Türkiye faces sizeable climate mitigation challenges. Although emissions per capita are relatively low and have been decelerating recently owing to enhanced mitigation efforts, they are still growing faster than in other OECD countries because of economic convergence and a carbon-intensive energy supply. The country has set a net-zero emissions target for 2053, with emissions expected to peak in 2038. To reach this target, Türkiye needs to take ambitious actions. In particular, Türkiye aims to put in place a carbon price, which should be a key instrument to reduce emissions and whose revenues could be used to support the environmental transition. Türkiye has also developed long term strategies to reduce emissions in key sectors like transport, buildings, and industry. A particular challenge will be to transition away from coal towards low-carbon energy, including by investing further in renewables. This would also provide significant side benefits, such as reducing air pollution and strengthening energy security. Finally, by strengthening the management of its forests, Türkiye can increase its greenhouse gas absorption capacity and better protect its ecosystems against growing wildfire risks.
OECD Economic Surveys: Türkiye 2025
Abstract
Türkiye has recently made significant progress in addressing climate change mitigation and adaptation. A directorate of Climate Change was established in 2021 as part of the Ministry of Environment, Urbanisation, and Climate Change. The country ratified the Paris Agreement in 2021 and published a revised Nationally Determined Contribution (NDC) in 2023. The NDC proposes to reduce greenhouse gas (GHG) emissions by 41% in 2030 relative to a “business as usual scenario” and confirms the country’s long-term net zero objective for 2053 (Figure 3.1). In 2024, the country published two Strategy and Action Plans (SAPs) for emissions mitigation and climate change adaptation through 2030. A 2053 Long Term Climate Strategy was published in November, which integrated the previous action plans for mitigation and adaptation in a comprehensive strategy across sectors, and listed several intermediate and sectoral targets for 2030, 2035, and 2053. Emissions have decoupled from growth: CO2 emissions have grown less than GDP since 1990 because the carbon intensity of energy has fallen by 18% and the energy intensity of GDP has fallen by 28%. Emissions per capita in Türkiye are 37% below the OECD average. However, the rapid growth in GDP per capita is putting upward pressure on emissions. The carbon intensity of energy use has declined, but less than in other OECD countries (Figure 3.2).
Greenhouse gas emissions by sector and targets
Note: The sectoral shares on GHG emissions are based on the OECD database over 1990-2021. The breakdown and total for 2022 are estimated by using sectoral shares and the growth rate of total GHG emissions from Türkiye’s Informative Inventory Report (IIR) 2024. The historical data and target estimate on the total emissions are based on the IMF database.
Source: OECD (2024), Air & GHG emissions database; Ministry of Environment, Urbanization, and Climate Change (2024), 2053 Long Term Climate Strategy; and IMF (2024), Climate Change Indicators Dashboard.
Achieving the net zero target in 2053 under current policies could be challenging. In particular, GHG emissions would rise by 30% by 2030. The country has committed to reach an emissions peak in 2038 “at the latest” (Climate Action Tracker, 2023[1]). Ensuring an earlier peak in emissions in the short term would help make emissions mitigation more feasible in the long term to achieve the final target. By contrast, emissions have increased relatively more than other countries in recent years after adjusting for economic trends: as a consequence, the Yale Environmental Performance Index ranked Türkiye 117th for its emissions trajectory over the last ten years and 155th when extrapolating those trends to 2050 (Block et al., 2024[2]). Türkiye’s reliance on coal, in particular, is not declining. In 2023, electricity generated through imported coal was at an all-time high. Türkiye is also increasingly vulnerable to climate change risks. Temperatures have increased by more than 2°C during the last 100 years and the country is warming faster than other OECD countries (Figure 3.3). Compared to other OECD countries, the country is particularly exposed to forest wildfires, which have contributed significantly to the increase in emissions in 2021 (Maes et al., 2022[3]).
Türkiye has made important progress in strengthening its institutional framework for climate change mitigation and adaptation in order to achieve its green transformation goals. The Climate Change Mitigation Strategy and Action Plan (2024-2030) has been developed as an implementation tool for the NDC and includes detailed sectoral actions and strategies with the goal to achieve the NDC targets, although those are not connected directly to sectoral emissions targets. A comprehensive Climate Law to implement Türkiye’s goals was announced in 2023 and is expected to be approved by Parliament in 2025 after its introduction on February 20th 2025. Such legislation exists in a majority of European countries and provides not only an opportunity to inscribe medium- and long-term emissions targets in law, but also a framework for a regular update in climate plans, for performance monitoring and for stakeholder participation, and finally can help establish independent expert advisory councils to support policymaking and monitoring (Evans et al., 2023[4]; D’Arcangelo et al., 2022[5]). Without this type of legislation, there are no legal requirements to incorporate climate objectives into policy processes, making it more complicated to integrate climate considerations into infrastructure investments and cost-benefit analyses. Türkiye recently adopted green budgeting in line with a majority of OECD countries, but the practice remains at an early stage. In particular, the country has not implemented green budget tagging, and accountability and transparency is weakened by the lack of reporting on implementation and the absence of an oversight institution (OECD, 2024[6]).
To improve the institutional framework governing its mitigation strategy, Türkiye can rely on the past experiences of other OECD countries which have implemented a comprehensive policy mix to achieve well defined and detailed intermediate targets with the help of independent bodies (Box 3.1). It will also benefit from the stakeholders’ coordination made possible by its well-implanted Climate Change and Adaptation Coordination Board (CCACB), which gathers public and private institutions as well as observers from other organisations, academia and NGOs, to determine, monitor, and evaluate the strategies and actions related to climate change.
Achieving a successful green transformation would help Türkiye address the main environment-related issues identified in previous OECD Economic Surveys (Box 3.1). Previous Surveys emphasised concerns regarding the future trajectory of GHG emissions given expected population growth and economic convergence, and the lack of detailed sectoral objectives consistent with targets. The absence of carbon pricing in parallel of existing fossil fuel subsidies, in particular, does not provide enough incentives to reduce emissions. In addition, the significant reliance on coal not only prevents significant emissions reduction, but also contributes to the degraded air quality in the country, identified in previous Surveys and the latest Environmental Performance Review of Türkiye (OECD, 2019[7]). Reducing the health impact of air pollutants will also require a modal shift in private transportation away from private car use, and better information via air quality indicators over all key sources of pollution in the entire territory. Finally, previous surveys have also underlined how Türkiye’s economic growth has increased pressures on natural resources and the environment. In particular, rapid urbanisation has led to urban sprawl encroaching on natural areas. Continuing careful management and policy coordination between ministries, in particular via the CCACB, would safeguard the ecological services provided by Türkiye’s natural asset base including the high biodiversity in the country and its contribution to carbon mitigation and climate change adaptation.
