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  • Turkey Green Growth Policy Paper:

    Towards a Greener Economy

    The World Bank

    Europe and Central Asia Region

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  • ©2013 The International Bank for Reconstruction and Development / THE WORLD BANK

    1818 H Street, NW Washington, DC 20433, U.S.A.

    Telephone: 202-473-1000. Internet: www.worldbank.org. E-mail: [email protected]

    All rights reserved.

    April 2013

    This report is the product of the World Bank Turkey Green Growth Technical Assistance Program. It was prepared by the

    Sustainable Development Department of the Europe and Central Asia Region of the World Bank.

    ______________________________

    This volume is a product of the staff of the International Bank for Reconstruction and Development / The World Bank. The

    findings, interpretations, and conclusions expressed in this paper do not necessarily reflect the views of the Executive Directors

    of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in

    this work. The boundaries, colors, denominations, and other information shown on maps in this work do not imply any judgment

    on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of denoted boundaries.

    RIGHTS AND PERMISSIONS

    The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The International Bank for Reconstruction and Development /

    For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright

    Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA, telephone 978-750-8400, fax 978-750-4470,

    www.copyright.com. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the

    Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA, fax 202-522-2422, e-mail [email protected]

    mailto:[email protected] http://www.copyright.com/

  • i

    Table of Contents Abbreviations and Acronyms ....................................................................................................................... iii

    Acknowledgements ...................................................................................................................................... iv

    Executive Summary ....................................................................................................................................... v

    1. Introduction ........................................................................................................................................... 1

    1.1 Context and Background ................................................................................................................. 1

    1.2 Approach ......................................................................................................................................... 2

    1.3 Report Outline ................................................................................................................................. 4

    2. Turkey’s Green Growth Challenges and Opportunities ......................................................................... 5

    2.1 Turkey’s economy and its recent performance .............................................................................. 5

    2.2 Opportunities for greening provided by Turkey’s growth path ...................................................... 6

    3. Towards a Working Definition of Green Growth in Turkey ................................................................. 17

    4. Strategic Sectors: Overview and Greening Potential ........................................................................... 19

    4.1 Overview ....................................................................................................................................... 19

    4.2 Automotive ................................................................................................................................... 20

    4.3 Iron and Steel ................................................................................................................................ 22

    4.4 Cement .......................................................................................................................................... 24

    4.5 Machinery Industry ....................................................................................................................... 25

    4.6 White Goods ................................................................................................................................. 26

    4.7 Agriculture ..................................................................................................................................... 29

    5. Green Growth Policies: Overview and Implications for Turkey ........................................................... 35

    5.1 Green Policies in Turkey ................................................................................................................ 35

    5.2 A common agenda for green policies ........................................................................................... 35

    5.3 A policy menu ................................................................................................................................ 36

    5.4 Regulatory instruments................................................................................................................. 37

  • ii

    5.5 Market-based instruments (MBIs) ................................................................................................ 38

    5.6 Information-based instruments .................................................................................................... 39

    5.7 Matching policies with key constraints ......................................................................................... 40

    5.8 Policies for key strategic sectors ................................................................................................... 41

    6. Economy-wide Impacts of Greening Scenarios: A Pilot General Equilibrium Analysis ........................ 45

    6.1 Introduction .................................................................................................................................. 45

    6.2 Model structure and basic features .............................................................................................. 46

    6.3 Environmental Pollution and Instruments of Abatement ............................................................ 48

    6.4 Data ............................................................................................................................................... 49

    6.5 Policy Scenarios and Analysis ........................................................................................................ 49

    7. Conclusions and Recommendations .................................................................................................... 71

    ANNEX 1: Description of the Algebraic Structure of the CGE Model ...................................................... 74

    ANNEX 2: Description of the CGE Model Calibration and Base Path (2011-2030) .................................. 89

    References .................................................................................................................................................. 95

  • iii

    Abbreviations and Acronyms

    BAT Best Available Technology

    CGE Computable General Equilibrium

    CO2 Carbon dioxide

    CAP Common Agricultural Policy

    CBA Cost Benefit Analysis

    DPL Development Policy Loan

    ECA Europe and Central Asia

    EIA Environmental Impact Assessment

    ERDF European Regional Development Fund

    EU European Union

    EIA Environmental Impact Assessment

    ELV End-Of-Life Vehicle

    ETS Emissions Trading System

    FAO Food and Agriculture Organization

    GGPP Green Growth Policy Paper

    GDP Gross Domestic Product

    HEPP Hydroelectric Power Plants

    ICT Information and Communication Technologies

    IPPC Integrated Pollution Prevention and Control

    Kwh Kilowatt hour

    MBIs Market-based Instruments

    MoD Ministry of Development

    NDP National Development Plan

    OECD Organization of Economic Cooperation and Development

    PH