sustainable energy policies in turkey

14
This article was downloaded by: [University of Western Ontario] On: 14 November 2014, At: 21:30 Publisher: Taylor & Francis Informa Ltd Registered in England and Wales Registered Number: 1072954 Registered office: Mortimer House, 37-41 Mortimer Street, London W1T 3JH, UK Energy Sources, Part B: Economics, Planning, and Policy Publication details, including instructions for authors and subscription information: http://www.tandfonline.com/loi/uesb20 Sustainable Energy Policies in Turkey K. Kaygusuz a & A. Sari b a Department of Chemistry , Karadeniz Technical University , Trabzon, Turkey b Department of Chemistry , Gaziosmanpasa University , Tokat, Turkey Published online: 06 Jul 2011. To cite this article: K. Kaygusuz & A. Sari (2011) Sustainable Energy Policies in Turkey, Energy Sources, Part B: Economics, Planning, and Policy, 6:3, 207-219 To link to this article: http://dx.doi.org/10.1080/15567240802458799 PLEASE SCROLL DOWN FOR ARTICLE Taylor & Francis makes every effort to ensure the accuracy of all the information (the “Content”) contained in the publications on our platform. However, Taylor & Francis, our agents, and our licensors make no representations or warranties whatsoever as to the accuracy, completeness, or suitability for any purpose of the Content. Any opinions and views expressed in this publication are the opinions and views of the authors, and are not the views of or endorsed by Taylor & Francis. The accuracy of the Content should not be relied upon and should be independently verified with primary sources of information. Taylor and Francis shall not be liable for any losses, actions, claims, proceedings, demands, costs, expenses, damages, and other liabilities whatsoever or howsoever caused arising directly or indirectly in connection with, in relation to or arising out of the use of the Content. This article may be used for research, teaching, and private study purposes. Any substantial or systematic reproduction, redistribution, reselling, loan, sub-licensing, systematic supply, or distribution in any form to anyone is expressly forbidden. Terms & Conditions of access and use can be found at http://www.tandfonline.com/page/terms- and-conditions

Upload: a

Post on 19-Mar-2017

222 views

Category:

Documents


1 download

TRANSCRIPT

Page 1: Sustainable Energy Policies in Turkey

This article was downloaded by: [University of Western Ontario]On: 14 November 2014, At: 21:30Publisher: Taylor & FrancisInforma Ltd Registered in England and Wales Registered Number: 1072954 Registeredoffice: Mortimer House, 37-41 Mortimer Street, London W1T 3JH, UK

Energy Sources, Part B: Economics,Planning, and PolicyPublication details, including instructions for authors andsubscription information:http://www.tandfonline.com/loi/uesb20

Sustainable Energy Policies in TurkeyK. Kaygusuz a & A. Sari ba Department of Chemistry , Karadeniz Technical University ,Trabzon, Turkeyb Department of Chemistry , Gaziosmanpasa University , Tokat,TurkeyPublished online: 06 Jul 2011.

To cite this article: K. Kaygusuz & A. Sari (2011) Sustainable Energy Policies in Turkey, EnergySources, Part B: Economics, Planning, and Policy, 6:3, 207-219

To link to this article: http://dx.doi.org/10.1080/15567240802458799

PLEASE SCROLL DOWN FOR ARTICLE

Taylor & Francis makes every effort to ensure the accuracy of all the information (the“Content”) contained in the publications on our platform. However, Taylor & Francis,our agents, and our licensors make no representations or warranties whatsoever as tothe accuracy, completeness, or suitability for any purpose of the Content. Any opinionsand views expressed in this publication are the opinions and views of the authors,and are not the views of or endorsed by Taylor & Francis. The accuracy of the Contentshould not be relied upon and should be independently verified with primary sourcesof information. Taylor and Francis shall not be liable for any losses, actions, claims,proceedings, demands, costs, expenses, damages, and other liabilities whatsoever orhowsoever caused arising directly or indirectly in connection with, in relation to or arisingout of the use of the Content.

This article may be used for research, teaching, and private study purposes. Anysubstantial or systematic reproduction, redistribution, reselling, loan, sub-licensing,systematic supply, or distribution in any form to anyone is expressly forbidden. Terms &Conditions of access and use can be found at http://www.tandfonline.com/page/terms-and-conditions

Page 2: Sustainable Energy Policies in Turkey

Energy Sources, Part B, 6:207–219, 2011

Copyright © Taylor & Francis Group, LLC

ISSN: 1556-7249 print/1556-7257 online

DOI: 10.1080/15567240802458799

Sustainable Energy Policies in Turkey

K. KAYGUSUZ1

and A. SARI2

1Department of Chemistry, Karadeniz Technical University, Trabzon, Turkey2Department of Chemistry, Gaziosmanpasa University, Tokat, Turkey

Abstract Turkey’s demand for energy and electricity is increasing rapidly. Since1990, energy consumption has increased at an annual average rate of 4.3%. As would

be expected, the rapid expansion of energy production and consumption has broughtwith it a wide range of environmental issues at the local, regional and global levels.