This chapter discusses three important steps for Türkiye to ensure a successful green transformation in line with those main challenges. While a comprehensive policy mix is required for effective decarbonisation strategies – carbon pricing, incentives for the adoption of low-carbon technologies, standards and regulations, support for the groups vulnerable to the transition process, etc. – this Chapter will focus on three particular elements:
Firstly, the country needs to price carbon effectively to provide the right incentives to economic agents but also address Türkiye’s exposure to the EU’s Green Deal and Carbon Border Adjustment Mechanism (CBAM).
Secondly, it needs to expand and decarbonise electricity production in order to transition away from imported fossil fuels and thus reduce the high contribution of energy production to GHG emissions. This would not only help achieve Türkiye’s climate change mitigation objectives while improving energy security, but also provide substantial health benefits considering the significant impact of the currently high level of air pollution on premature deaths.
Finally, Türkiye needs to improve the management of its forests which are already affected by increasing temperatures and a changing climate.
It should be noted that the decarbonisation of energy production will support the greening of other sectors such as transportation, buildings, and industry, which are also critical to reaching the climate objective, but that will not be discussed specifically in this Chapter. Türkiye has recently developed a detailed strategy and several action plans for those sectors (see Box 3.2).
Kaya decomposition of the change in GHG emissions between 2000 and 2022
Note: The black triangle is the growth in total GHG emissions excluding LULUCF between 2000 and 2022. Coloured bars represent the sum of annual contributions to the change by source, approximated by the log-difference. The Kaya equation is a simple decomposition of the level of GHG emissions into emissions per unit of total primary energy supply (“carbon intensity”), energy use per unit of real GDP (“energy intensity”), real GDP per capita (in USD 2015 PPP), and population.
Source: OECD (2024), OECD Environment Statistics (database); Demography and Population Statistics (database); National Accounts Database; IEA (2024), IEA World Balances (Energy).
Note: In Panel B, forest exposure refers to the share of tree-covered areas exposed to very high or extreme wildfire danger for more than three consecutive days. OECD countries with a level of 0% have been excluded from the figure. Population exposure refers to the share of the population exposed to at least one fire over 2017-21.
Source: OECD (2024), OECD Environment Statistics (database); and OECD (2022), "OECD Regions and Cities at a Glance 2022".
A regularly-updated, detailed sectoral strategy of GHG emissions reductions can provide certainty and ensure the credibility of long term targets
For example, France’s National Low-Carbon Strategy (SNBC) outlines short- and medium-term carbon budgets and strategies to achieve sectoral targets in the long run, and carbon neutrality by 2050. In particular, it focuses on decarbonising energy through the expansion and the greening of electricity, reducing energy consumption, reducing non-energy emissions, and enhancing carbon sinks. The 2015 Law on the Energy Transition for Green Growth requires that climate budgets are set for five-year periods via the SNBC.
An effective combination of governance and policy choices can support decarbonisation
For example, Denmark has been at the forefront of emissions reductions by articulating strong institutional choices with proactive policies. This includes a comprehensive policy mix with a carbon tax, regulatory measures such as a ban on new fossil fuel cars, public investment, and targeted policies to attract private investments such as R&D support or streamlined planning processes. On the institutional front, it provided intermediate ambitious, detailed, and quantifiable targets for example in its Climate Law, and promoted stakeholder involvement e.g. via business-government partnerships and an advisory citizen assembly.
Independent advisory bodies can help design, strengthen and coordinate climate policies
An independent economic advisory body on climate change can provide technical advice and help coordinate different policy interventions across public and governmental institutions. For example, the United Kingdom established the Committee on Climate Change to provide independent analyses and to advise the Government on setting legally-binding carbon budgets, to monitor governmental action, and to provide policy advice. In Denmark, the Environmental Economic Council provides analyses and advice to policymakers, and the Danish Council on Climate Change, a council of experts, provides annual recommendations to the Ministry of Climate, both to achieve long-term mitigation targets. In addition, the latter Council provides an annual climate report including ten-year projections and an analysis of the adequacy of current policies.
Türkiye’s Long-Term Climate Strategy (LTS) provides a comprehensive overview of targets and projected policy interventions for long-term greenhouse gas emissions mitigation in the main economic sectors, in parallel of strategies related to innovation, just transition, and climate finance.
In the energy sector, the strategy focusses on long-term improvement in energy efficiency and diversification of supply with ramped up renewable and nuclear energy targets in particular. In industry, emissions reductions ranging from 75% to 100% are planned for the hard-to-abate industrial sectors by 2053. In buildings, gradual regulatory changes are proposed to bring emissions near zero along with efficiency savings. In transportation, the plan foresees the gradual expansion of electrification and modal shifts and presents 2035 targets for the number of electric vehicles and charging stations, and long-term targets for the electrification and the more intense use of railways. In the waste and agriculture sectors, actions to reduce methane emissions are proposed by enhancing the circular economy and sustainable agriculture principles. In land use, land use change and forestry (LULUCF), the main focus is to improve forest management through research and development and regulatory changes.
Source: Turkish authorities and Türkiye: 2053 Long Term Climate Strategy, https://unfccc.int/sites/default/files/resource/Turkiye_Long_Term_Climate_Strategy.pdf
Türkiye needs to increase its carbon pricing as part of a broader strategy to reduce emissions. Pricing emissions is the most effective way to reduce emissions, especially in the short run, and can raise significant revenues which can be recycled (OECD, 2023[9]; Hahn et al., 2024[10]). Still, effective decarbonisation requires a broad policy mix, combining carbon pricing with standards and regulations and complementary policies such as innovation support, infrastructure investment, and compensatory measures for groups vulnerable to the green transformation.
The expected increase in revenues from carbon pricing tends to be more important in middle- and low-income countries than in high-income countries, as they tend to be more carbon-intensive and with low or no direct carbon taxation, going beyond the level of expenditure needed for the transition (Black et al., 2024[11]). Today, Türkiye only prices carbon indirectly, mostly through fuel excise taxes in road transport. Effective carbon rates are thus relatively low compared to other OECD countries, particularly in industry and buildings (Figure 3.4, Panel A). More than two-thirds of energy use is not taxed (Figure 3.4, Panel B). Fewer than a fifth of emissions are priced above EUR 30 per ton and almost none above EUR 60 per ton. In addition, the gap with the EU – Türkiye’s main trading partner – is likely to widen as the region implements a second Emissions Trading System (ETS) in 2027 covering road transport and buildings emissions.
