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1、 Public Disclosure AuthorizedPublic Disclosure AuthorizedPublic Disclosure AuthorizedPublic Disclosure Authorized Trkiyes Circular Economy Transition in the EUs Global Value Chain Ecosystem January 2025 1 2025 International Bank for Reconstruction and Development/The World Bank 1818 H Street NW Wash

2、ington DC 20433 Telephone:202-473-1000;Internet:www.worldbank.org Some rights reserved This work is a product of the staff of the World Bank.The findings,interpretations,and conclusions expressed in this work do not necessarily reflect the views of the Executive Directors of The World Bank or the go

3、vernments they represent.The World Bank does not guarantee the accuracy,completeness,or currency of the data included in this work and does not assume responsibility for any errors,omissions,or discrepancies in the information or liability with respect to the use of or failure to use the information

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7、en.Please cite the work as follows:World Bank.2025.Trkiyes Circular Economy Transition in the EUs Global Value Chain Ecosystem.World Bank.”All queries on rights and licenses,including subsidiary rights,should be addressed to World Bank Publications,The World Bank Group,1818 H Street NW,Washington,DC

8、 20433,USA;fax:202-522-2625;email:pubrightsworldbank.org.Cover design:Vladimir Mirzoev.2 Table of Contents Acknowledgments.4 Acronyms and Abbreviations.5 Executive Summary.1 Summary of Key Policy Recommendations for Trkiyes Circular Economy Transition.3 1.Introduction:The Rationale for Trkiyes Trans

9、ition to a Circular Economy.4 2.The How:A Dual-Scenario Framework for the Economics of the Circular Economy Transition.5 2.1 Circular Economy Light:Adaptive and Progressive Steps.5 2.2 Full Circular Economy:Beyond Incremental Steps.7 2.3 Factors Enabling Circular Economy Readiness.8 3.Trkiyes Circul

10、ar Economy Today:Achievements and Challenges.10 3.1 Trkiyes Preparedness to a Light Transition Scenario:Technological Upgrades and Their Drivers.10 3.1.1 Adoption of Resource-Efficient Production Technologies.10 3.1.2 Traceability and Monitoring:Digital and Reporting Infrastructure.13 3.1.3 Other Ma

11、chinery Upgrades and Process Innovations.15 3.1.4 Licensing Agreements for Foreign Technology.16 3.1.5 Access to and Use of Recycled Inputs.17 3.1.6 Skills.19 3.2 Trkiyes Preparedness to a Full Transition Scenario:Contributing to Advancing the Circular Economy Global Innovation Frontier.21 3.2.1 Inn

12、ovative Activities and R&D Expenditures.21 3.2.2 Anecdotal Evidence on Entrepreneurial Potential in Trkiye.22 3.3 Financing the Transition.22 3.4 Regulatory Alignment within Trkiye and with the EU.25 3.4.1 Trkiyes Action Plans and Incentive Programs.25 3.4.2 Challenges of Coordination with the EU an

13、d across Actors within Trkiye.29 4.Policies to Fast-Track the Light Transition and Catalyze the Full Transition.30 4.1 Recycling Ecosystem.31 4.2 Digital Infrastructure for Monitoring and Traceability.33 4.3 Establishing Shared Infrastructure Resources to Lower the Costs of CE Transition.36 4.4 Incr

14、ease Funding for the CE Transition through New and Established Financial Mechanisms.37 4.5 Managing the Relationship with the EU.39 4.6 Institutional and Coordination Enhancements within Trkiyes Government.40 4.7 Fostering Greater Collaboration between Public Stakeholders and the Private Sector.42 4

15、.8 Longer-term Strategies for Catalyzing a Full Transition.44 4.8.1 Human Capital Development and Awareness Building.44 4.8.2 Fostering an Innovative Ecosystem.44 4.8.3 Fostering a National Vision for a Sustainable,Inclusive,and Circular Economy.44 5.Conclusions.46 References.47 Annex A.Sector Selec

16、tion.50 Annex B.EU CE Regulatory Landscape in the Auto and Textiles and Apparel Industry.53 B.1 Textiles and Apparel.53 B.2 Automotive industry.57 Annex C.The Textiles and Apparel and Automotive Machinery and Equipment Industries in Trkiye.61 C.1 Industry Overview.61 C.2 Initiatives,Challenges,and O