With respect to global environmental issues, Turkey’s carbon dioxide emissions havegrown along with its energy consumption. Emissions in 2004 reached 193 million

tons. On the other hand, Turkey is an energy importing country; more than halfof the energy requirement has been supplied by imports. In this regard, renewable

energy resources appear to be the one of the most efficient and effective solutions forsustainable energy development in Turkey. This article gives a review of the present

energy situation and role of renewable energy for future directions in the Turkishenergy sector.

Keywords energy utilization, renewable energy, sustainable development

Introduction

Energy is essential to the economic and social development and improved quality of life in

Turkey, as in other countries. Much of the world’s energy, however, is currently produced

and consumed in ways that could not be sustained if technology were to remain constant

and if overall quantities were to increase substantially. The need to control atmospheric

emissions of greenhouse and other gases and substances will increasingly need to bebased on efficiency in energy production, transmission, distribution and consumption

in the country. On the other hand, electricity supply infrastructures in Turkey, as in

many developing countries, are being rapidly expanded as policymakers and investors

around the world increasingly recognize electricity’s pivotal role in improving living

standards and sustaining economic growth. On the contrary, in the coming decades,global environmental issues could significantly affect patterns of energy use around the

world as well as in Turkey. Any future efforts to limit carbon emissions are likely to

alter the composition of total energy-related carbon emissions by energy source in the

country (Bilgen et al., 2004; Ocak et al., 2004; Kaygusuz and Sarı, 2006).

Turkey has made significant progress with regard to environmental protection butmore still needs to be done. The United Nations Framework Convention on Climate

Change (UNFCCC) entered into force in May 2004 (MEF, 2007). The country is in the

process of developing its Climate Change Strategy and first national communication

to the UNFCCC. The government should strive to monitor the effectiveness of the

Address correspondence to Dr. K. Kaygusuz, Department of Chemistry, Karadeniz TechnicalUniversity, Trabzon, 61080 Turkey. E-mail: [email protected]

207

Dow

nloa

ded

by [

Uni

vers

ity o

f W

este

rn O

ntar

io]

at 2

1:30

14

Nov

embe

r 20

14

Page 3: Sustainable Energy Policies in Turkey

208 K. Kaygusuz and A. Sari

chosen policies and measures, both in terms of costs and emissions reductions. It should

also consider defining an emissions target based on the momentum of the UNFCCC

ratification. Coordination among the various government bodies will be key to the success

of the strategy. Turkey has made significant progress in reducing local air pollution,

particularly in large cities, but work remains to be done to ensure existing standards

are met and to prepare for further reductions in air pollution. In this respect, it will beimportant to ensure that all market operators, including those owned by the State, comply

with the existing air quality and emissions legislation.

The general approach of Turkey’s energy policy has been highly supply-oriented,

with emphasis placed on ensuring additional energy supply to meet the growing demand,

while energy efficiency has been a lower priority. Consistently high energy intensityand its imminent increase, partly attributable to improved living standards, are matters of

concern. To realize an energy savings potential of 25–30%, an Energy Efficiency Strategy

was developed in 2004 and the government is preparing an Energy Efficiency Law. These

positive developments lift the status of energy efficiency and conservation as part of the

government’s energy policy but stronger policies beyond those in the law are still needed.

The evident lack of a comprehensive and coordinated energy efficiency policy for thetransport sector is of particular concern (MENR, 2007).

Natural gas accounts for 23% of the total primary energy supply (TPES) in Turkey.

Gas demand has been growing rapidly and the domestic gas network is being extended

quickly to allow more consumers to access gas. The new gas storage facilities can help

to meet peak demand but decisions to build storage facilities to cover seasonal peaksupply should be made on the basis of economic criteria taking into account alternative

approaches, namely more flexible supply contracts, interruptible consumers and multi-

firing in power plants. Large-scale gas transmission projects will enhance supply diversity,

security of supply and competition in Europe and Turkey. However, their success will

depend on the regulatory systems, including pricing, for gas transit, which will affect theviability of transit routes. It will also depend on the gas market reform given the large

share of domestic consumption out of the total volumes of new pipelines.