Note: In Panel B, OECD calculations based on data on effective carbon rates by sector, fuel, and instrument (OECD, 2024), and the emissions base refers to all GHG excluding land use change and forestry. The ECRs are available at the level of the sector, fuel, and instrument (e.g. excise tax, carbon tax, ETS). Covered emissions are sorted by increasing level of the ECR that applies to them. Therefore, for a given point on the y-axis, the value on the x-axis corresponds to the share of total emissions priced at or below this value.
Source: OECD (2024), OECD Net effective carbon rates (database); and OECD (2024), Pricing Greenhouse Gas Emissions 2024: Gearing Up to Bring Emissions Down, OECD Series on Carbon Pricing and Energy Taxation.
Türkiye should accelerate the implementation of a national ETS. The country has conducted several studies regarding the pricing of carbon including an analysis of the most adequate carbon pricing mechanism and a mandatory emissions’ monitoring, reporting, and verification program (World Bank, 2022[12]). Following up on these analyses, the government decided to adopt an ETS and planned to finalise the legal framework for it in its Medium-Term Program (MTP 2025-2027). The details of the ETS, such as the scope, the emissions cap, and the schedule, have not been specified yet but will be included as part of the enactment of the Climate Law in 2025 along with details regarding the Carbon Market Board overseeing the system. The implementation of a pricing mechanism is urgent because the EU will introduce a carbon border adjustment mechanism (CBAM) in 2026, which according to some estimates could cost Türkiye EUR 2.5 billion per year. However, a carbon price of EUR 20 per ton in 2027 gradually increasing to EUR 50 per ton in 2032 would reduce the costs for Türkiye by two thirds and allow the country to collect part of the revenue initially raised by the EU (Long et al., 2023[13]).
The government continues to directly support fossil fuels via tax expenditures and direct transfers. For example, in 2021, the Revenue Administration estimated revenues foregone from excise tax exemptions for fossil fuel use to 0.9% of GDP (World Bank, 2022[12]). Türkiye also provides substantial direct support for coal and other fossil fuels. This includes capital transfers to the state-owned Turkish Hard Coal Enterprise (TTK) to compensate the company for its high production costs which were more than three times its selling price in 2018. In addition, Turkish Coal Enterprises (TKI) has been supplying coal in-kind to poor households using lignite for heating purposes (OECD, 2023[14]; World Bank, 2023[15]). While Türkiye has made efforts to expand its natural gas infrastructure to reduce the dependence of households on coal, the country should phase out fossil fuel subsidies or replace them with targeted support measures if needed.
Beyond this direct support, government guarantees supporting fossil fuels are also sizeable. An electricity capacity mechanism, whereby power plants receive monthly capacity payments based on a regulated formula, applies to coal and natural gas (it also applied to hydropower until last year). It has become partially competitive since 2022 where a mixed payment methodology with half of the capacity payments distributed at market clearing prices was implemented (Korucan and Yardimci, 2023[16]). The goal of the mechanism is to ensure sufficient installed and reserve generation capacity. It could be improved. For example, it does not feature emissions performance standards or age limits for participating domestic plants while a 50% efficiency criteria applies to power plants using imported fuels. Eligible firms are allowed to participate in the energy market, while in other countries these mechanisms are typically put in place to bolster strategic reserves (Papandreou, 2023[17]; IEA, 2021[18]). A temporary, competitive mechanism with emissions standards and oriented towards building strategic reserves, along with boosting green electrification and improved grid interconnections, would provide better incentives more efficiently while improving energy security (European Commission, 2016[19]).
Direct and indirect support, and the lack of carbon taxes, imply that fossil fuels are severely underpriced even before accounting for externalities. Taking into account the social costs of fossil fuels, the IMF estimated that implicit and explicit subsidies to fossil fuels amounted to 15% of GDP in 2022. In particular, the country provides the largest benefit to coal and natural gas among G20 countries (Black et al., 2023[20]). More targeted support could be beneficial. For example, in 2015 Indonesia reduced the share of fossil fuel subsidies in government expenditures by 60% and replaced them with increases in spending on social protection and infrastructure, which supported growth and employment. It also reduced the budget’s vulnerability to risk coming from variations in commodity and currency prices (OECD, 2024[21]). In addition to providing more targeted support in line with climate ambitions, Türkiye could review tax expenditures based on their impact on the environment: today, 10 countries have included such tax expenditures in the scope of their green budgeting (OECD, 2024[6]).
Pricing carbon efficiently could increase government revenues significantly. Increasing the effective carbon rate to a floor of EUR 60-75 per ton by deploying an ETS and transitioning away from fossil fuel subsidies could reduce emissions by more than 15% and raise 2% of GDP in extra revenues annually (Parry, Minnett and Zhunussova, 2023[22]; D’Arcangelo et al., 2022[23]). In parallel, the net zero pathway (NZP) developed by the World Bank and consistent with Türkiye’s 2053 net zero target estimates that the additional public investment needs for the green transition would amount to 0.9% of GDP per year. In its Twelfth Development Plan, and reiterated in the 2053 Long Term Climate Strategy, the government estimated additional annual public investment needs of 0.7% of GDP, a similar order of magnitude.
Carbon revenues could be recycled to support growth, facilitate green investment, and accompany groups requiring special policies during the green transition. Increasing the price of carbon without compensatory policies would increase inequalities and hamper growth: a recent estimate by the IMF suggests that a price of EUR 75 per ton would reduce consumption in Türkiye by 3.4% for the lowest income decile and by 2.5% for the top decile (Parry, Minnett and Zhunussova, 2023[22]). However, recycling a quarter of the revenues towards a targeted income transfer to the bottom 40% of household and using the rest to reduce labour taxation would have a positive impact on growth and be redistributive (Guillemette and Château, 2023[24]; Chateau, Jaumotte and Schwerhoff, 2022[25]). These estimates do not take into account the environmental and social benefits of higher carbon prices. To address the impact on domestic competitiveness, in particular for energy-intensive and trade-exposed industries, Türkiye could in turn implement its own CBAM (which ensures that domestic purchasers have no carbon-price-related reason to prefer domestic products over imports or vice versa), provide emissions-unrelated rebates to exposed industries, or temporarily provide free allowances depending on an arbitrage between effectiveness and administrative complexity (OECD, 2022[26]; OECD, 2021[27]; Parry, Minnett and Zhunussova, 2023[22]).
