The Regulation on the Operation of the Türkiye Emissions Trading System Market (the “Regulation”) was published in the Official Gazette dated 21 October 2026 and numbered 33407. Prepared by the Energy Market Regulatory Authority (“EPDK”), the Regulation sets out the principles governing the registration, trading, collateralisation and financial settlement of allowances under the Türkiye Emissions Trading System (“ETS”).
Market structure and institutional responsibilities
Under the Regulation, Enerji Piyasaları İşletme Anonim Şirketi (“EPİAŞ”) is designated as the market operator. EPİAŞ operates the primary market, where allowances are distributed through auctions, and the secondary markets, where allowances are traded among participants. It also acts as the central counterparty in these markets, assuming the role of seller to each buyer and buyer to each seller. Collateral management and cash clearing are carried out through the central settlement institution.
An allowance is a fungible, transferable right issued in book-entry form, representing the right to emit one tonne of carbon dioxide equivalent of greenhouse gases over a specified period. Transactions such as the issuance, holding, transfer and retirement of allowances are tracked through the Transaction Registry System (“İKS”) established by EPİAŞ. Market transactions are carried out through the ETS Market Management System (“ETSPYS”), which also incorporates the İKS.
Opening an İKS account and participating in the market
Operators covered by the ETS must open an account in the İKS. Opening an account requires the execution of the central settlement institution participant agreement and the İKS participation agreement, and the submission of an application to EPİAŞ through ETSPYS, together with the other required information and documents. In addition to holding an İKS account, participants must execute the relevant market participation agreement to trade in the primary market or the spot allowance market.
Acquisition and trading of allowances
Free allowances are transferred to installation accounts following completion of the application and approval procedures with the Climate Change Presidency (“İDB”). These allowances may be transferred between installations of the same market participant or sold through bilateral agreements or the secondary markets.
In the primary market, allowances are offered for sale through auctions in accordance with the schedule determined by the İDB. The auction schedule is announced on EPİAŞ’s website within fifteen business days following publication of the National Allocation Plan. The minimum bid size is one lot, corresponding to 100 allowances. If the total volume of bids submitted is lower than the volume of allowances offered at the auction, the auction is cancelled.
In normal primary market auctions, the price of the last buy bid wholly or partially matched against the allowances offered is the Allowance Reference Price (“TRF”). The amount payable by each participant for its matched bids is calculated at the TRF, irrespective of its own bid price.
The Regulation also provides for additional reserve auctions for operators meeting the specific conditions set out in the relevant ETS legislation. Allowances acquired from the additional reserve may be used solely to fulfil surrender obligations, pursuant to a decision of the Carbon Market Board and up to the allowance shortfall of the installations requesting them. Allowances acquired through an additional reserve auction are transferred directly to the retirement account of the relevant installation.
At market participants’ request, the Supplementary Allowance Price Mechanism may also be applied in the primary market in respect of allowances they are required to surrender. The mechanism operates through auctions designated by the İDB. The matching price for each participant is its own buy bid price; no TRF is calculated for these auctions. Allowances acquired are transferred directly to the relevant installation’s retirement account.
In the secondary markets operated by EPİAŞ, market participants may trade allowances using the continuous trading method. The secondary markets comprise the spot allowance market and, if established, the forward allowance market.
Collateral and payment obligations
Market participants must provide collateral to ensure the continuity of cash flows among market participants and to protect other market participants with receivables.
Turkish lira, US dollars or euros; final and open-ended electronic letters of guarantee that meet certain conditions; and the other government debt instruments and lease certificates listed in the Regulation may be accepted as collateral. Allowances may not be made subject to collateral agreements.
Market participants’ net invoiced amounts payable arising from settlement must be paid by the second business day following the date of service of the invoice. Default interest applies to overdue amounts. If the debt is not paid within the prescribed period and cannot be covered by the account balances and Turkish lira cash collateral specified in the Regulation, the participant is deemed to be in invoice default without further notice; recourse is then made to its other collateral, and it is barred from trading in the primary and secondary markets for the duration of the default.
Market participants may submit objections to EPİAŞ regarding settlement statements and/or invoices, specifying the grounds for their objections. These objections do not relieve participants of their payment obligations. A participant that does not object within the prescribed period is deemed to have accepted the trade confirmation in its entirety. Upon expiry of the objection period, trade confirmations acquire contractual status in respect of the prices and quantities they contain.
Transitional arrangements
Until the İKS, the primary market and the spot allowance market become operational, a simulation will be conducted through ETSPYS without giving rise to any delivery, invoicing or payment obligations.
A special transitional provision applies to emissions for the 2026 system year. A supplementary allowance price may be applied where market participants request a quantity of allowances equivalent to their installations’ verified greenhouse gas emissions. The İDB will determine matters relating to applications, allowance issuance and auction dates. Each participant’s own buy bid price applies, and no TRF is calculated. Allowances acquired through these auctions are transferred directly to the relevant installation’s retirement account and are not taken into account in fulfilling the surrender obligation.
The Regulation has entered into force on 21 October 2026.