The government wishes to maintain hard coal production to enhance fuel diversity,

and consequently security of supply, but the policy is also closely related to social,

regional and employment policies. Given its poor competitiveness, Turkish hard coal

receives high and increasing subsidies per ton. Turkey has large lignite resources, whichmake a far bigger contribution to its security of supply and are much more competitively

priced than its hard coal resources ever could be. Nonetheless, there is a need for vigorous

pursuit of productivity so that coal can compete as a fuel on equal grounds, even in the

face of costs associated with tightening environmental requirements (IEA, 2005; MEF,

2007; MENR, 2007).Turkey’s use of hydropower, geothermal and solar thermal energy has increased

since 1990. However, the total share of renewable energy sources in the TPES has

declined, owing to the declining use of non-commercial biomass and the growing role of

natural gas in the system. The fixed feed-in tariffs and purchase obligation for distribution

companies under the proposed new Renewable Energy Law can encourage investments.The maximum level, 6 eurocents per kWh, is moderate as compared to the levels given,

for example, to wind power in some developed countries such Germany, the United

Kingdom, and Greece. While the scheme may not become excessively expensive for

consumers, which is a common risk of feed-in tariffs, careful monitoring and adjustment

of the cost of the scheme will be necessary until it is fully replaced by the purchase

obligation in 2012. Given the diverse availability of resources among different distribution

Dow

nloa

ded

by [

Uni

vers

ity o

f W

este

rn O

ntar

io]

at 2

1:30

14

Nov

embe

r 20

14

Page 4: Sustainable Energy Policies in Turkey

Sustainable Energy Policies in Turkey 209

areas, it needs to be ensured that distribution companies can buy renewable electricity

from certified producers located in other distribution regions to be able to fulfill their

obligation at minimum cost. Despite a large potential for the use of heat from renewable

energy sources such as biomass, geothermal, and solar thermal, there are no specific

policies in place for heat production from these renewables (IEA, 2005).

Turkey has recently announced that it will reopen its nuclear program in order torespond to the growing electricity demand while avoiding increasing dependence on

energy imports. The competitiveness of nuclear power in a liberalized electricity market

in Turkey needs to be clarified. Investment decisions should be made on the basis of

efficient and transparent price signals regardless of whether power plants are being built

by private or public companies. Furthermore, waste disposal options need to be definedfrom the outset of launching a nuclear power project. Despite a high reserve margin of

40%, Turkey will need more capacity in the midterm because electricity demand will

continue to grow rapidly. The recently-launched rehabilitation program for the thermal

power plants to increase their efficiency is a prudent approach as it postpones the need

to invest in new capacity. Nonetheless, new capacity will be needed in the next decade,

which requires a good investment climate. Despite some reductions in distribution lossesduring the last couple of years, both technical and non-technical losses (totaling about

15–20% in 2005) are still a concern. One notable development is the progress in the

project to interconnect with the European Union for the Coordination of Transmission

of Electricity (UCTE) network, which was completed in 2007 (IEA, 2005; MEF, 2007).

To date, there have been cross-subsidies in electricity prices both between differ-ent consumer groups, notably from industrial consumers to residential consumers, and

between different geographical areas. It is positive that the government has announced

that energy prices for each consumer group will be based on cost and that transparent

tariff calculation rules have been established by the regulator. However, regional cross-

subsidies will remain at least for the next five years. On the other hand, the governmentshould be highly commended for the initiative to create competitive electricity markets.

The steps taken so far have created a window of opportunity to implement successful

reform with clear and significant benefits. Now, decisive action will need to be taken to

see the process through to a successful conclusion (IEA, 2005).

Given that Turkey is facing significant energy and environment policy challenges, the

government needs to explore all possible means to respond to these challenges, includingformulating a coherent energy research and development policy. To implement such a

policy, a coherent energy strategy with adequate financing as well as good cooperation

among the different ministries is necessary. This could be done by building on the work

done for the National Research and Technology Foresight Program (Vision 2023 Program;

TUBITAK, 2003).

Overview of Turkey

Geography, Population and Economy

Turkey is located between Europe and Asia. Its surface area is 781,000 km2, of which

approximately 97% is in Asia and 3% is in Europe. Turkey’s coastlines total more than

8,333 km. Turkey’s geographical location makes it a natural land bridge connecting

Europe to Asia. Therefore, it has an increasingly important role to play as an “energy

corridor” between the major oil and natural gas producing countries in the Middle East

and Caspian Sea and the Western energy markets (DIE, 2005).