3.3.1. Decarbonising energy production requires expanding electricity supply and greening its sources
Energy consumption is relatively carbon intensive in Türkiye. While the share of renewables in primary energy and electricity supply is at the median of OECD countries owing in part to significant hydropower resources, the share of renewable energy in final energy consumption is among the lowest in the OECD (IEA, 2024[28]). The energy sector is responsible for almost a third of the country’s emissions, 10 percentage points higher than in the median OECD country. Coal, oil, and natural gas each contribute almost 30% to total energy supply (Figure 3.5, Panel A). As a consequence, most of final consumption is provided by fossil fuels, or by electricity generated with fossil fuels.
To reduce GHG emissions from energy supply, electricity generation will need to be expanded, and its sources will need to be greened. Electricity in Türkiye covers one fifth of final energy consumption today, slightly less than in advanced economies on average. It remains fuelled mostly by coal and natural gas, which contributed to 35% and 23% of electricity generation respectively in 2022 (Figure 3.5, Panel B). The carbon intensity of electricity generation has not declined as fast as other countries (IEA, 2021[18]; Ember, 2024[29]). This is particularly concerning given that the decarbonisation of economic sectors to achieve emissions targets will depend on their electrification. In particular, in addition to energy efficiency measures and carbon capture, it will require (i) the electrification of cars, trucks, and an expanded electrified railway system; (ii) renovations to insulate buildings and the move towards electrified heat pumps, and (iii) manufacturing processes (e.g. for steel production) fuelled by electricity or hydrogen typically generated via electrolysis (World Bank, 2022[12]; IEA, 2023[30]). Türkiye’s detailed strategy and action plans in each of those economic sectors confirm the importance of electrification in successfully achieving the green transformation in the country (see Box 3.2).
Decarbonising energy supply by deploying green electricity will help achieve emissions targets. The World Bank has recently provided a detailed “Resilient and Net Zero Pathway” (RNZP) showing how Türkiye could achieve its 2053 target, and meet a doubling of peak power demand, by transitioning away from coal power plants, accelerating investments in solar and wind energy while ensuring energy security through additional battery and pumped storage, pushing forward on energy efficiency, and relying on gas generation with carbon capture and storage (World Bank, 2022[12]).
Such a strategy would also significantly improve energy security. Total domestic energy production only covers 31% of total energy supply today. Oil and natural gas are almost integrally imported and represent around three fifths of final energy consumption. Half of the coal supply is also imported, mostly from Russia and Colombia (Figure 3.5, Gumus (2024[31])). In parallel, the integration of renewable energy sources such as wind and solar power could raise concerns regarding energy security due to their intermittent nature. To address these challenges, net zero scenarios including the one developed by the World Bank puts emphasis on the importance of investment grid diversification and interconnection, flexible backup generation, demand response programs and smart grids, and investment in energy storage. Such concerns have been largely recognised in Türkiye’s, long term strategy: in particular, the LTS includes a projected increase in electrolyser and battery capacity to 2 and 2.1 GW respectively by 2030 and plans for additional pumped-storage hydropower plants, and a reduction in energy intensity by 35% in 2035 (Box 3.2).
Note: In Panel A, services include commercial and public services.
Source: IEA World Energy Statistics and Balances (database), www.iea.org/countries/turkiye/energy-mix.
3.3.2. Transitioning away from coal
Türkiye needs to transition away from coal-fired power to decarbonise energy generation and enhance energy security. To achieve the net zero target, no new coal plant should be built, the most inefficient coal plants should be closed by 2030, and the remaining plants closed or retrofitted by 2040 (World Bank, 2022[12]; IEA, 2021[32]). However, the Turkish government has not proposed plans to reduce coal capacity and instead aims to expand coal mining activity to provide baseload capacity and thus improve energy security. While Türkiye projects to reduce the share of coal in energy supply, the 2022 National Energy Plan (NEP) forecasts an increase of absolute domestic coal-fired power plants capacity by 1.7 gigawatts (GW) by 2030, and a general increase in capacity until at least 2035. Other OECD countries relying significantly on coal, such as Germany, Slovenia, or Poland, have deployed national plans to phase out coal. By contrast, coal-fired power generation has more than doubled in the last decade in Türkiye. A detailed plan to transition away from coal, consistent with the country’s emissions target, would provide greater certainty on the future trajectory of energy supply and spur investment in power generation from other sources.
Various net zero pathways (NZP) developed for Türkiye suggest that a transition away from coal is necessary and feasible. Following up the announcement of the net zero target, four reports have developed decarbonisation pathways which include future trajectories for power capacities by energy sources. Despite differences in assumptions relative to macroeconomic and energy demand projections, all scenarios agree on the future of electricity generation. Coal would be phased out (Figure 3.6). Solar and wind capacities would be quadrupled by 2030 compared to ten years prior – an annual rate of growth of 15-20%, and reach a total of around 140GW in 2040 against 25GW in 2023. While this pace is ambitious since global renewable capacity has increased by 10% a year in the last 10 years, it has been steadily accelerating. In particular, global renewable capacity increased by 60% in 2023, by 40% in the United States, and by 30% in Europe, South Africa, and Brazil (IEA, 2024[33]). The current hydropower capacity would be maintained for storage and baseload capacity. In order to provide the necessary baseload capacity, natural gas capacity would stabilise or grow slightly to support energy security and peak-demand support, but would typically be combined eventually with carbon capture in an NZP. A nuclear capacity of 4.8GW is generally assumed, as announced by the government (the government announced in November 2024 a new target of installed capacity of nuclear energy 4.8GW for 2030 and 7.2GW for 2035) (Alparslan, 2022[34]; World Bank, 2022[12]; APLUS Energy, 2021[35]; Aksoy et al., 2022[36]; Şahin et al., 2021[37]; Kat et al., 2024[38]).