17、pportunities in the Two-Focus Sectors:Evidence from Field Interviews and Desk Research.63 C.2.1 Textiles and Apparel.63 C.2.2 Automotive Machinery and Equipment.68 C.3 Expected Impact of Policy Recommendations on Enhancing Trkiyes Position in the Automotive 3 and Textiles and Apparel GVCs.73 Annex D

18、.Global Best Practices.74 Annex E.Achieving the EUs CE goals through Cooperation with Trkiye.76 E.1.The Central Role of Trkiye in the EU Circular and Green Value Chains.76 E.2 The Importance of Cooperation and Collaboration.78 E.3 Potential Consequences of Lack of Cooperation.78 Annex F.Data Sources

19、.80 F.1 Stakeholders Interviews(MaySeptember 2023).80 F.2 Enterprise Survey Data.80 F.3 Other Data Sources.81 Figures:Figure 1.Two transition scenarios.5 Figure 2:Adoption of CE practices.11 Figure 3:Energy efficiency enhancing measures.11 Figure 4:Resource productivity.12 Figure 5:Environmental foo

20、tprint monitoring.14 Figure 6:Certification.15 Figure 7:Machinery upgrades and process innovation.16 Figure 8:Technology licensing.17 Figure 9:Purchasing of trademarks,copyrights,patents,or other intangible assets.17 Figure 10:Recycling rate.19 Figure 11:Workforce skills.20 Figure 12:IT skills and u

21、sage.20 Figure 13:Manager responsibilities for climate and environmental issues.21 Figure 14:Innovative activity and R&D spending.22 Figure 15:Major obstacle as identified by firms.23 Figure 16:Main impediment for non-adoption of energy efficiency enhancing measures.24 Figure 17:Energy efficiency me

22、asures:Main impediment for non-adopters.24 Figure A.1 Trkiyes exports to the EU-27 as a share of total exports,2021.50 Figure A.2 Domestic content in Trkiyes gross exports,20112020.51 Figure B.13 Key characteristics of the EU Green Deal approach to sustainability.53 Figure E.1:Network representation

23、 of the country-level buyer-seller relations,global perspective.77 Figure E.2:Network representation of the buyer-seller relations,Trkiye perspective.77 Tables:Table 1:Descriptive statistics.12 Table 2:Principal Turkish Sustainability Strategies and Action Plans.26 Table 3:Relevant Turkish Incentive

24、s Focused on Enhancing Green and Circular Production.27 Table A.1 Contribution of key export industries to the Turkish economy(2021).51 Table B.1:Key circular economy-related EU legislation affecting the textiles and apparel GVC.55 Table B.2:Key circular economy-related EU legislation affecting the

25、automotive GVC.58 4 Acknowledgments The World Bank team thanks Anne Beck and Daria Taglioni for preparing this report as part of the World Banks collaboration with the Government of the Republic of Trkiye,led by Andrea Liverani and Arno Behrens.Acknowledgments are also due to Penny Bamber,Karina Fer

26、nandez Stark,and Vivian Cuoto for their detailed background analysis within the automotive and apparel-textiles sector value chains and to Sabine Schlorke for discussions and inputs on new financing approaches to the circular economy.The World Bank is grateful for the valuable insights and contribut

27、ions of all interviewees and extends its deep thanks to the Ministry of Trade of the Republic of Trkiye for assistance in facilitating the requisite field research.The team would like to express its gratitude to Humberto Lopez(Country Director for the Republic of Trkiye)and Sanjay Srivastava(Regiona

28、l Manager,Environment Department for Europe and Central Asia)for their invaluable guidance and support.5 Acronyms and Abbreviations CBAM Carbon Border Adjustment Mechanism CE Circular Economy CEAP Circular Economy Action Plan CIRPASS Collaborative Initiative for Standards-based Digital Product Passp

29、ort CLEPA Association of European Automotive Components and Parts Industry CRM Customer Relationship Management CTCN Clean Technology Centers and Networks DA Delegated Act DPP Digital Product Passport EEA European Environment Agency ELV End-of-Life Vehicle EPR Extended Producer Responsibility EPZ Ex