Dow

nloa

ded

by [

Uni

vers

ity o

f W

este

rn O

ntar

io]

at 2

1:30

14

Nov

embe

r 20

14

Page 5: Sustainable Energy Policies in Turkey

210 K. Kaygusuz and A. Sari

In 2004, the population of Turkey was 71.3 million, 26% over the 1990 level. The

average population growth rate was 1.8% per year between 1990 and 2004. Population

growth is expected to gradually slow down to 1.2% in 2015, 1% in 2020, and 0.8% in

2030. With these growth rates, the population would reach almost 88 million by 2020.

Turkey is experiencing high domestic migration rates towards cities (DIE, 2005).

The economy has undergone a significant shift from agriculture towards the servicesector and to some extent industry, although some 30% (43% in 1993) of the active

population was still employed in agriculture in 2003. The unemployment rate was 9%

in mid-2004, 3 percentage points above the 2000 level. However, the employment rate

is only 46% of the labor force, the lowest in Organization for Economic Co-operation

and Development (OECD) member countries and labor productivity is around 35% ofthe OECD average.

Turkey suffered from the most severe economic difficulties of its recent history in

2001 caused by a banking crisis resulting from a widening current account deficit and

fragile foreign confidence. The gross domestic product (GDP) declined by 7.5% in 2001

but recovered by 6% in 2003 and 6.4% in 2004. The Turkish economy is currently among

the fastest growing economies in the OECD. It is driven by strong productivity gainsand by robust growing private consumption, investments, and exports, and has not been

hindered by cuts in government consumption and investment. In 2004, GDP per capita

in Turkey, measured using current purchasing power parities, was US$ 6,800, which is

26% of the OECD average. A major problem is the significant extent of unregistered

activities that account for more than 50% of total employment and lead to a narrowingof the tax base (DPT, 2001; DIE, 2005).

Energy Market

Turkey has dynamic economic development and rapid population growth. It also has

macro-economic, and especially monetary, instability. The net effect of these factors is

that Turkey’s energy demand has grown rapidly almost every year and is expected to

continue growing, but the investment necessary to cover the growing demand has not

been forthcoming at the desired pace. Turkey’s primary energy reserves (Table 1) are not

enough to meet energy demand. Turkey is an energy importing nation with more than74% of total energy consumption (Tables 2 and 3) met by imported fuels such as oil,

natural gas and hard coal (see Figures 1 and 2).

As shown in Figure 1, in 2003, TPES in Turkey was 83.7 Mtoe, up by 58% from

the 1990 level and 129.63 Mtoe in 2005, growing in phase with GDP. Dependence on

oil has declined from 51% in 1973 to 31% in 2005. Natural gas demand has grownalmost sevenfold since 1990, gaining a 32% share in TPES. The share of coal in TPES

is 27%, down from 32% in 1990 and the share of combustible renewables and wastes is

7%, down from 14% in 1990. Given hydropower production’s dependence on weather

conditions, annual variations tend to be large; however, the longer-term trend has been

increasing supply owing to new capacities. Production of geothermal energy has almostdoubled since 1990 reaching 0.86 Mtoe. Solar and wind contributed 1.36 Mtoe in 2005

(see Table 4).

As seen in Figure 2, domestic energy production was 23.8 Mtoe in 2003 (28%

of TPES) and comprised coal (10.8 Mtoe), renewables (10 Mtoe), oil (2.5 Mtoe) and

gas (0.5 Mtoe). In 2005, domestic energy production was 27.6 Mtoe. The government

forecasts both oil and gas production to decline owing to depletion of resources but coal

Dow

nloa

ded

by [

Uni

vers

ity o

f W

este

rn O

ntar

io]

at 2

1:30

14

Nov

embe

r 20

14

Page 6: Sustainable Energy Policies in Turkey

Sustainable Energy Policies in Turkey 211

Table 1

Primary energy reserves in Turkey (2002)

Energy sources Proven Probable Possible Total

Hard coal (Mt) 428 456 245 1,129

Lignite (Mt)

Elbistan 3,357 3,357Others 3,982 626 110 4,718

Total 7,339 626 110 8,075

Asphaltite 45 29 8 82

Bitumes 555 1,086 1,641

HydropowerGWh/yr 126,109 126,109

MW/yr 35,539 35,539

Petroleum (Mt) 39 39

Natural gas (Billion m3) 10.2 10.2

Nuclear sources (ton)

Uranium 9,129 9,129Thorium 380,000 380,000

Geothermal (MW/yr)

Electricity 200 4,300 4,500

Thermal 2,250 28,850 31,100

Solar energyElectricity 8.8

Heat 26.4

Source: MENR, 2007.

production (principally lignite) and renewable energy production to increase (TEDAS,

2005; MENR, 2007).

