Turk Eximbank, a state-owned financial institution in Turkey, has recently secured an impressive loan of 1 billion euros as part of a strategic initiative titled “Türkiye Green Export.” This loan, facilitated by a consortium comprising Deutsche Bank, Standard Chartered, BNP Paribas, and ING, marks the largest loan transaction in the bank’s history. Signed at the beginning of May, the loan has a duration of 10 years and comes at a time when Turkish exporters are facing challenges imposed by the new European regulation, CBAM (Carbon Border Adjustment Mechanism).
CBAM is a cross-border mechanism designed to adjust carbon emissions for products imported into the European Union. It aims to equalize the carbon price between European producers and those external, who are not subject to the same level of carbon taxation. In this context, the funding obtained by Turk Eximbank will support Turkish exporters in aligning with the ecological standards imposed by this new system, with the ultimate goal of reducing carbon emissions and promoting sustainability.
The International Bank for Reconstruction and Development (IBRD), part of the World Bank Group, has contributed to this initiative by providing a first-loss guarantee worth 600 million euros. This is the first time IBRD has offered such a guarantee for a loan aimed at green exports, underscoring the significance and innovation of this project. Furthermore, the Turkish Ministry of Finance and Treasury has provided counter-guarantees, thus strengthening the financial security of the deal.
The financial resources generated through this loan will be directed towards supporting producers of green goods and promoting the use of renewable energy sources. Additionally, investments in energy efficiency will be supported, and working capital needs required to adapt to CBAM requirements will be covered. This involves a significant pivot in Turkey’s industrial strategy, aimed at minimizing the negative impact of CBAM on the competitiveness of its exporters.
Over the past year, the Turkish government has begun developing a national system for trading emission certificates, intended to work in synergy with CBAM. This initiative not only helps align Turkey’s emission standards with those of Europe but also facilitates a smoother transition for local companies towards a green and sustainable economy.
Through this financing operation, Turk Eximbank and its international partners not only support the adaptation of the Turkish industry to European ecological norms but also demonstrate a firm commitment to promoting environmentally sustainable and responsible business practices. This is a testament to the international trust and recognition that Turkey captures through its commitments to reducing environmental impact, positioning itself as a leader in the regional response to global climate challenges.