Who foots the bill for carbon emissions?

Last week, on the occasion of COP31, I noted that the climate struggle has ceased to be merely an environmental issue and is now reshaping the rules of industry, trade and global competition. One of the most concrete examples of this transformation is the European Union's Carbon Border Adjustment Mechanism (CBAM).

The system is quite simple: the EU applies the carbon cost it imposes on its own industrialists to certain imported products as well. Carbon emissions generated during production in areas such as iron and steel, aluminium, cement, fertiliser, electricity and hydrogen are priced. The financial obligation that began as of 2026 will gradually become heavier in the coming years.

So what does this regulation mean for Türkiye?

In 2025 we exported approximately 117 billion dollars to the European Union. Our trade volume with this market, which accounts for close to 43 percent of our total exports, reached 233 billion dollars. Moreover, we sell to Europe not only final products but also the intermediate goods that feed its industry's production chain.

Therefore, for us the carbon regulation is not an environmental policy to be watched from a distance but an economic necessity that directly concerns the competitiveness of our exports.

While the costs of our companies engaged in carbon-intensive production will rise, those able to produce with low emissions will gain a significant competitive advantage. Furthermore, the possibility that the carbon price unpaid in our country will be collected at the EU border shows that the matter is not limited to company balance sheets.

Türkiye is not unprepared for this transformation.

The Climate Law adopted in 2025 established the legal basis for the national Emissions Trading System. This opened the way for pricing carbon in Türkiye and for using the revenues obtained for the green transition. However, the system needs to be operated effectively and the transformation costs of our industrialists need to be managed.

Developments in energy demonstrate our transformation capacity.

Our installed electricity capacity, which was around 32 thousand megawatts in 2002, exceeded 127 thousand megawatts as of September 2026. Of this, 80 thousand megawatts—that is, 63.1 percent—comes from renewable energy sources. The total installed capacity of solar and wind has reached 43,762 megawatts.

Of course, installed capacity must not be confused with actual generation. In 2025, approximately 44.5 percent of our electricity generation was met from hydroelectric, solar, wind and geothermal sources. Coal's share, meanwhile, is still at the 33 percent level.

Electrification in transport is also gaining speed. While around 192 thousand electric cars were sold in 2025, the share of electric vehicles in the car market reached 17.7 percent. In October 2026 this rate stood at 22.3 percent.

All of these are important advances. But the cleaning of energy generation, the transformation of industry and the spread of electrification require long-term and costly investments. And here is precisely where the question of financing comes before us.

Everyone paying the same price in the climate struggle does not produce a fair outcome for everyone.

Today, developing economies are expected to decarbonise their industries, renew their energy infrastructure and invest in new technologies. Yet these countries do not possess the same capital accumulation, technology and low-cost financing opportunities as advanced economies.

Moreover, the matter has a historical dimension that must not be overlooked.

Europe ran its factories by burning coal for roughly two centuries from the Industrial Revolution onward, built its railways and grew its industry. With the cheap energy it obtained from fossil fuels it increased its prosperity, achieved capital accumulation and laid the foundations of its present technological superiority.

Now, however, it tells countries that are only at the beginning or in the middle of the same development journey that they must pay the price of carbon.

Of course, fighting climate change is our shared responsibility. But shared responsibility does not mean that historical responsibilities are equal.

For those who grew rich on coal yesterday to load the cost of development onto others today through carbon does not create a fair climate order.

The success of the climate struggle lies, before setting the price of carbon, in the answer to be given to the question of who will share the cost of the transformation, and how.