30、port Processing Zone ERP Enterprise Resource Planning ESPR Eco-design for Sustainable Products Regulation ETS Emission Trading System EU European Union EV Electric Vehicle GDAP Turkish Green Deal Action Plan GDPR General Data Protection Regulation GVC Global Value Chain ICE Internal Combustion Engin

31、e IHKIB Istanbul Apparel Exporters Association(Trkiye)IPA Instrument Pre-Accession IT Information Technology ITHIB Istanbul Textile Raw Materials Exporters Union(Trkiye)ITKIB Istanbul Textile and Apparel Exporters Associations(Trkiye)IoT Internet of Things LCA Life Cycle Analysis MRF Material Recove

32、ry Facility OECD Organisation for Economic Co-operation and Development OEM Original Equipment Manufacturer OIB Automotive Industry Exporters Association(Trkiye)OSD Automotive Manufacturers Association(Trkiye)PEF Product Environmental Footprint PET Polyethylene Terephthalate PPP Public-Private Partn

33、ership R&D Research and Development 6 REACH Registration,Evaluation,Authorization,and Restriction of Chemicals RMDZ Recycling Market Development Zone SBTI Science Based Targets Initiative SMEs Small and Medium Enterprises SPI Sustainable Products Initiative TALSAD Turkish Aluminum Manufacturers Asso

34、ciation(Trkiye)TAYSAD Automotive Suppliers Association of Trkiye(Trkiye)TBITAK Scientific and Technological Research Council of Trkiye TIK Trkiye Istatistik Kurumu(Trkiye),Turkish Statistical Institute UNDP United Nations Development Programme UNFCC United Nations Framework Convention on Climate Cha

35、nge VAT Value Added Tax WBES World Bank Enterprise Survey WFD Waste Framework Directive WRAP Waste and Resources Action Programme 1 Executive Summary This report examines the transition of Turkish firms to align with circular economy(CE)principles,highlighting both immediate needs and the longer-ter

36、m opportunities from engaging in a transition agenda.The report stresses that the changing landscape toward the CE in the European Union(EU)offers a significant strategic opportunity for Trkiye to strengthen its position in global markets and build resilience against economic shocks.The shift to a C

37、E can be achieved through varying approaches,each with distinct implications for Turkish firms.We categorize such different approaches as light and ambitious transition scenarios.The light transition scenario aims at more efficient use of materials with an increase in reuse and recycling through mea

38、sures that are already in progress or that can be implemented in the immediate future.The ambitious transition scenario envisions enhanced environmental standards and a comprehensive redesign of products,business models,and financing.The light approach is a conservative strategy,while the ambitious

39、transition,in many respects,represents a higher-risk,higher-returns strategy that can help Turkish firms shift toward producing and exporting higher value-added goods and services.The approach is ambitious as it involves transitioning from a primarily one-way flow of goods to a dynamic two-way excha

40、nge.However,although the shift introduces uncertainty,it offers opportunities for significant advancement without necessarily incurring high costs.A key insight from the desk analysis and fieldwork is that a one-size-fits-all reform is not going to be helpful.The relationship between costs and trans

41、formation efforts is not straightforward,primarily due to the diverse nature of industries and sectors within the Turkish economy.This diversity means that while some sectors and firms can rapidly advance,supported by the necessary reforms,others may only undergo incremental changes due to external

42、decision-making factors.This requires a focus on adaptive transformation in such sectors and firms.Meanwhile,other sectors and firms should have higher aspirations,since they can catalyze transformation,achieve leadership roles in the relevant CE global value chains(GVCs),and enhance competitiveness

43、 through innovation-led growth.In the very short term,and with the light approach in mind,three improvements are paramount.First,accelerating the adoption of mature technology and of critical tools is essential for resource-efficient production.For example,there is an urgent necessity for firms to a

44、ccess recycled inputs and to monitor production through digital tracing infrastructure.Second,the problem of insufficient scale and high fixed costs to invest in the transition,particularly for smaller firms and lower-tier suppliers in GVCs,needs to be addressed.This includes a need for targeted fin