Energy Policies in Turkey

The Ministry of Energy and Natural Resources (MENR) is responsible for the preparation

and implementation of energy policies, plans and programs in coordination with its

dependent and related institutions and other public and private entities. It reports directlyto the Prime Minister. The MENR has the following tasks and objectives (MENR, 2007):

� Determine and implement national energy policy objectives.� Coordinate between the dependent and related institutions and other public and

private entities.� Prepare and/or supervise programs in conformity with the energy policy.� Ensure the implementation of the programs.� Supervise and control all exploration, development, production and distribution

activities for energy and natural resources.

On the other hand, every 5 years the State Planning Organization (DPT), with the

assistance of different ministries and expert organizations from all sectors, including the

energy sector, prepares a Development Plan (DPT, 2001). The energy policy objectives

Dow

nloa

ded

by [

Uni

vers

ity o

f W

este

rn O

ntar

io]

at 2

1:30

14

Nov

embe

r 20

14

Page 7: Sustainable Energy Policies in Turkey

212 K. Kaygusuz and A. Sari

Table 2

Total final energy production in Turkey (Mtoe)

Energy sources 2005 2010 2020 2030

Coal and Lignite 20.69 26.15 32.36 35.13

Oil 1.66 1.13 0.49 0.17

Gas 0.16 0.17 0.14 0.10Nuclear — — 7.30 14.60

Hydropower 4.16 5.34 10.00 10.00

Geothermal 0.70 0.98 1.71 3.64

Solar/Wind/Other 0.22 1.05 2.27 4.28

Total production 27.59 34.77 54.27 71.68

Source: MENR, 2007.

Table 3

Total final energy consumption in Turkey (Mtoe)

Energy sources 2005 2010 2020 2030

Coal and Lignite 35.46 39.70 107.57 198.34

Oil 34.60 51.17 71.89 102.38Gas 19.40 49.58 74.51 126.25

Nuclear — — 7.30 14.60

Hydropower 4.16 5.34 10.00 10.00

Geothermal 1.89 0.97 1.71 3.64

Solar/Wind/Other 0.22 1.05 2.27 4.28

Total primary energy consumption 95.28 147.81 275.25 459.49

Source: MENR, 2007.

of the Eighth Five-Year Development Plan for the period 2001–2005, largely unchangedfrom the previous plans, are as follows:

� Ensure sufficient, reliable and economic energy supplies in order to support eco-

nomic and social development.� Maintain security of the energy supply.� Encourage sufficient investments to meet growing energy demand.� Prioritizing energy security activities to cope with the increasing demand and

import dependence.� Taking into account the environmental concerns in all stages of the energy chain

within the framework of sustainable development.� Reforming and liberalizing the energy sector to increase productivity and efficiency

and to enhance transparency.� Intensifying research and development on energy technologies.

Dow

nloa

ded

by [

Uni

vers

ity o

f W

este

rn O

ntar

io]

at 2

1:30

14

Nov

embe

r 20

14

Page 8: Sustainable Energy Policies in Turkey

Sustainable Energy Policies in Turkey 213

Figure 1. Total primary energy consumption by energy sources in Turkey. (color figure available

online)

Figure 2. Total primary energy production by source in Turkey. (*Negligible. **Includes geother-

mal, solar, wind, combustible renewables and waste.)

Energy Security

Turkey has been able to keep supply up with the country’s increasing demand. The

government emphasizes the importance of ensuring energy security and improvement of

environmental quality while encouraging investments in the energy sector.Net energy imports have been increasing considerably and import dependence is

becoming an important issue for Turkey. On average, net energy imports increased by

6% per year in 1990–2005, climbing from 28 Mtoe in 1990 to 64.4 Mtoe in 2005 (see

Tables 2 and 3). The share of imports in TPES has increased significantly, from 51% in

1990 to 75% in 2005. In terms of energy, natural gas imports have increased most (by

19.3 Mtoe) but there has also been notable growth in oil (by 26.4 Mtoe) and coal (by 15.2

Dow

nloa

ded

by [

Uni

vers

ity o

f W

este

rn O

ntar

io]

at 2

1:30

14

Nov

embe

r 20

14

Page 9: Sustainable Energy Policies in Turkey

214 K. Kaygusuz and A. Sari

Table 4

Renewable energy supply in Turkey

Renewable energy sources 1990 1995 2000 2002 2004

Primary energy supply

Hydropower (ktoe) 1,991 3,057 2,656 2,897 3,112

Geothermal, solar and wind (ktoe) 461 654 978 1,142 1,364

Biomass and waste (ktoe) 7,208 7,068 6,457 5,974 6,456

Renewable energy production (ktoe) 9,660 10,779 10,091 10,013 10,210

Share of total domestic production (%) 38 40 38 40 41Share of TPES (%) 18 17 12 13 14