Transitioning away from coal with renewables would provide energy at lower cost and reduce energy dependency. Building new coal plants is already more expensive than solar and wind, and this gap will widen as renewables get cheaper and carbon prices rise (IEA, 2024[39]; Alparslan, 2021[40]; Aksoy et al., 2022[36]). Furthermore, the average cost of electricity generated from renewables was expected to fall below the operating cost of coal in 2023 in Türkiye, and has already done so in the EU and the United States (Gray, 2020[41]). In addition, the efficiency of domestic coal is 50% lower than that of imported coal. Maintaining the current level and structure of coal import capacity, in turn, is problematic for energy security. The share of imported coal in the production of electricity has kept increasing in the last four years. Russia and Colombia have represented more than four-fifths of Türkiye’s coal imports since 2017; and the share of coal imports in coal-generated electricity has been gradually increasing over the last 20 years, from none to almost two-thirds between 2000 and 2023 (Gumus, 2024[31]; EIU, 2024[42]). While the share of domestic coal in electricity generation is around 14% currently, other greener sources of energy could as efficiently stabilise energy supply. The capacity factor (the actual energy output relative to the theoretical maximum) of domestic coal has fallen below some wind farms recently (Gumus, 2024[43]).
Projected power capacity in net zero pathways, by source
Note: Numbers from the World Bank are not directly accessible but replicate Figure S.4 of the Country Climate and Development Report. “Other” includes 15GW of biomass in Kat et al. (2024)’s projections in 2040.
Transitioning away from coal would have significant welfare benefits by reducing not only GHG emissions, but also air pollution. Türkiye has one of the highest levels of exposure to fine particulates (PM2.5) in the OECD, leading to the highest mortality rates from air pollution in 2019 (Figure 3.7). In that year, 13.8% of premature deaths were attributed to exposure to PM2.5 against 5.5% in the OECD on average. The overall welfare cost of particulate exposure generated by coal-fired power plants has been estimated to be between 2% and 5% of GDP per year (OECD, 2024[44]; Health and Environment Alliance, 2021[45]; Black et al., 2023[20]; OECD, 2024[46]).
Türkiye has started to tackle the issue. Power plants are subject to the industrial air pollution control regulation, which sets relatively tight limit values for some air pollutants. In addition, Türkiye introduced the Regulation on the Management of Industrial Emissions in January 2025, which introduces a Green Transformation Certificate to assess the environmental performance of facilities in some industrial sectors, classifying facilities from A to F based on their compliance with the best available techniques. The Ministry of Environment, Urbanisation, and Climate Change also provides grants to municipalities to replace coal with natural gas for residential heating in order to reduce the health effects of air pollution. However, no limit exists on PM2.5 concentrations. Introducing or tightening thresholds, along with regulatory enforcement and inspections conducted following the OECD Best Practice Principles for Regulatory Policy such as evidence-based and targeted inspections (OECD, 2014[47]), could bring coal plant retirements forward or incentivise retrofits.
Mean Population exposure to fine particulates PM2.5, 2020
Source: OECD (2024), OECD Environment Statistics (database).
The successful transition away from coal will require a combination of carbon pricing, standards and regulations, and financial incentives. As an example of successful and rapid phaseout, coal has now effectively no role in electricity generation in the United Kingdom even though its contribution had been stable between 2000 and 2010 and still represented 30% of total generation in 2010 (OECD, 2022[26]; MacDonald, Lee and Candlin, 2023[48]). The United Kingdom successfully phased out coal in particular by setting a carbon price floor and limiting emissions intensity beyond the potential reach of coal plants.
Such measures can be accompanied by investments in conversions or retrofits. Early closures of power plants could be compensated through direct payments or auctions. The World Bank has estimated the direct, stranded costs of early retirements at USD 4 billion (World Bank, 2022[12]). Germany implemented both strategies, respectively for lignite and hard coal. Türkiye could also benefit from cooperation with domestic and multilateral development banks (Kachi, Bendahou and Outlaw, 2024[49]). In Chile, the Inter-American Development Bank provided a concessional loan to finance the retirement of two coal power units early and replace them by a wind farm (IDB Invest, 2021[50]). The Asian Development Bank, of which Türkiye is a member, has set up a pilot programme including a debt restructuring instrument to incentivise the early decommission of coal power plants. Coal plants can also be retrofitted. Converting coal plants to gas plants can be attractive for those with pre-existing gas infrastructure nearby. Coal power plants below 300 megawatts (MW) capacity that lack gas infrastructure and are outside earthquake zones could also be replaced by small modular nuclear reactors (SMRs) (World Nuclear Association, 2024[51]). The government emphasises SMRs as a major part of the strategy to decarbonise energy production in its most recent mitigation SAP. Nuclear energy provides more stable decarbonised electricity compared to renewable sources, and the smaller scale of SMRs reduces the risks of delays and overruns compared to standard nuclear plants. However, as for other nuclear plants, there are other environmental concerns related to the storage of waste, and potential negative long-term implications on life and health in case of serious accidents, which require careful monitoring and the cost of additional investments to be taken into account. In addition, the technology of SMRs is relatively new: the first SMR was connected in 2019 and only Russia, China, and India have already connected some SMRs to the grid. Finally, the capture of coal emissions can make sense for new coal plants to avoid large depreciation costs. It could be made more competitive with a high carbon price: the average cost of capture is around USD 50-100 per ton today with an additional cost of transport and storage of USD 20 (IEA, 2021[52]).
3.3.3. Support measures will have to accompany regions and workers dependent on coal
Complementary measures will be required to accompany the people and regions vulnerable to changes in the structure of jobs in general, and to the transition away from coal in particular. At the national level, the net employment effects from higher carbon prices could be fairly limited (Chateau, Bibas and Lanzi, 2018[53]), as jobs created in greener businesses, including in construction and services, are projected to offset job losses in mining and carbon-intensive industries. In Türkiye, estimates suggest that there are around 50 thousand workers in the coal industry and an additional 150 thousand workers in the subsectors covered by the EU CBAM. This is less than 1% of total employment (World Bank, 2022[12]; Özenç and Aşık, 2024[54]). Many workers in these sectors already have skills transferable to green jobs, which should help them find other job opportunities (IEA, 2022[55]). In Türkiye, compared to other manufacturing jobs, wages are relatively higher in the coal sector, informality and the share of routine jobs are lower, and education levels are similar despite a higher rate of vocational training (Özenç and Aşık, 2024[54]).