45、ancing options to address the initial investment hurdles faced by businesses;shared infrastructure,such as wastewater treatment facilities and environmental monitoring systems,to support sustainable practices,and other shared resources,such as green transformation centers and one-stop shops for info

46、rmation and implementation of new regulation.Third,institutional and coordination enhancements are needed to help address the coordination shortfalls and promote innovation,observed in the preparation of this report.This entails two dimensions:one pertaining to relations with the EU and another conc

47、erning domestic platforms for intergovernmental and public-private coordination and partnership.Specifically,Trkiye should strengthen ties with EU entities and ensure regulatory alignment while also advocating for regulations that consider the unique needs of Turkish companies.In particular,Trkiyes

48、government should balance between maintaining an open dialogue with the EU counterparts to meet evolving regulatory requirements while also carefully timing the transition to EU standards,to optimize the tradeoff between costs and market opportunities.In addition,it should foster collaboration among

49、 public stakeholders in Trkiye(Ministries of Trade,Environment,Urbanization and Climate Change,and Industry and Technology)and with private sector entities,to unify the national approach toward sustainability and CE transitions.In the envisioned ambitious scenario,this report aims to position Turkis

50、h firms at the forefront of new and emerging industries,creating a fertile ground for sustained growth,innovation,and the advancement of the CE.The focus is on bolstering research and development(R&D)activities,pioneering innovative business models and processes,and nurturing green skills.Our findin

51、gs reveal a direct link between a firms scale,its reliance on import and export activities,and its R&D investment.Yet,in comparison to their peers in Europe and Central Asia,Turkish companies tend to lag in R&D spending.The shift toward a CE emerges as a possible avenue for bridging this gap.The Tur

52、kish private sector exhibits remarkable resilience and adaptability,and it is poised to capitalize on its integration into 2 European initiatives,connections with global GVCs,and exposure to the most innovative practices.This positions Trkiye favorably to fully embrace the CE,provided there is suffi

53、cient and long-lasting governmental backing.Our field research highlights the dynamic strides local entrepreneurs are making in adopting existing sustainable innovation solutions,such as polyester recycling and the implementation of waterless dyeing techniques for synthetic fibers.These efforts have

54、 been further propelled by Trkiyes involvement in EU initiatives,such as Horizon Europe projects focusing on textile and plastic recycling.These successes illustrate the potential of Turkish businesses to lead in ecofriendly business practices and technological breakthroughs,even in ambitious transi

55、tions to a CE.For instance,global innovation in cotton recycling and waterless dyeing of nonsynthetic textiles could benefit from Turkish ingenuity,contingent upon a supportive long-term policy strategy.Beyond the immediate priorities outlined earlier,a fully successful and robust transition into gl

56、obal CE industries requires three longer-term actions.These are of critical importance but easily actionable.First,Trkiyes government should invest in green skills and in raising awareness about CE among firms,the workforce,educational institutions,and the general public.Second,it should foster an i

57、nnovative ecosystem that supports R&D,new business models,and environmental sustainability through tailored finance,subsidies,incentives,and cross-border collaborations.Finally,to catalyze sufficient private investment,the government should signal to the private sector its long-term commitment and p

58、olicy coherence in promoting this agenda and communicate the convinced alignment to broader global initiatives promoting green markets and sustainable investment vehicles.This can be achieved through fostering a national vision for sustainable and inclusive development and a mindset shift:rather tha

59、n an imperative,the CE transformation should be viewed as an opportunity to upgrade Turkish firms position in GVCs,enhance export competitiveness,and build resilience against economic shocks through the adoption of sustainable practices.In conclusion,this report highlights the importance of a delibe

60、rate,strategic,and articulated approach toward transitioning Turkish firms to a CE,blending immediate actionable steps with a forward-looking long-term strategy.By moving forward with flexibility and vision,Trkiye can use its distinct advantages to not only respond to the changing global economy but

61、 also to lead in sustainable innovation and resilience,establishing a model for others in the worldwide move toward a more circular and thriving future.The report is structured as follows.Section 1 introduces the report.Section 2 illustrates the two scenarios for the transition,both attainable by Tr