Generation

Hydropower (GWh) 23,148 35,541 30,879 33,684 34,124

Geothermal, solar and wind (GWh) 80 86 109 153 155Renewable energy generation (GWh) 23,228 35,627 30,988 33,837 46,339

Share of total generation (%) 40 41 25 26 26

Total final consumption

Geothermal, solar and wind (ktoe) 392 580 910 1,048 1,148

Biomass and waste (ktoe) 7,208 7,068 6,457 5,974 5,865Renewable total consumption (ktoe) 7,600 7,648 7,367 7,022 7,134

Share of total final consumption (%) 18 15 12 12 12

Source: IEA, 2005.

Mtoe) imports. To reduce the supply risks caused by increasing imports, encouraging the

use of domestic energy resources is a high priority on the government’s agenda. Another

priority is diversification in import sources, both in terms of type of energy and its origin

(MENR, 2007).Turkey is actively participating in initiatives to establish regional markets, such as

the Energy Community of South East Europe and the Med-Ring Project. These initiatives

are expected to increase cross-border electricity and gas trading. Synchronization of the

Turkish electricity grid with UCTE was achieved in 2007. With regard to interconnections

with neighboring gas markets, the Turkey-Greece interconnector was commissioned in2007. On the other hand, fuel switching in power generation has been significant over

the past two decades as coal-fired plants are increasingly replaced by gas-fired plants.

The gas transmission and distribution infrastructure is being improved and extended to

new areas, which enables industry and households to progressively switch from oil and

coal to gas. Natural gas storage is being developed to ensure supply during the winterseason and peak hours; at present, the major flexibility mechanism is the interruptible

consumers (IEA, 2005; MENR, 2007).

The government emphasizes the importance of having sufficient reserve margins

when preparing forecasts and estimating needs for generation expansion. According to

the most recent electricity demand projections, if new power plants were not built there

could be a supply shortfall in 2008. Therefore, the government is taking an active role

Dow

nloa

ded

by [

Uni

vers

ity o

f W

este

rn O

ntar

io]

at 2

1:30

14

Nov

embe

r 20

14

Page 10: Sustainable Energy Policies in Turkey

Sustainable Energy Policies in Turkey 215

in maintaining a supply and demand balance. Some measures already taken are the

refurbishment of some coal-fired power plants and the reduction of technical and non-

technical losses in the distribution networks. The reformed electricity market is expected

to attract new investments in generating capacity ensuring sustainability. Energy efficiency

policies and measures will also play a role. Transmission infrastructure will be improved

to allow for the expansion of distributed and intermitted generation such as renewableenergy sources.

Energy Taxation

Turkey’s main tax on oil products is the fuel consumption tax (FTC). The FTC rates for

various oil products are given in Table 5. To alleviate the effects of oil price fluctuations

and the pronounced exchange rate fluctuations of the Turkish lira against the dollar on

domestic oil prices, the government linked the FTC to a pre-existing mechanism called theFuel Stabilization Fund (FPSF) in 2000. The FPSF was financed through a compensatory

FPSF tax. The tax fluctuated and was inversely proportional to developments in the

international oil prices and the exchange rate of the Turkish lira against the dollar. The

tax did not apply to fuels used in generating electricity. While this tax was abolished and

replaced with the Automatic Pricing Mechanism (APM), the APM was also abolished atthe beginning of 2005. Oil products are also subject to a value-added tax (VAT) of 18%

(MENR, 2007).

In January 1996 Turkey signed the Customs Union Agreement with the European

Union, whereafter customs duties are applied only to oil product imports from non-EU

countries. Electricity prices are subject to several taxes and levies. Although the Electricity

Market Law prohibits inclusion of any costs on electricity prices that are not directly

Table 5

Taxes on oil products and natural gas in Turkey (April 2004)

Excise tax,TL

VAT,%

Premium gasoline (per liter) 1,005,000 18Unleaded gasoline (per liter) 990,000 18

Naphtha — 18

Kerosene (per liter) 634,000 18

Jet fuel (per liter) — 18

Diesel oil (2% sulfur, per liter) 706,000 18

Diesel oil (other qualities) 706,000 18Heating oil (per kg) 360,500 18

Fuel oil (1% sulfur, per kg) 158,500 18

Fuel oil (3.5% sulfur, per kg) 115,500 18

LPG (bottled), propane, butane (per kg) 699,000 18

LPG (automotive, per kg) 770,500 18LPG (heating, per kg) 699,000 18

Propane (fuel, per kg) 699,000 17

Natural gas (per m3) 6,750 18

Source: IEA, 2005.

