2027 risk is not double payment; it is paying CBAM with nothing to deduct.

Simplified. The free-allocation adjustment follows Implementing Regulation (EU) 2025/2620; the CBAM factor is 97.5% for 2026 and 95% for 2027, falling to zero in 2034.

What do the Commission’s draft rules on carbon price paid require?

The Commission published draft implementing rules on 13 May 2026. Under that draft:

• the carbon price must come from a binding mechanism, and rebates or compensation reduce the price taken into account;
• a claim based on the price actually paid needs a carbon price report certified by an independent, accredited person — a self-declaration is not enough;
• where embedded emissions are declared on default values, only Commission default carbon prices for the country can be used;
• international credits under Article 6 of the Paris Agreement count only up to 10%;
• once adopted, the rules apply retroactively from 1 January 2026.

The text was scheduled for a Member State vote in September 2026. Check the final version in the Official Journal of the EU before relying on any of these points.

Turkey’s supplementary allowance price mechanism: a door, not a guarantee

The EPDK market regulation contains a transitional tool — the Tamamlayıcı Tahsisat Fiyatı Mekanizması, or supplementary allowance price mechanism. Participants may request allowances equal to their verified 2026 emissions at a supplementary price; those allowances are retired and do not count toward the surrender obligation. According to the outcomes of the Carbon Market Board’s first meeting, announced on 3 September 2026, the mechanism takes effect in 2027 for 2026 emissions, and commentators, including the International Carbon Action Partnership, note that it could help exporters show a carbon cost paid at home.

Whether a voluntary payment of this kind satisfies the EU’s “binding mechanism” and “effectively paid” tests is, as of 2 November 2026, an open question. The answer decides whether the payment reduces a customer’s CBAM bill or is simply an additional cost.

Actual emissions vs default values: the cost lever a Turkish supplier controls

When an EU declarant cannot obtain verified installation data, it must use the Commission’s default values, which carry a mark-up of 10% in 2026, 20% in 2027 and 30% from 2028 for most sectors. Because the free-allocation adjustment is calculated from CBAM benchmarks, every tonne of CO₂e declared above the benchmark is payable in full — from the first year.

The figure most often quoted — “only 2.5% of emissions is payable in 2026” — holds only for goods produced exactly at the CBAM benchmark. Above the benchmark, the excess is not reduced by the CBAM factor at all. The simplified example below shows why the gap matters even in 2026.

The difference — roughly €151,000 on one product line in the first year — comes from the 0.20 tCO₂e per tonne that sits above the benchmark. On default values the declared intensity is usually higher still for an efficient plant, because defaults are set conservatively and carry the mark-up. From 2028 the CBAM factor falls quickly (90% in 2028, 77.5% in 2029, 51.5% in 2030), so the payable share of the benchmark itself grows every year.

What does the EU declarant need from the Turkish operator?

• Embedded emissions per product and CN code, calculated under the EU methodology (Implementing Regulation (EU) 2025/2547), including precursors bought from other mills or smelters.
• Verification by an accredited verifier; verifiers have been able to register in the CBAM Registry since 1 September 2026.
• A certified carbon price report, if any carbon price was effectively paid in Turkey.
• A delivery date that lets the declarant file by 30 September 2027 — in practice, well before the summer.

The 2026–2028 carbon calendar for companies in Turkey

Between November 2026 and November 2028, a company in Turkey that exports CBAM goods faces more than ten dated carbon events. The three that move cash are 1 February 2027 (EU certificate sales open), 30 September 2027 (first EU CBAM surrender) and the last business day of November 2028 (first Turkish allowance surrender).

What the carbon calendar means for your books: accounting, VAT, corporate tax and transfer pricing

From 2027, carbon in Turkey has a price, an invoice, VAT, collateral and a deadline, which makes it an accounting and tax item, not only an environmental one. Allowances need a documented accounting policy, EPİAŞ trades raise VAT and liquidity questions, ETS costs raise corporate-tax timing questions, and the CBAM cost your EU customer pays comes back through price or intercompany terms.

How should a Turkish company account for carbon allowances?

No IFRS standard deals specifically with emission allowances, so each group adopts and documents a policy — usually treating allowances as intangible assets (IAS 38) or inventory (IAS 2), with a provision for the surrender obligation (IAS 37). In Turkey that group policy must be reconciled with the valuation rules of the Tax Procedure Law (VUK) used in the statutory books, especially for allowances received free of charge during the pilot. We are not aware of a ruling or circular from the Turkish Revenue Administration (GİB) specifically on emission allowances as of 2 November 2026.

Is VAT charged on carbon allowance trades in Turkey?

The EPDK market regulation adds the VAT rate to trade value and fees in its collateral calculation and requires secondary-market sellers to invoice EPİAŞ, which points to VAT applying to allowance trades. Collateral is posted in cash, eligible electronic letters of guarantee or debt instruments; allowances themselves cannot be used as collateral. Free allocation and VAT recovery on purchases still need a documented position.

Are ETS costs deductible for Turkish corporate tax?

