Turkey has secured a $1.6 billion financing agreement from the Asian Infrastructure Investment Bank (AIIB) to support policy reforms and attract private investment for its climate targets.The funding will help Turkey address an estimated $68 billion investment requirement for climate action by 2030, with around half of the amount expected to come from private sources, according to the AIIB. The agreement was announced on Thursday, the fourth day of the two-week UN climate conference in Antalya.The programme covers fiscal policy, financial regulation and sectoral planning. It is intended to support the implementation of Turkey’s Climate Law and its emissions reduction strategy, which includes an interim target for 2035 and a commitment to reach net-zero emissions by 2053.The financing will be directed towards expanding sustainable finance, reducing emissions across industries and strengthening the country’s ability to deal with climate-related risks. Turkey, which has a population of around 86 million, faces growing exposure to droughts, floods and wildfires as global temperatures rise.Konstantin Limitovskiy, AIIB’s chief investment officer, said the agreement was the bank’s largest climate policy-based financing package to date.The deal comes as the bank expands its climate-related lending. Its total climate financing reached a record $7.47 billion in 2025, according to the statement.
Support for Turkey’s emissions trading system
A portion of the funding will help Turkey develop its emissions trading system, which is still in its early stages. Under the proposed mechanism, companies operating in high-emission industries will receive allowances that can be traded.The system could also have implications for Turkish exporters supplying goods such as steel and cement to the European Union. Under the EU’s carbon border levy, carbon costs paid in Turkey can be recognised when calculating charges on emissions embedded in certain imported products. A domestic carbon pricing mechanism could therefore help exporters account for these costs.The programme has set several targets for the coming years. At least 180 industrial facilities are expected to report their baseline emissions under the trading scheme by April 2027. The plan also aims to secure production licences for 1,800 megawatts of wind and solar power capacity by early 2027.Agriculture and land management are also included in the reforms. The programme aims to help 225,000 farmers in water-stressed areas shift to crops that require less water by 2028. It also targets the designation of 50,000 hectares of land as carbon sinks by the same year, allowing these areas to absorb carbon dioxide from the atmosphere.
Climate risks drive policy reforms
Turkey is facing mounting pressure from water shortages, prolonged drought, extreme heat, wildfires and flooding in urban areas. The reform programme is designed to strengthen planning and risk management across sectors affected by these threats, including water resources, ecosystems and public health.