Dow

nloa

ded

by [

Uni

vers

ity o

f W

este

rn O

ntar

io]

at 2

1:30

14

Nov

embe

r 20

14

Page 11: Sustainable Energy Policies in Turkey

216 K. Kaygusuz and A. Sari

related to electricity market activities, with the exception of the Energy Market Regulation

Authority’s (EMRA) surcharge on electricity Turkish Petroleum Authority (TPA) tariffs,

a 2% levy for the Turkish Radio and Television Corporation is imposed on end-user

electricity prices. Electricity prices are subject to the municipality consumption tax, which

is 1% for industry and 4% for household consumers. The VAT rate for electricity is 18%.

No excise taxes are applied for coal. The only tax is the VAT of 18% (IEA, 2005; MENR,2007).

Climate Change in Turkey

Turkey’s total carbon dioxide (CO2) emissions amounted to 193 million tons (Mt) in

2002 (see Figure 3). Emissions grew by 4% compared to 2001 levels and by just over50% compared to 1990 levels. Oil has historically been the most important source of

emissions, followed by coal and gas. Oil represented 42% of total emissions in 2002,

while coal represented 40% and gas 18%. The contribution of each fuel has, however,

changed significantly owing to the increasingly important role of gas in the country’s

fuel mix starting from the mid-1980s (IEA, 2005).

According to recent projections, TPES will almost double between 2002 and 2020,with coal accounting for an increasingly important share, rising from 26% in 2002 to

36% in 2020, principally replacing oil, which is expected to drop from 40% to 27%.

Such trends will lead to a significant rise in CO2 emissions, which are projected to

reach nearly 600 Mt in 2020, over three times 2002 levels. On the other hand, in 2002,

public electricity and heat production were the largest contributors of CO2 emissions,accounting for 28% of the country’s total (see Figure 4). The industry sector was

the second largest, representing 26% of total emissions, followed by transport, which

represented 19% and direct fossil fuel use in the residential sector with 10%. Other

sectors, including other energy industries, account for 17% of total emissions. Since

1990, emissions from public electricity and heat production have grown more rapidlythan in other sectors, increasing by 6%. Simultaneously, the shares of emissions from

the residential and transport sectors both dropped by 7% and 3%, respectively, while the

share of emissions from the manufacturing industries and construction sector remained

stable.

Figure 3. Turkey’s CO2 emissions with/without measures scenarios. (color figure available online)

Dow

nloa

ded

by [

Uni

vers

ity o

f W

este

rn O

ntar

io]

at 2

1:30

14

Nov

embe

r 20

14

Page 12: Sustainable Energy Policies in Turkey

Sustainable Energy Policies in Turkey 217

Figure 4. CO2 emissions by sector in Turkey. (color figure available online)

Renewable Energy Sources

Turkey has substantial renewable energy resources and these make the second-largest

contribution to domestic energy production after coal. In 2004, energy from renewablesources amounted to 10 Mtoe (14% of TPES). This shows very little increase from 1990

when 9.7 Mtoe renewable energy sources were used (18% of the TPES). More than half

of renewable energy sources used in Turkey are composed of combustible renewables and

waste, the rest being mainly hydro and geothermal. Combustible renewables and waste

used in Turkey are almost exclusively non-commercial fuels, typically wood and animalproducts, used in the residential sector for heating. The use of biomass for residential

heating, however, has declined owing to the replacement of non-commercial fuels by

commercial fuels. The contribution of wind and solar is still small but is expected to

increase. Electricity generation from renewables is about 46.4 TWh and contributed

26% to total generation in 2004 (Table 5). Hydro is the dominant source of renewableelectricity, with only 0.15 TWh derived from other sources. Hydro production fluctuates

annually depending on the weather (Dündar et al., 2002; EIE, 2003; GAP, 2006; DSI,

2006).