62、kiye but differing in ambition level.Section 3 assesses the current competitiveness of Trkiye,also focusing on the key challenges,as they emerged from desk analysis,fieldwork,and stakeholder interviews.Section 4 offers policy solutions and suggests intervention in line with the dual approach propose

63、d above,and Section 5 concludes.3 Summary of Key Policy Recommendations for Trkiyes Circular Economy Transition Strategic Approach Diversified strategy:Adopt a diversified approach to facilitate rapid progression in sectors and companies capable of transformative leaps while guiding others through g

64、radual adaptations.Flexibility and vision:Utilize Trkiyes distinct advantages to respond to the global shift toward a circular economy(CE),maintaining international competitiveness in sustainable innovation.Immediate Priorities(Light Approach)Advanced technology adoption:Prioritize the establishment

65、 of a robust recycling ecosystem and a reliable digital infrastructure for efficient resource use.Foundation for transition:Address challenges related to scale and investment,especially for smaller firms and lower-tier suppliers in global value chains(GVCs).Institutional governance:Enhance coordinat

66、ion within Trkiye and with the European Union(EU),balancing the need for dialogue and strategic timing of transitioning to EU standards.Ambitious Scenario for Full Transition Skill investment:Focus on developing skills related to the green economy and raising awareness about the CE across various st

67、akeholders.Innovative ecosystem:Support research and development(R&D),innovative business models,and environmental sustainability through tailored finance,subsidies,and incentives.Private investment:Encourage significant private sector investment through clear government signaling of long-term commi

68、tment to the CE.Detailed Strategies Recycling ecosystem:Enhance infrastructure,financial accessibility,and industry practices to support recycled inputs and secondary materials markets.Digital infrastructure:Improve digital capabilities for better traceability and monitoring,crucial for regulatory c

69、ompliance and sustainability practices.Shared resources:Establish shared environmental infrastructure to reduce individual business burdens and promote collective adherence to environmental standards.Financing the transition:Enhance financing mechanisms,leveraging innovative models and international

70、 financing to support the transition to sustainable practices.EU relations:Manage the relationship with the EU through strategic dialogue and phased adoption of EU standards,leveraging financial instruments to ease the transition.Institutional coordination:Strengthen interinstitutional coordination

71、to ensure unified implementation of sustainability and CE initiatives.Public-private collaboration:Foster greater collaboration between public stakeholders and the private sector to align national strategies with sustainability goals.Long-Term Vision Embrace the opportunities presented by the CE to

72、strengthen Trkiyes global market position and economic resilience.Address challenges such as skill gaps and green infrastructure development,carefully timing the transition to meet EU regulations without incurring unsustainable costs.Brand the country as a sustainable and circular production base.4

73、1.Introduction:The Rationale for Trkiyes Transition to a Circular Economy The concept of a circular economy(CE)is a paradigm shift from traditional linear economic models,focusing on the efficient use and reuse of resources to create sustainable,self-sufficient,closed-loop systems.For Trkiye,this tr

74、ansition is both a matter of environmental stewardship and a strategic alignment with the EUs emphasis on sustainable practices within its green value chain ecosystem.As the EU advances toward more sustainable practices(World Bank 2022),Trkiye,with its deep economic and trade ties to the region,find

75、s itself at a crucial juncture.Embracing CE principles can position Trkiye as a key player in this evolving green landscape,enabling greater economic growth alongside sustainability.The general motivation for Trkiyes transition to a CE is therefore twofold:it addresses the evolving regulatory enviro

76、nment of its principal trade partner,the EU,and it aligns with Trkiyes own environmental and sustainability objectives,exemplified by its ambitious Zero Waste Initiative.1 The EUs progression toward stricter environmental standards presents Trkiye with both challenges and opportunities.Adapting offe

77、rs a chance not just for compliance but for innovation and a more significant role in sustainable global markets.Like all emerging countries,Trkiye faces the choice between continuing to pursue the linear development strategy initiated in past decades or seizing new growth opportunities through the

78、CE transformation.The former,characterized by high resource consumption and waste,poses significant challenges in terms of energy and resource efficiency.Transitioning to a CE offers a pathway to address these challenges.It promises enhanced job resilience and a transformative economic impact by fos