In Türkiye and other coal-intensive countries, coal jobs are concentrated in specific regions and affect specific workers, which can be impacted disproportionately (OECD, 2023[56]). In the United Kingdom, hourly wages for displaced coal workers are estimated to have fallen by 40% on impact and remained 20% lower fifteen years later (Rud et al., 2024[57]). In the United States, counties exposed to the decline of coal activity since 1980 have experienced long-run reduction in earnings, employment, and population (Hanson, 2023[58]). More generally, past transitions in other countries have shown that these regions can suffer long-term effects if the transition is not anticipated (Caldecott, Sartor and Spencer, 2017[59]).
Learning from other countries’ past transitions will be important for Türkiye in order to prevent long-term scarring of regions and workers. In the country, coal and lignite mining represents more than 0.4% of employment in two regions: Zonguldak-Karabük-Bartın (4.2%) and Manisa-Afyonkarahisar-Kütahya-Uşak (1.1%). Past experiences in other countries suggest that adequate support can be provided through a combination of labour market policies, place-based investments, and measures to remove obstacles to geographical mobility (OECD, 2023[60]). For example, the coal transition was relatively successful in the region of Limburg in the Netherlands, which benefited from the relocation of some government services and support for innovation and knowledge sharing which boosted growth in the 2000s after suffering from the highest unemployment rate in the country in the 1970s. The transition away from coal could be partly funded by savings from reduced coal subsidies: The World Bank estimated that two thirds of the transition costs in Türkiye could be covered by the induced reduction of coal subsidies (World Bank, 2022[12]).
Supporting the transition away from coal will require an assessment of the redistribution of skills induced by the transition, and a combination of place-based and labour market policies. The public employment service can assess the skills needed for green jobs through “skills assessment and anticipation exercises”, which could be based on labour force surveys such as the recent analysis made by the SHURA Energy Transition Center (OECD, 2023[61]; Özenç and Aşık, 2024[54]). Once groups vulnerable to the green transformation have been identified, the government can put in place a combination of place-based policies and reinforce labour market policies (Causa et al., 2024[62]; D’Arcangelo et al., 2022[5]; OECD, 2024[63]). Place-based policies include early-stage reskilling and up-skilling, public investment programmes, and improvements in social conditions through higher quality healthcare and transport policies in the region. They can take the form of wider regional industry development plans. For example, the Just Transition Development Plan in Greece deploys private, public and PPP financing for investments in Western Macedonia not only to shift power production from lignite plants toward natural gas and renewables, but also to establish a pharmaceutical industry and develop wine tourism (OECD, 2023[64]).
Encouraging geographical mobility could help smooth transitions. As an example of such a policy, the EU’s Just Transition Fund (JTF) makes provisions for support for both digital and physical infrastructure investments that improve connectivity (IEA, 2022[65]). Similar policies could be implemented in Türkiye. Central government financial support for place-based policies can be conditioned on the establishment of long-term, regional plans for the transitions: for example, the JTF provides support to the territories most affected by the green transition and requires that countries prepare long-term plans for eligible regions (OECD, 2021[66]). Active labour market policies, targeted unemployment benefits and social assistance, and looser labour market regulations, will then facilitate the reallocation of workers to green employment (Causa et al., 2024[62]). Furthermore, more stringent employment protection legislation is associated with a higher share of brown workers that cannot transition to green jobs, potentially because it creates barriers to exit of low productivity polluting firms (Tyros, Andrews and de Serres, 2023[67]). As a consequence, following up on the recommendations of the special chapter of the 2023 OECD Economic Survey of Türkiye in that regard will be essential. In particular, Türkiye can increase the number of persons receiving counselling services by supporting job placement services by the public employment service İŞKUR, engage private job placement and counselling providers, deploy digital tools to improve match efficiency, expand the scope and generosity of unemployment insurance and assistance, and loosen employment protection legislation (OECD, 2023[68]).
3.3.4. Türkiye can speed up the deployment of renewables
The transition away from coal will only be successful if wind and solar capacity expands fast. Türkiye has made significant progress in the deployment of renewables in recent years. The share of renewables in electricity generation has increased from 26% in 2010 to 46% in 2024. During this period, the country built up a wind and solar installed capacity of 12.5 and 19.9GW respectively (Gümüş, 2025[69]). The authorities have provided two quantitative intermediate future targets: the 2023 NDC aims to reach capacities of 18GW and 33GW by 2030 for wind and solar respectively, and the NEP aims at 29.6GW and 52.9GW by 2035. These objectives have been raised in November 2024 to 43.1GW and 76.9GW. Even before recent announcements, the solar objective was consistent with NZPs, while the objectives for wind power are still below but significantly closer to requirements (Figure 3.6). However, the pace of installation has recently slowed down: for example, only 0.4GW of wind capacity was installed in 2023, the lowest number since 2012 (Gumus, 2024[31]). There is room for solar and wind expansion. Today, Türkiye appears to only use a relatively small share of its solar and wind potential, and the current geographical distribution of capacity is not optimally aligned with potential (IEA, 2021[18]; OECD, 2023[68]; Yildirim, 2023[70]).
To accelerate wind and solar power deployment, Türkiye can improve its current financial incentives. Today, the country uses three main instruments: (i) The Renewable Energy Support Mechanism (YEKDEM), a Feed-in Tariff (FiT); (ii) competitive auctions conducted via the Renewable Energy Resource Areas (YEKA) for a FiT in specific “renewable energy zones”; and (iii) net metering regulation for small-scale solar systems. Those incentives are largely welcome, but their design could be improved.
FiTs can be costly, slow to adapt to changes in technology, and hard to calibrate. FiTs are a simple mechanism to provide support and reduce uncertainties, but prices and volumes allocated via FiTs are typically settled by an administrative process which can be slow to adjust to declines in costs due to technological progress. In addition, they blur the price signal as they are not directly linked to the market price. As a consequence, most OECD countries have now shifted away from FiTs towards mechanisms that incorporate the price signal and based on competitive biddings like feed-in premiums (FiPs) and contracts for differences (CfDs). With these instruments, the producer is guaranteed a given price – and obtains the upside if the wholesale price rises above this guaranteed level in the case of FiPs. CfDs can be fiscally attractive compared to FiPs (and would prevent unexpected windfalls to renewable generators) since they allow the government to recoup revenues if the market price is above the reference tariff level. CfDs could be paired with long-term Purchasing Power Agreements whereby private power consumers and producers agree on long-term energy supply, which also reduces the burden on public finances (Busch et al., 2023[71]; Ason and Poz, 2024[72]).