Costs incurred to earn and maintain business income are deductible in principle (Income Tax Law No. 193, Article 40(1), applied to companies through Corporate Tax Law No. 5520, Article 6). The open questions are timing — purchase, emission or surrender — the tax base of free allowances and any gain on their sale. Administrative fines under the Climate Law are not deductible (Corporate Tax Law, Article 11(1)(d)).

How do CBAM costs come back to a Turkish exporter?

Through one of two routes: a lower price or a separate recharge. The route changes the Turkish analysis. A price reduction adjusts revenue; a separate charge from an EU party can raise questions of reverse-charge VAT (VAT Law No. 3065, Article 9) and corporate withholding on payments abroad (Corporate Tax Law, Article 30). Decide the route in the 2027 contracts, not after the first invoice arrives.

Who bears CBAM inside a group?

Where a Turkish subsidiary sells to an EU group company that acts as CBAM declarant, the intercompany price and the allocation of CBAM, verification and data costs must follow the arm’s length principle (Corporate Tax Law, Article 13). If the EU entity bears the CBAM cost while the Turkish entity’s price is unchanged, the transfer pricing file needs to explain why. Groups raising green or sustainability-linked finance face a separate test under the Turkey Green Taxonomy Regulation (Official Gazette No. 33380, 24 September 2026) — see our briefing on Turkey’s Green Finance Strategy 2026–2029.

What happens if…? Eight questions finance teams ask

The costliest carbon failures for companies in Turkey are procedural: a missed 30 April report, an unsurrendered allowance, an EU customer forced onto default values, or a DDP contract that makes the Turkish exporter the EU importer. Each has a defined consequence under Climate Law No. 7552, the Turkey ETS Regulation or the EU CBAM Regulation.

What happens if our Turkish plant misses the 30 April verified-report deadline?

Article 14 of Climate Law No. 7552 fines late submission of a verified emissions report — TRY 627,450 to 6,274,500 for 2026 under Communiqué 2026/1 — and doubles the fine for installations in the ETS. During the pilot, the Law reduces administrative fines by 80%. Separately, the EPDK regulation blocks a participant that has not filed its verified report from trading allowances in its registry account, except to meet its surrender obligation.

What happens if we do not surrender enough Turkish allowances?

For each allowance not surrendered, the Climate Law imposes a fine equal to twice the higher of the weighted-average primary-market and secondary-market prices over the last three months of the year concerned, and the shortfall still has to be surrendered in the following year (Turkey ETS Regulation, Art. 16(2)). An operator that meets less than 80% of its obligation in three consecutive years has its emissions permit cancelled, and a new permit cannot be issued for three to six months.

What happens if our EU customer uses default values instead of our data?

The customer declares the Commission’s default intensity for the product and country of origin, including the mark-up of 10% in 2026, 20% in 2027 and 30% from 2028 for most sectors. Under the May 2026 draft, it could then deduct a carbon price only by reference to the Commission’s default carbon prices. Expect the higher cost in the next price negotiation — or a request to switch to a supplier that provides verified data.

What happens if our EU customer imports less than 50 tonnes a year?

An importer whose CBAM goods do not exceed 50 tonnes of net mass in a calendar year is exempt from CBAM obligations; the exemption does not apply to electricity or hydrogen. If the threshold is exceeded during the year, the obligations cover all of that year’s imports, so smaller buyers still need data in case volumes grow.

What happens if we sell DDP and are the importer of record in the EU?

A Turkish company acting as importer is not established in a Member State, so it must use an indirect customs representative, which must hold authorised CBAM declarant status and takes on the CBAM obligations for those goods. The representative will charge for that liability. Review Incoterms customer by customer: DAP or FCA terms move import clearance, and with it the CBAM obligation, to the buyer.

What happens if our installation emits less than 50,000 tCO₂e a year?

A Category A installation is outside the trading scope of the Turkey ETS but remains subject to greenhouse gas monitoring and reporting rules. More importantly, if it makes CBAM goods, its EU customers still need product-level embedded-emissions data for every year in which they exceed the 50-tonne threshold.

What happens if the EU does not recognise any Turkish carbon price?

The EU declarant then surrenders the full number of certificates after the free-allocation adjustment, with no Article 9 reduction, and any Turkish carbon payment remains a purely domestic cost. In 2026–2027 the difference is limited because little is paid in Turkey; from 2028, as the CBAM factor falls and the Turkish pilot gives way to the first implementation period, recognition becomes material.

What happens after the pilot ends in 2027?

The Climate Change Presidency has described a first implementation period from 2028 to 2035. The free-allocation path, the role of auctions and the use of carbon credits after the pilot are for the Carbon Market Board to set and had not been published as of 2 November 2026. Budget 2028 with scenarios, not a single number.

Illustrative case analyses: where the obvious answer fails

Composite, anonymised fact patterns based on common structures of foreign-owned exporters in Turkey. They illustrate the analysis; they are not records of a specific client and do not predict the result in your case.

Turkey vs other production bases: does moving production change the carbon bill?

Moving production from Turkey to another non-EU country does not remove the EU CBAM; it changes only the embedded emissions and any carbon price effectively paid. Goods originating in Iceland, Liechtenstein, Norway and Switzerland, which apply the EU ETS or a linked system, are outside the EU CBAM. Producers inside the EU pay the EU ETS directly.