79、tering growth in green sectors.This shift allows Trkiye to leverage its strengths while mitigating environmental issues.The EUs regulatory evolution toward sustainability and circularity,given Trkiyes economic integration with the EU,acts as a powerful catalyst for Trkiyes transformation.Delayed ali

80、gnment with these regulations could result in reduced market access and competitiveness,while adaptation could boost Trkiyes economic robustness and secure its EU market position.Proactively engaging with these regulatory changes is crucial for Trkiyes economic prosperity and continued development p

81、rogress.1 http:/zerowaste.gov.tr/.5 2.The How:A Dual-Scenario Framework for the Economics of the Circular Economy Transition The transition to a CE,characterized by its emphasis on sustainability and resource efficiency,marks a significant shift from traditional linear economic models.This transitio

82、n encompasses a spectrum of activities,ranging from low-tech recycling initiatives to high-tech innovations.Central to this paradigm shift is the strategic interplay of different combinations of such activities.In other words,varying emphasis on redesigning products and business models;reducing the

83、reliance on virgin materials;enhancing the durability of products;and elevating practices like reuse,repair,and recycling can lead to different patterns for affected industries and different competitiveness outcomes for the concerned countries.In this context,we explore the implications of this tran

84、sition for Turkish firms within GVCs,particularly under two distinct scenarios.The first,a light version of the CE,predominantly focuses on reduction and recycling strategies(see Figure 1,lefthand side panel).This approach aligns closely with imminent EU regulations that prioritize traceability and

85、the provision of detailed information on circularity and sustainability metrics,as well as minimum recycled content requirements.Such a strategy can be considered reactive to the EUs first-mover stance.Its transformation potential relative to the linear make-use-waste is smaller relative to the seco

86、nd,more robust scenario.This latter envisions a comprehensive shift to a full CE(see Figure 1,righthand side panel).This scenario entails a deeper structural change,driven by extensive redesign of products and business models,coupled with a significant uptick in reuse and repair activities.Current r

87、egulatory proposals in the EU,including mandates for improved product repairability,are nudging economies toward this more comprehensive model.However,the path of reform,its timeline,and the likely effects on the EU industry are still fraught with considerable uncertainty.EU trade partners,such as T

88、rkiye,could consider an anticipatory strategy of leapfrogging into the CE.Reform plans do not necessarily entail prohibitive costs but can help Trkiyes firms to increase value addition,strengthen their competitive position on the global markets,and build resilience against economic shocks,especially

89、 when considering the potential for technological leapfrogging.Figure 1.Two transition scenarios Source:Original elaboration.Crucially,the evolution from a linear to a circular economic framework holds wide-ranging consequences for all firms in the value chain.We observe that impending subsidies and

90、 regulatory changes are poised to alter the incentive structures around R&D significantly.These shifts could influence the relative costs of older and newer production technologies and affect the pricing dynamics of recycled versus nonrecycled inputs.Trkiyes position in this evolving landscape will

91、be determined by its ability to rapidly adopt new technologies and business models.This adaptability will be a critical determinant in its successful integration and competitiveness within the CEs GVC.In summary,as Trkiye navigates this transition,understanding the economic underpinnings of these tw

92、o alternative scenarios becomes crucial.The countrys strategic response to these developments will shape its economic trajectory in an increasingly resource-conscious global market.2.1 Circular Economy Light:Adaptive and Progressive Steps The concept of a light transition in the context of a CE focu

93、ses on minimizing environmental effects and integrating mature and sustainable technologies.This approach prioritizes recycling,monitoring carbon and material footprints,and making incremental improvements to the existing linear 6 production models.For Turkish firms,this transition necessitates chan

94、ges in product design to favor recycled materials and enhance resource efficiency.Such a shift is crucial for firms engaged in GVCs,particularly those facing demands from EU customers for less resource-intensive production processes.In this scenario,the structure of value chains and production remai

95、ns largely product-centric and linear but incorporates greater resource efficiency and transparency.Adjustments in production technology and material usage aim to reduce water consumption and improve product durability,without overhauling the fundamental business model.These changes,while maintainin

96、g the core linear paradigm,are steps toward a more sustainable production methodology.The adoption of this light CE model requires Turkish firms to invest in digital infrastructure to meet stringent information requirements,such as those proposed by the EU Digital Product Passport.2 This necessitate

