Key Highlights: Country Climate and Development Report for Türkiye

Although the increase in Türkiye's greenhouse gas (GHG) emissions has been slower than economic growth and its per capita emissions are lower than in the OECD or EU countries, there is a strong case for a forceful mitigation agenda in Türkiye. The energy sector-which includes the power, transport, building, and industrial sectors-is the country's single largest contributor to GHG emissions, accounting for three-quarters of total emissions. Türkiye's power, transport, and agriculture sectors are less carbon intensive than the EU average-partly due to the large penetration of renewable energy in Türkiye's power system and low motorization rates. However, coal dependency is high and set to intensify further under current investment plans. And the building sector (residential and non-residential) is less energy efficient than the EU average. Manufacturing is more carbon intensive than the EU average, exposing Türkiye to risks if the EU introduces the Carbon Border Adjustment Mechanism (CBAM).

Türkiye has made ambitious climate change commitments, ratifying the Paris Agreement in October 2021, and committing to net zero emissions by 2053. The country is establishing new institutional arrangements for climate change issues, including the recently formed Ministry of Environment, Urbanization and Climate Change and the updating of the National Climate Change Action Plan. The intensification of climate-related events in recent years-including floods, forest fires, and sea pollution-and the potential implications of the European Union (EU) Green Deal for Türkiye's economy, have also contributed to the urgency of the climate change agenda in the country. In parallel, the war in Ukraine and attendant energy supply disruptions and price increases highlight risks for countries like Türkiye that are dependent on fossil fuel imports, reemphasizing the urgency of climate action in support of energy security and affordability.

The World Bank Group's Country Climate and Development Report (CCDR) on Türkiye explores opportunities and trade-offs for aligning the country's development goals with its recent commitments on climate change. It explores how climate action would affect Türkiye's growth and development path and can contribute to achieving the country's development objectives, help capture opportunities offered by green technologies and sectors, protect the economy against longer-term risks, such as large-scale disasters or carbon lock-in as the world transitions towards reduced greenhouse gas emissions, and support a just and inclusive transition.

Resilient Net Zero Pathway

A resilient and net zero development pathway (RNZP) can help Türkiye achieve its development and climate objectives but it implies a significant departure from current trends and important policy changes. While there are multiple possible paths for aligning Türkiye's development and climate objectives, the CCDR on Türkiye provides an illustrative RNZP that combines adaptation and resilience actions with the 2053 net zero pledge. The RNZP is based on two main principles:

• Boosting resilience and adaptation requires a whole-of-economy strategy and a supportive socioeconomic environment. The RNZP prioritizes supporting adaptation in the private sector by ensuring access to information, technology, and finance. It includes actions to enhance the resilience of critical public assets and services, agriculture systems and land use plans, water resource management, and financial resilience (including insurance and adaptive social protection and integration of climate and disaster risks in macroeconomic and fiscal policies).
• Türkiye can achieve its 2053 net zero emissions target but this will require major changes in many economic sectors. The transformation includes deep decarbonization of the power sector; a combination of energy efficiency and electrification in buildings; modal shift, energy efficiency, and electrification in transport; a change in current practices to maximize carbon sequestration from forest landscapes; and emissions reduction efforts in the rest of the economy (industries, agriculture, waste management, and water management).

The RNZP emphasizes several priority areas for boosting economywide resilience and adaptation. These include the need to facilitate the adaptation of firms and people, for example by expanding public provision of climate and disaster risk information; adapting land use plans and protecting critical public assets and services, which will include strengthening resilience to severe and growing water-related risks; and mainstreaming adaptation, resilience, and disaster risk finance in macro-fiscal policies, including by assessing the economic costs of climate change and disasters, and reflecting contingent liabilities in fiscal policies, budget allocation, and public investment.

In the RNZP, emissions from the power sector are significantly reduced by 2040, despite an increase in demand from electrification of end-use sectors. Even without a carbon constraint, new coal power plants are neither needed nor the least-cost option to meet growing electricity demand. Instead, Türkiye can achieve energy security through an accelerated pace of least-cost investments in domestic solar and wind-building on the track record of tripling renewable energy capacity in the last decade-and investing in energy efficiency, battery and pumped storage, geothermal, and gas generation with carbon capture and storage (and the completion of the nuclear plant under construction). This would enable the country to meet a doubling of energy demand by 2053 to fuel its growth ambition, with the added benefit of lowering emissions and improving energy security by reducing reliance on imported coal, gas, and oil.

By enabling Türkiye to achieve net zero emissions with significant residual emissions in hard-to-abate sectors, negative emissions from forest landscapes play a key role in the RNZP, but they also create risks. Forest carbon storage is vulnerable to economic and climatic factors, such as forest fires. A robust strategy toward net zero must therefore consider how to do more in emitting sectors should the negative emissions from forests prove impossible-for example due to increasingly frequent forest fires.

Net Gains from Net Zero

The RNZP illustrates the feasibility and overall benefits of aligning development with climate-related goals. As Türkiye imports 99 percent of its gas and 93 percent of its oil, energy efficiency and renewable energy could generate major benefits by reducing energy imports and expenditure, air pollution, and vulnerability to disruptions in global energy markets. When all costs and co-benefits are accounted for, the net economic impact of the RNZP is positive over 2022-30 and increases when we consider longer time horizons: the RNZP leads to a net $15 billion gain over 2022-30 and a $146 billion gain over 2022-40, largely due to reduced fuel imports and health benefits from lower air pollution.

Achieving Türkiye's climate commitments would yield net economic gains but require large public and private investments. These investments would remain manageable, when compared with the size of the Turkish economy. Compared with the baseline scenario, Türkiye would need to invest an additional $68 billion over 2022-30 (in present value terms) to be on the RNZP. Over 2022-40, this number grows to $165 billion. This is around 1 percent of the country GDP over the same period, and would not affect significantly current account, trade balance, or public debt. Macroeconomic simulations suggest the transition would provide a small boost to GDP, with an increase by around 1 percent in 2030, and net gains in employment. However, the success of this transition requires a stable macroeconomic situation and well-designed policies to attract private investors and minimize costs, as well as dedicated interventions to facilitate the transition of affected people and ensure a just transition toward a decarbonized and resilient development path.

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