Even though an eventual shift from FiTs towards FiPs or CfDs would be more efficient, the recent shift to a reliance on auctions with YEKA is welcome and could be pursued in the short term. The programme has shown some limitations. Solar capacity allocations since 2017 are only one-third of what would be needed to achieve targets. Recent growth has been mostly driven by small-scale solar due to the loosening of the net metering regulation (Alparslan and Yildirim, 2023[73]). Large-scale plants would provide significantly higher returns thanks to a lower average cost of energy (Hahn et al., 2024[10]). Wind capacity expansion has also been slow, partly due to insufficient transmission capacity and potentially because of restrictive participation requirements like local content rules (IEA, 2021[18]). By 2023 only 1.3GW of capacity was operational out of the tendered 6GW since 2017 (Gumus, 2024[31]).
Finally, remaining administrative and regulatory constraints could be loosened. Experience from other OECD countries shows that establishing a single body responsible for issuing all required licenses or establishing a spatial committee to coordinate the broader electricity network is key to promote investment in renewables. For rooftop solar energy, approval must be obtained from different organisations in Türkiye. As a consequence, it takes 27 weeks from an application for a residential rooftop solar system with one week for the actual installation (Alparslan and Yildirim, 2023[73]). Encouragingly, authorities have identified the permit process as an essential barrier to renewables deployment and has planned to significantly reduce the pre-license process from 48 months to 18 months along with shortening other procedures (e.g. environmental impact assessments).
Forests are essential for emissions mitigation but their role is threatened, in particular by increasing wildfire risks. The annual GHG sequestration from land use, land-use change and forestry (LULUCF) has declined significantly. In absolute terms, it grew from 66.5 Mt CO2-eq in 1990 to reach a peak of 77 Mt CO2-eq in 2014, but eventually decreased to 47 CO2-eq in 2021. The share of non-LULUCF emissions sunk declined steadily from 30% in 1990 to 8% in 2021. This was partly driven by the historically large wildfires in 2021 which burnt a surface four times higher than in any year since 1990, and released 20 million tons of CO2. There has been an increasing trend in burnt areas in recent years. Fires have been responsible for 14% of tree cover loss in Türkiye between 2001 and 2023. More generally, the intensity of forest use increased by 50% between 2019-22 and 2010-18, and is now above the median OECD country (OECD, 2019[7]). Annual tree cover loss has doubled since 2016 (GFW, 2024[74]). While permanent deforestation (excluding wildfires) remains rare, it has tripled since 2016. Land take and recultivation have been higher than most countries in the European Economic Area in the last decade. An ambitious forest strategy will thus be essential both to reduce carbon emissions and adapt to climate change.
3.4.1. Improving the mitigation capacity of forests
Restoring and enhancing the level of emissions sunk by the LULUCF sector will be key to achieve Türkiye’s emissions target. In the World Bank’s RNZP with significant reductions in emissions in other sectors, the reductions induced by forests and harvested wood products would need to increase by 60% to achieve net zero emissions in 2053. To achieve those goals, Türkiye can rely on a strong institutional governance of its forests. They are largely owned and managed by the government through the General Directorate of Forestry (OGM). Special afforestation requires OGM authorisation and oversight.. All forest areas benefit from a long-term management plan in line with the Sustainable Development Goals, against 83% in Europe and Northern America for example.
Türkiye can pursue the improvement in its accounting of natural capital, especially forests. Previous increases in forest cover have been linked to changing definitions of forests and afforestation. For example, data provided to the FAO included land re-registration, while private forests were underestimated (Serengil and Papageorgiou, 2022[75]). In 2017, the World Bank estimated that 40% of what authorities classified as forests were actually “other wooded land” according to UN definitions, while private forests were 10 times larger than reported (World Bank, 2017[76]). Efforts are under way to improve forest accounting, but more could be done. To improve accuracy, Türkiye's Twelfth Development Plan aims to align forestry statistics with international standards. Although the Twelfth Development Plan also sets a gradual, increasing target to raise the forest coverage from 29.8% in 2022 to 30.3% in 2028, the country could set clear, quantitative objectives for net afforestation and assess forests’ vulnerability aligned with its climate adaptation strategy.
Türkiye could focus on restoring degraded forests and reforestation with fast growing species, while limiting deforestation. Over 40% of the forest area is considered degraded. Restoring these forests is cost-effective and can significantly increase carbon absorption (Grafton et al., 2021[77]). The World Bank’s RNZP study suggests that preventing net deforestation, reforesting 15 thousand hectares by 2053, and restoring a third of the degraded forests could offset 120 million tons of GHG emissions and compensate unabated emissions in other sectors. The Twelfth Development Plan’s objective for industrial afforestation is in line with this scenario, but the proposed increase in forest area is significantly lower. To address this issue and improve forest management and institutional capacity, the OGM has launched the 'Climate Resilient Forests Project' in 2024, focusing on policy development, fire-resistant species, climate-resilient forests, and enhancing wildfire response capacity.
To achieve those objectives, Türkiye should employ a policy package combining regulatory policies and economic incentives. Türkiye has room to extend the range of protected areas: the share of protected land area is currently relatively low and the country has not set a horizon to achieve the Kunming-Montreal target of 30% (OECD, 2023[78]; European Commission, 2024[79]). However, the careful selection of protected areas will be essential. Evidence of past protected areas policies suggest that they have had a minor impact on forest cover on average because the selected areas are often under minimal pressure from economic development, but that better targeting and strict enforcement yield positive results (Reynaert, Souza-Rodrigues and van Benthem, 2024[80]). Türkiye could also adopt policy tools like taxes, subsidies, and tradable permits (Chhun et al., 2024[81]). Subsidies can take the form of tax credits, tax reductions (e.g. property tax exemptions), or payments for ecological services (PES). For example, Costa Rica has a long-running PES programme to stop deforestation, which provides direct payments to landowners when adopting sustainable forest management techniques (OECD, 2023[82]; UNFCCC, 2020[83]; OECD, 2020[84]). Eventually, forests could be covered by an ETS provided that mechanisms are in place in particular to manage the risks of carbon release (Mendelsohn, Sedjo and Sohngen, 2012[85]; Parry, Minnett and Zhunussova, 2023[22]; Sedjo and Marland, 2003[86]; OECD, 2024[87]). However, as discussed above, the sectoral coverage of the ETS planned by Türkiye has still not been specified.
