In the Paris Agreement, Turkey pledged to reduce greenhouse gas (GHG) emissions by 21% by 2030 relative to business-as-usual (BAU). However, Turkey relies heavily on imported energy and fossil-intensive power generation. And despite significant wind and solar energy potential, only 5.1% of its total power is generated by wind and solar installations. Finally, although two nuclear power stations are planned, no nuclear capacity currently exists.

This study is based on an expectation that to fulfill its Paris Agreement pledge, Turkey will likely need to reduce its reliance on fossil-based energy and make additional investments in low-carbon energy sources—moves that may impact the nation’s GDP, electricity generation profiles and resulting carbon prices. To fully assess these impacts, the researchers develop a computable general equilibrium (CGE) model of the Turkish economy that combines macroeconomic representation of non-electric sectors with a detailed representation of the electricity sector. They analyze several scenarios to assess the impact of an emission trading scheme in Turkey: one including the planned nuclear development and renewable subsidy scheme (BAU), the other in which no nuclear technology is allowed (NoN).

The assessment shows that in 2030, without an emissions trading policy, the primary energy mix will consist mainly of oil, natural gas and coal. Under an emission trading scheme, however, coal-fired power generation vanishes by 2030 in both BAU and NoN due to the high cost of carbon. With nuclear (BAU), GHG emissions are 3.1% lower than NoN due to the resulting energy mix, allowing for a lower carbon price ($50/tCO₂ in BAU compared to $70/tCO₂ in NoN). These results suggest that fulfillment of Turkey’s Paris Agreement pledge may be possible at a modest economic cost of about 0.8–1% of GDP by 2030.