For a group with a Turkish plant, the practical question is therefore not where to produce but how clean, and how well documented, the Turkish production is — and how the CBAM cost is shared in contracts.

What drives the carbon cost — and the cost of getting the finance side right

Seven variables drive the 2027 carbon bill of a company in Turkey: export tonnes by CN code, actual versus default intensity, the gap to the CBAM benchmark, the CBAM factor for the year, the EU certificate price, the Turkish allowance position and the contract that decides who pays. None of them is set at COP31, and most can be measured now.

What decides the scope of our review?

We do not publish fees. The scope — and the fee confirmed privately after a paid scoping call — depends on the number of Turkish installations and legal entities, the number of CN codes and EU or UK customers, whether verified emissions data already exists, intercompany flows and transfer pricing documentation, the Incoterms and customs-representative arrangements, and whether a ruling request (özelge) to the Revenue Administration is advisable on VAT or corporate-tax treatment.

A 90-day checklist for November 2026 to January 2027

Before 31 January 2027, a company in Turkey exporting CBAM goods should know its installation category, its 2026 EU and UK sales by CN code and declarant, whether customers will declare actual or default values, and how allowances, VAT and CBAM recharges will be booked — because EU certificate purchases begin on 1 February 2027.

1. Confirm each Turkish installation’s category (A, B or C), pilot status and monitoring methodology plan filing.
2. List 2026 EU and UK sales by CN code, customer, Incoterm and customs declarant.
3. Ask each EU customer whether it exceeds 50 tonnes and whether it will declare actual or default values.
4. Commission product-level embedded-emissions data, including precursors, verified by an accredited verifier.
5. Book verification capacity for the 30 April 2027 Turkish report; it relies on the same data.
6. Model 2026 CBAM exposure with the published Q1–Q3 prices and a Q4 assumption, using a zero Article 9 deduction as the base case.
7. Adopt an accounting policy for allowances under IFRS and reconcile it with VUK before the 2026 year-end close.
8. Document VAT and corporate-tax positions for allowance trades and CBAM recharges; consider a ruling request where amounts are material.
9. Update intercompany agreements and transfer pricing files for who bears CBAM, verification and data costs.
10. Prepare a board paper on the supplementary allowance price mechanism for 2026 emissions, to be decided once the EU rules on carbon price paid are final.

Frequently asked questions

Sources and legal references

Turkey

• Climate Law No. 7552 (İklim Kanunu), Official Gazette No. 32951, 9 July 2025 — mevzuat.gov.tr
• Turkey ETS Regulation (Türkiye Emisyon Ticaret Sistemi Yönetmeliği), Official Gazette No. 33353, 27 August 2026 — resmigazete.gov.tr
• EPDK Regulation on Operating the Turkey ETS Market (Türkiye Emisyon Ticaret Sistemi Piyasasının İşletilmesine İlişkin Yönetmelik), Official Gazette No. 33407, 21 October 2026 — resmigazete.gov.tr
• Communiqué 2026/1 on administrative fines under Climate Law No. 7552, Official Gazette No. 33120, 27 December 2025 — resmigazete.gov.tr
• Turkey Green Taxonomy Regulation (Türkiye Yeşil Taksonomisi Yönetmeliği), Official Gazette No. 33380, 24 September 2026 — resmigazete.gov.tr
• Corporate Tax Law No. 5520, Articles 6, 11, 13 and 30 — mevzuat.gov.tr
• Income Tax Law No. 193, Article 40 — mevzuat.gov.tr
• VAT Law No. 3065, Article 9 — mevzuat.gov.tr
• Turkish Revenue Administration (GİB), legislation and rulings — gib.gov.tr
• Directorate of Climate Change (İklim Değişikliği Başkanlığı) — iklim.gov.tr

European Union

• Regulation (EU) 2023/956 establishing a carbon border adjustment mechanism (Articles 9, 22, 26 and 31; Annexes I and III) — EUR-Lex
• Regulation (EU) 2025/2083 simplifying the CBAM (de minimis threshold, certificate sales, declaration deadline) — EUR-Lex
• Implementing Regulation (EU) 2025/2620 on the free-allocation adjustment — EUR-Lex
• Implementing Regulation (EU) 2025/2621 on default values and mark-ups — EUR-Lex
• Implementing Regulation (EU) 2025/2547 on the calculation of embedded emissions — EUR-Lex
• European Commission, price of CBAM certificates — taxation-customs.ec.europa.eu

United Kingdom and COP31

• HM Government, Carbon Border Adjustment Mechanism (CBAM) policy summary — gov.uk
• UNFCCC, COP31 — unfccc.int
• Secondary source for the Carbon Market Board’s pilot design: International Carbon Action Partnership, report on the 3 September 2026 announcement — icapcarbonaction.com

Disclaimer. This article is provided for general information and does not constitute legal, tax, accounting or investment advice. Turkey ETS parameters are still being set by the Carbon Market Board and EPDK, the EU rules on carbon price paid were in draft at the time of writing, and the treatment depends on each company’s facts, contracts and data. Professional advice should be obtained before acting.