3.4.2. Reducing wildfire risks
Climate change poses a growing risk of wildfires, which threaten forests and their sequestration power, and generate economic costs. Among OECD countries, Türkiye is particularly exposed: in particular, the share of tree-covered area exposed to very high or extreme fire danger is among the highest across the 52 countries in the International Program for Action on Climate (IPAC) and the share of the population exposed is above the IPAC median (Maes et al., 2022[3]).
The length of the fire weather season has increased by 40% since 1979 and is expected to increase by 30% in a scenario of an increase in 2°C in global temperatures (Jones et al., 2022[88]). Exposure to wildfire risk is high: three quarters of the country’s forests are exposed to very high or extreme fire danger, and 17% of the population were exposed to at least one fire between 2017 and 2021 (Figure 3.3). Wildfires have social costs that go beyond direct lives lost and damages to infrastructure and ecosystems. In particular, they present significant long-term health risks: today, wildfire-induced air pollution is associated with 340 000 premature deaths annually in the world (OECD, 2023[89]). In the United States, with a shorter wildfire season, a more limited increase in relative risk, and less population exposure, a recent estimation suggested that the mortality burden from the increase in fine particulates due to climate-induced wildfires would generate annual damages of more than 0.6% of GDP by 2050 (Qiu et al., 2024[90]).
Better management in reforestation and forest restoration can help reduce wildfire risks, along with improved land use, and stronger institutional capacity. The 2021 wildfires in Türkiye highlighted the need for better wildfire prevention and response. The OECD has provided an exhaustive cross-country comparative analysis of recent policy measures implemented by other countries facing similar risks which can support Türkiye’s strategy against wildfires (OECD, 2023[89]).
Implementing modern forest management techniques, for example through prescribed fires and the creation of buffer zones and fuel breaks. Türkiye has already experimented with some of those policies. The Constitution mandates that forests lost to wildfires should immediately be reforested, and the country has started planting fire resistant species in those rehabilitations. It has also built roads to isolate settlements and agricultural lands from forests (San-Miguel-Ayanz et al., 2022[91]).
Reinforcing land-use planning and building incentives, for example by regulating development in wildfire-prone areas. For instance, Portugal and France ban the construction of new buildings in zones with high wildfire risks. Building codes and standards can also mandate fireproof building designs. Financial incentives through insurance premia or the tax system can encourage wildfire mitigation: for example, the Colorado Wildfire Mitigation Deduction allows owners to claim tax credits for mitigation investments (Sutherland et al., forthcoming[92]).
Ramping up institutional capacity to manage wildfires with more funding. Türkiye’s forest fire management budget is relatively low, although capacity has recently increased since the wildfires of 2021 including investments for helicopters and drones (WWF, 2019[93]). Türkiye already provides important services, e.g. through early warning systems and information sharing across government agencies (World Bank, 2022[94]). It also benefits from international coordination through the European Forest Fire Information System and the EU Civil Protection Mechanism which pools response capacities with the EU and 10 other countries. The institutional framework could still be improved by promoting a whole-of-government approach to wildfire management, for example by creating a single coordinating body like the Agency for the Integrated Management of Rural Fires in Portugal.
Low insurance coverage makes the population vulnerable to increasing wildfire risks. Insurance can help not only reduce the socio-economic impacts of climate-related events, but also provide incentives for mitigation actions through premia or regulations and contribute to sharing the monetary burden between the public and the private sector. Such mitigation actions can include, for example, risk prevention measures at the property level such as fire-proof roofs and windows or renovations with non-flammable building materials. For example, in the United States, some insurance providers already give a discount on premiums to homeowners undertaking wildfire prevention measures – such discounts are mandated in California via the “Safer from Wildfires” programme. Today, the take-up of insurance in Türkiye is relatively low. For example, in 2022 the penetration of non-life insurance was the lowest in the OECD at 1.1% of GDP. The premiums per person amounted to USD 108, the second lowest in the OECD and 20 times below the OECD average (OECD, 2023[95]). The majority of disaster-related insurance covers earthquakes through Türkiye’s Catastrophe Insurance Pool (TCIP, or DASK in Turkish). As a consequence, only around 14% of Türkiye’s climate-related total economic losses were insured between 1980 and 2019, and 8% of all natural catastrophe economic losses between 1990 and 2019, lower than most OECD countries (World Bank, 2022[12]; OECD, 2021[96]).
Expanding the existing earthquake insurance system (TCIP) to cover other natural disasters would help. Disaster insurance aims to achieve multiple objectives: achieving broad coverage at an affordable price while being able to cover large losses in a reasonable amount of time. Experiences from European and OECD countries suggest that this could be achieved by mandating insurance against multiple risks as part of standardised products, while providing public reinsurance for catastrophic losses (OECD, 2005[97]; Kuik et al., 2017[98]). In France, private insurers must include insurance against natural catastrophes in property insurance policies. Coverage is funded from a fixed share of all premiums and insurers in turn benefit from government-backed reinsurance through the “Catnat” system. TCIP provides a good starting point to establish a broader system of insurance beyond earthquakes. It is set as a compulsory earthquake insurance scheme for dwellings in municipal areas. It has a simplified premium structure with 15 rating categories based on hazard zone area and the type of dwelling (OECD, 2021[96]). The government provides limited reinsurance on top of TCIP’s coverage and households can subscribe to private insurance above the TCIP threshold. For this reason, it is particularly welcome that the government is planning to expand the scope of TCIP to include most natural disasters, and include rural areas, which are currently excluded from coverage. The regulation regarding this Compulsory Disaster Insurance, which was outlined in the Medium-Term Program, is expected to be implemented in 2025.
Raising public awareness of disaster risk and providing more information would also help insurance take-up, incentivise adaptation investment, and ensure than insurance premiums reflect the actual risk. Türkiye already provides detailed geographical information on wildfire risks. Some countries in the OECD have started implementing programmes to add information on disaster risk at the time of a rental of purchase transactions, as is usually done for energy performance. This could be part of a certificate programme: for example, Germany’s Hochwasserpass includes a flood risk assessment and recommendations for additional precautionary measures. In the United States, the Boulder County’s Wildfire Partners program provides certificates after a free home assessment, which can be used to subscribe to insurance. Additional regulations could then complement the broader insurance system: In California, the “Safer from Wildfires” programme legally mandates insurance providers to reward wildfire prevention efforts undertaken by insured individuals by reflecting these in risk scores and giving corresponding discounts on insurance premiums (OECD, 2023[89]).
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