Compliance Carbon Markets – Emission Trading Systems (ETS)
Trading, allocation and strategy management aligned with mandatory carbon regulations.
Compliance Carbon Markets (ETS / Emissions Trading Systems) are government-regulated systems that allocate emission allowances to companies. In markets such as the EU ETS, UK ETS, Korea ETS and the upcoming Türkiye ETS, companies trade EUA, UKA or national allowance units based on the emissions intensity of their operations. Compliance markets require companies to meet their obligations by procuring a defined carbon allowance unit.
Prices in compliance carbon markets are driven by regulation, sectoral boundaries, supply-demand dynamics and macroeconomic signals. Each system has its own allowance unit and compliance cycle.
The European Union Emissions Trading System (EU ETS) is the world’s largest and most liquid compliance carbon market. Its unit is EUA – EU Allowance.
The EU ETS primarily covers power generation, including electricity and heat production. In addition, heavy industry sectors—such as iron and steel, cement, refineries, chemicals (ammonia, acids, hydrogen, methanol), aluminum, glass, ceramics and paper production—form the backbone of the system due to their high emissions intensity.
On the transport side, the aviation sector has long been covered by the EU ETS for all intra-EU commercial flights. As of 2024, the scope has been expanded to include maritime transport, requiring container ships, tankers, bulk carriers, ro-ro and passenger vessels above 5,000 GT to cover emissions from voyages to EU ports with EUAs.
These four core groups—energy, heavy industry, aviation and maritime—define the foundation of the EU ETS and underpin Europe’s carbon pricing mechanism.
The EU’s Carbon Border Adjustment Mechanism (CBAM) introduces a mandatory product-based carbon cost for companies exporting to the EU. In its initial phase, iron and steel, aluminum, cement, fertilizers, hydrogen and electricity are covered. Companies producing these goods must calculate embedded CO₂ emissions, submit regular CBAM reports and, from 2026 onward, purchase CBAM certificates corresponding to those emissions. As high-carbon products face higher costs, energy efficiency, renewable energy use and process optimization become direct competitive advantages for Turkish exporters.
Türkiye’s planned Emissions Trading System (TR-ETS) is designed to initially cover power generation and energy-intensive industrial sectors. Electricity producers and high-emission industries such as cement, iron and steel, refineries, petrochemicals, ceramics, glass and paper are expected to be included in the first phase. Companies will be required to report annual emissions and procure allowances within defined caps. As the TR-ETS expands over time, it will establish a domestic carbon price and make carbon cost management a critical preparation area for large industrial producers, particularly in data management, emissions accounting and cost optimization.
Natta Energy supports companies seeking to meet regulatory requirements by providing risk management, positioning, compliance strategy and market access.
- EUA requirement assessment
- Market access
- Procurement strategy
- Risk management
- MRV integration