The European Union's ("EU") European Green Deal ("EGD") is a comprehensive roadmap towards carbon neutrality by 2050. It also has significant implications for Türkiye, which seeks to align its policies and practices with the EU. Türkiye's economic vision is underscored by a robust commitment to internationally aligned green transformation to make the country a leader in environmentally sustainable practices while attracting Foreign Direct Investment ("FDI"). Its Foreign Direct Investment Strategy ("FDI Strategy") 2024-2028 outlines an action plan focused on green transformation which will significantly contribute to sustainable development goals.
The FDI Strategy identifies several critical areas, including renewable energy production, circular economy practices, sustainable industrial policies and green finance development, as critical for green transformation. Primary goals are to increase renewable energy production, by facilitating investor access to green energy, and promotion of environmentally friendly technologies to ensure that Türkiye can meet energy needs sustainably while reducing its carbon footprint.
The FDI strategy promotes environmentally friendly policies integrated with low-emission and digitized production techniques to attract high-quality FDI projects. This involves management of industrial emissions using best practices and minimizing harmful effects of waste on human health and the environment. Türkiye plans to align its national regulations with global standards, including the EGD, which will require implementation of measures such as Carbon Pricing and the Emission Trading System ("ETS") to promote green transformation in production and trade. Under this approach, the country will be more competitive, as it will operate under similar regulatory frameworks as counterparts in other major economies like the EU, attract more global investors, and contribute to a greener, more resilient economy.
Strategic Actions and Policies
Green finance is crucial in supporting sustainable projects and attracting new investments - and Türkiye is committed to strengthening its credentials in this area. The required financial infrastructure for environmentally sustainable projects will be established by creation of an internationally aligned National Green Taxonomy which clearly defines sustainable economic activities.
The FDI Strategy outlines specific actions and policies across various sectors. It emphasizes measures to increase renewable energy production such as simplifying bureaucratic processes, reducing costs, and providing targeted incentives for green energy projects. In doing so, Türkiye aims to create a more efficient, accessible investment environment for renewable energy.
The strategy also addresses the need to reduce green energy project costs to make investments more attractive and feasible - especially for smaller businesses or start-ups that may otherwise struggle with high initial expenses. Incentives could include tax breaks, subsidies, or grants specifically designed to encourage investments in green technologies and infrastructure which, once more, it is hoped will attract high-quality FDI projects that support the shift towards a green economy.
Türkiye will take concrete steps to promote a circular economy, including preparing secondary legislation for managing industrial emissions and developing a National Circular Economy Action Plan. These actions aim to create a regulatory framework that supports sustainable industrial practices and encourages investments in circular economy projects.
The strategy recommends creation of national Sustainability Reporting Standards and update of the Sustainability Principles Compliance Framework to improve monitoring of sustainability risks and opportunities and align with global best practice. It emphasises the need to create a favourable investment environment for technological investments with high energy efficiency which will require legislation to support green finance and promotion of investments in energy-efficient technologies.
Investments supporting Türkiye's climate change adaptation and mitigation are classified as "Quality FDI" projects. Over the last 10 years Türkiye has attracted 121 FDI projects1 including:
- Investments in renewable energy sources such as solar, wind, geothermal, and green hydrogen.
- Investments in technologies and products for generating green energy, such as solar panels and wind turbines.
- Investments in e-mobility such as electric and hydrogen vehicles, components, and batteries.
- Investments that support the circular economy.
- Investments in services related to environmental technologies.
- Investments in technologies that enhance energy efficiency.
Expected Outcomes and Benefits
The FDI Strategy promises significant benefits across economic, environmental, and social dimensions focusing on renewable energy, circular economy practices, and sustainable industrial policies that will boost Türkiye's global competitiveness. This shift is expected to attract high-quality FDI, fuelling economic growth and creating valuable job opportunities. By aligning with international sustainability standards, Türkiye aims to enhance investor confidence, making the country more attractive for green investors.
On the environmental front, the green transformation will lead to major improvements including lower carbon emissions, cleaner air and water, and waste reduction. Emphasizing renewable energy and circular economy practices will reduce the country's environmental impact substantially. The introduction of carbon pricing and an ETS will encourage businesses to adopt cleaner technologies, supporting global climate action and fostering a more sustainable and resilient economy.
Improvements in public health and creation of healthier living environments are also expected among the other outcomes. The focus on green finance and sustainable industrial policies aims to ensure that economic growth benefits everyone. This holistic approach is designed to enhance the quality of life for all citizens, positioning Türkiye as a leader in sustainable development and setting a positive example for other nations working towards a sustainable and resilient future.
Footnote
1. Türkiye Foreign Direct Investment Strategy 2024-2028, Presidency of the Republic of Türkiye Investment Office
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