Paris Climate Agreement and The European Green Deal

The Paris Agreement on climate change miscondining, adaptation and financing was signed in 2015 under the United Nations Framework Convention on Climate Change.

The Paris Climate Agreement, approved by 192 countries, aims to ensure that the temperature rise on earth from the past to the present is reduced to less than 2 degrees Celsius and kept at 1.5 degrees Celsius as much as possible. Because limiting temperature increases to 1.5 degrees Celsius instead of 2 degrees Celsius will significantly reduce the effects caused by climate change.

Within the scope of the fight against climate change, the European Union published the European Green Agreement on 11 December 2019, aiming to provide solutions to climate change that causes serious environmental problems worldwide and to lead the way globally on sustainable green transformation, based on climate and environmental protection.

The European Green Agreement is a new economic growth strategy for the EU’s climate agenda, which includes the goal of neutralizing greenhouse gas emissions across Europe by 2050 and achieving a 55% reduction in greenhouse gas emissions by 2030 compared to 1990; covers various areas of activity such as environment, climate, energy, industry, agriculture, transportation and finance.

The European Green Agreement is a policy document that includes concrete steps and strategies to achieve the eu’s objectives for combating climate change. Within the European Union, such documents are called flexible legal documents and are not directly legally binding. Even if flexible legal rules are not binding on individuals, they have a legal effect in terms of turning these policies set for member states into legally specific measures.

Border Carbon Regulation

Within the scope of the fight against climate change, Turkey has assumed a certain responsibility within the scope of both the international conventions to which it is a party and its national legislation. Turkey was last a party to the Paris Agreement on 6 October 2021. The new order envisaged by the European Green Agreement is of close interest to Turkey’s trade relations with Europe and its economy. Turkey published the Green Reconciliation Action Plan on July 16, 2021, which aims to keep pace with the new order by taking action on climate change.

Carbon regulation at the border regulated under the agreement, expected to come into force in 2023 and planned to be implemented gradually until 2026, is extremely important for Turkey, which has intensive trade relations with the European Union.

A carbon tax is currently in place within the European Union. The carbon tax introduced under the Green Tax Reform is a kind of environmental tax. Accordingly, producers who use fossil fuels are subject to a taxation on the amount of carbon dioxide emissions resulting from the content and burning of fossil fuels. The goal of the states with the carbon tax; Due to the increase in fuel prices of the carbon tax, the result of manufacturers offering more expensive prices to users is to reduce the demand rates and resource usage of consumers, thus minimizing the destruction to nature. In this way, financial arrangements make positive contributions to both the economy and the environment, but also are of great importance in terms of additional income provided to the state.

The Border Carbon Regulation is a regulation that will significantly affect our country. In the first place, the European Commission aims to minimize its carbon footprint in many areas covering the iron and steel, cement, construction, transportation, aluminum and electricity sectors and implements additional measures in line with this goal.

Turkey’s annual greenhouse gas emissions are mainly due to energy production using fossil fuels. Under the European Green Agreement, a carbon-neutral environment should primarily be transitioned to renewable energy generation instead of power plants that use fossil fuels. These innovations in the energy sector will also affect the industry, transportation, construction and agriculture sector.

Turkey exports the vast majority of industrial productions such as steel, cement and iron and steel to European Union countries. Considering carbon pricing, it is inevitable that these sectors, which use coal with high carbon content in their production, will have a significant impact on Turkish trade. Because the European Union has stated that exporters should pay the same prices as the carbon prices paid by local producers. Considering the carbon emissions of coal, the carbon cost of applying carbon at the border to the Turkish sector is quite high.

As of 2020, Turkey has become one of the leading countries in the textile sector. When it comes to the textile industry, the whole process is based on electricity. In this case, considering the carbon emission rate of electricity, the textile sector is one of the sectors that is highly affected by carbon application at the border. In this case, the use of recyclable materials will enable products in the textile sector to become available in other sectors and therefore save energy.

The transportation sector also has an important place within the scope of carbon regulation at the border. Although hybrid and electric vehicle production has increased in recent years worldwide, diesel and gasoline vehicle production is quite common in Turkey. The carbon emission rates of the fuels used in vehicles to the environment are also high. In order to minimize carbon emissions from vehicles and reduce emission levels within the scope of the European Green Agreement and consequently carbon regulation at the border, it aims to increase the contribution of railway and sea transportation in the share of transportation, to carry out alternative fuel use and green port and airport projects.

Environmental regulations and sanctions in Turkey were primarily regulated by the Environmental Law No. 2872 dated 1983 and various secondary legislation. In particular, the Environmental Impact Assessment (EIA) Regulation is the most important of the secondary regulations. We believe that the ANNEX-1 list of EIA Regulations regulating activities with a heavy environmental impact will be revised over time and/or additional obligations will be imposed under the green agreement. Because ANNEX-1 includes refineries, thermal power plants, mines, cement and chemical plants with high negative effects on the environment. We believe that the environmental legislation that will be subject to the industrial organizations covered by ANNEX-1 will impose new obligations within the scope of the Green Agreement.

The European Green Agreement is binding for the countries of the European Union and is not binding on Turkey. However, with the application of Border Carbon Regulation (SKD); As a country that makes close to 50% of its exports to Europe, it is very clear that we will be adversely affected by this practice.

In a nutshell; If the Turkish Industrialist and Exporter does not move forward with its green transformation already within the scope of the European Green Agreement, both its exports to Europe will be negatively affected and it will soon experience difficulties within the scope of Turkish legal legislation.