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Turkey to mitigate trade risks under new EU carbon rules

European Bank for Reconstruction and Development commissions study on impact of EU’s new carbon rules on Turkish exporters

A study by the European Bank for Reconstruction and Development (EBRD) found that businesses exporting to Europe could pay extra charges of as much as €777 million when the EC’s Carbon Border Adjustment Mechanism comes into effect, the bank said in a statement on Thursday.

“The EC’s Carbon Border Adjustment Mechanism (CBAM) is a price on imports proportionate to the carbon content of goods imported from countries without adequate carbon pricing in order to guard against carbon leakage,” the bank said.

However, if direct carbon emissions are considered, this would reduce to €399 million.

The mechanism will be phased in gradually and will initially apply only to a selected number of goods.

This means that Turkish exporters of energy-intensive products such as cement, steel and aluminum could face additional steep costs when legislative proposals tabled by the European Commission (EC) under the European Green New Deal come into effect.

Commenting on the study, Sule Kilic, the EBRD deputy head of Turkey, said the EBRD is working on a set of strategic policy choices for the government to mitigate trade risks and foster domestic low-carbon economic development in line with the EU climate policy objectives.

“A reporting system will apply as from 2023 and importers will start paying a financial adjustment in 2026,” the EBRD stated.

Turkey already has a measurement, reporting and verification system that is similar to the EU Emissions Trading System (ETS).

The report suggests that this would put the Turkish economy on an equal footing with similar developments in other OECD countries.

The analysis also warns Turkish companies that in order to access financing, climate consideration and, in particular, climate risk management will be increasingly important.​​​​​​​

Source
AA

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