Conclusions

Turkey is facing many challenges in all areas of energy policy. Despite a favorable

legislative framework, the bulk of the work for the effective implementation of theelectricity and gas market reforms still lies ahead. Energy efficiency, environmental

protection and the exploitation of Turkey’s large renewable energy resources all warrant

additional attention. Well-established liberalized energy markets have generally encour-

aged adequate investment to meet security requirements. In shaping energy policy and a

liberalized energy market, it appears necessary to improve communication, coordination

and consultation between the relevant government agencies as well as with the main

Dow

nloa

ded

by [

Uni

vers

ity o

f W

este

rn O

ntar

io]

at 2

1:30

14

Nov

embe

r 20

14

Page 13: Sustainable Energy Policies in Turkey

218 K. Kaygusuz and A. Sari

stakeholders. In particular, consumers need to be fully involved in the policy-making

process, especially market liberalization, energy efficiency and environmental protection,

and the relevant information must be disseminated. Cost-reflective pricing is a prerequisite

for effective energy policies such as market reform and energy efficiency. The government

of Turkey should:

� Increase focus on the energy efficiency in energy policy planning and implemen-

tation.� Continue the process of liberalization and privatization of the energy sector.� Improve coordination among government agencies in all areas related to energy.

Involve all stakeholders, particularly consumers, in developing energy policies.� Clearly define the roles of the different ministries and agencies involved in air

quality monitoring and enforcement.� Ensure that all market operators, including those owned by the State, comply with

the existing air quality and emissions legislation.� Strengthen energy efficiency measures in the industrial sector by the government.� Encourage energy efficiency in buildings.� Ensure that the regulator focuses on the monitoring of competition in the down-

stream oil market and takes a light-handed regulatory approach.� Rapidly step up efforts to increase productivity in coal mining, including through

possible privatization of state-owned operations, or accelerating current moves to

lease and contract mining operations.� Enact the Renewable Energy Law as envisaged and monitor and evaluate its cost

and effectiveness.� Share information and experience with other countries introducing quota- and

certificate-based promotional schemes for renewable energy sources.� Encourage the rehabilitation of the thermal power plants to increase their efficiency

where economically feasible.� Create a sound legal framework for the use of nuclear power. Clarify the role

of nuclear power in the future in terms of economic competitiveness. Definenuclear technology choices and waste disposal options before building nuclear

power plants.� Evaluate the potential for co-generation and pay due attention to the cost-effectiveness

of future policies (IEA, 2005).

References

Bilgen, S., Kaygusuz, K., and Sarı, A. 2004. Renewable energy for a clean and sustainable future.

Energ. Source. 26:1119–1129.

Dündar, C., Canbaz, M., Akgün, N., and Ural, G. 2002. Wind atlas of Turkey. Ankara, Turkey:

Electrical Power Resources Survey and Development Administration.

Electrical Power Resources Survey and Development Administration (EIE). 2003. Solar and Wind

Energy Activities of EIE. Available at: http://www.eie.gov.tr.

International Energy Agency (IEA). 2005. Energy policies of IEA countries: Turkey 2005 review.

Paris: OECD/IEA.

Kaygusuz, K., and Sarı, A. 2006. The benefits of renewables in Turkey. Energ. Source. Part B

1:23–35.

Ministry of Energy and Natural Resources (MENR). 2007. Energy Statistics in Turkey. Available

at: http://www.enerji.gov.tr.

Dow

nloa

ded

by [

Uni

vers

ity o

f W

este

rn O

ntar

io]

at 2

1:30

14

Nov

embe

r 20

14

Page 14: Sustainable Energy Policies in Turkey

Sustainable Energy Policies in Turkey 219

Ministry of Environment and Forestry (MEF). 2007. First National Communication of Turkey on

Climate Change, Apak, G., and Ubay, B. (Eds.). Ankara, Turkey: The Ministry of Environment

and Forestry, pp. 60–150.

Ocak, M., Ocak, Z., Bilgen, S., Keles, S., and Kaygusuz, K. 2004. Energy utilization, environmental

pollution and renewable energy sources in Turkey. Energ. Convers. Mgmt. 45:845–864.

Southeastern Anatolia Project (GAP). 2006. Energy and Water in the GAP Region. Available at:

http://www.gap.gov.tr.

State Hydraulic Works (DSI). 2006. Hydroelectric Power in Turkey. Available at: http://www.dsi.

gov.tr.

State Institute of Statistics (DIE). 2005. Statistic yearbook of Turkey in 2004. Ankara, Turkey:

Prime Ministry.

State Planning Organization (DPT). 2001. Eighth five-year development plan 2001–2005. Ankara,

Turkey: DPT.

Turkish Electricity Distribution Corporation (TEDAS). 2005. Annual report. Ankara, Turkey:

TEDAS.

Turkish Scientific and Technical Research Council (TUBITAK). 2003. Vision 2023 Technology

Project: Energy and Natural Resources Panel, Ankara, Turkey, January 24.

Dow

nloa

ded

by [

Uni

vers

ity o

f W

este

rn O

ntar

io]

at 2

1:30

14

Nov

embe

r 20

14