97、s the development of new workforce and skills focused on sustainability monitoring and enhancement of products and processes.Firms may need to train existing employees,hire new specialists,or consult external experts to adapt to these new demands.These technological and procedural adaptations will i

98、nevitably alter cost structures,affecting competitiveness based on the ability to adapt.The effect of these changes will vary across industries,with some facing more significant challenges and costs.For instance,the textile industry might encounter ambitious sustainability targets that current techn

99、ologies cannot meet,and smaller firms may have limited influence in EU regulatory discussions.Despite these challenges,the light transition offers opportunities for Turkish suppliers to integrate more closely into the EU market,for example,through new upstream connections for sourcing recycled mater

100、ials.These gradual changes align with the EUs short to medium-term regulatory goals and contribute to the broader objectives of its sustainability agenda and Circular Economy Action Plan.This transition,though less intensive than the alternative full-fledged transition,is a strategic alignment with

101、global sustainability trends,positioning Turkish firms on solid ground for future growth and resilience.In summary,there are several strategic,operational,economic,and supply chain considerations to the light transition scenario toward a CE relevant to Turkish firms in GVCs that this report will dis

102、cuss and that can be briefly summarized as follows:1.Strategic Approach Incremental change over radical overhaul:The light transition represents a gradual shift from the traditional linear model to a CE,focusing on enhancing resource efficiency and minimizing environmental impact within the existing

103、 production framework rather than a complete structural transformation.Emphasis on reduction and recycling:Central to this scenario is the reduction of environmental impact at each production stage,including minimizing wear and tear,and improved recycling practices to close the material loop.2.Opera

104、tional Adjustments Monitoring and reporting requirements:Heightened focus on monitoring carbon and material footprints,necessitating the implementation of digital systems for effective tracking and reporting of the relevant metrics.Adaptation in production processes:Turkish GVC firms may need to alt

105、er product designs and shift from virgin materials to recycled inputs for less resource-intensive production.Technological and skill upgrades:Investments in new machinery and digital infrastructure,along with the development of new workforce skills for sustainability monitoring and product/process i

106、mprovements.3.Economic and Competitive Implications Shift in cost structures and competitiveness:Changes in fixed and variable cost structures affect the overall competitiveness,highlighting the importance of firms ability to adapt to new requirements for maintaining or improving their market positi

107、on.2 The Digital Product Passport(DPP)digitally stores data on a products characteristics making it electronically accessible for all stakeholders.The information requirement can vary depending on the specific product and can include details on a products technical performance,environmental footprin

108、t,materials and their origin,recycling capabilities and repair activities.7 Industry-specific challenges and cost distribution:Variations across industries in the extent of required upgrades and the distribution of costs,with some sectors facing more stringent targets and unique challenges due to te

109、chnological and institutional constraints(see Annex C).4.Supply Chain and Market Dynamics End-of-role in production process:The current end-of-role for Turkish suppliers coincides with product shipment to the EU market.The transition might facilitate the potential emergence of new sourcing connectio

110、ns for recycled inputs,indicating shifts in supply chain relationships to the advantage of Turkish producers.Alignment with EU regulatory changes:Incremental changes need to align with the EUs near to medium-term regulatory changes and developments in the EU Circular Economy Action Plan(see Annex B)

111、,which will likely shape the market and operational landscape for Turkish businesses.2.2 Full Circular Economy:Beyond Incremental Steps A full transition to a CE is a transformative shift,requiring businesses to fundamentally rethink their models and practices.At the heart of this shift is the move

112、toward reuse,repair,and product-as-service models,which not only aims to minimize environmental impacts but also opens new avenues for innovation and competitiveness.Unlike the modest adaptations of the light model,this comprehensive approach extends far beyond mere recycling,which is re-envisioned

113、as a last resort,to keep products in the usage cycle for as long as possible.The essence of this paradigm shift lies in a profound redesign of products and business models,steering the economy toward service-oriented solutions.This is not a mere tweak of existing processes but involves significant i

114、nnovation across products,processes,and potentially the entire value chain.The transition encompasses a strategic overhaul,from product conception to end-of-life management,embedding circular principles at every stage.For Turkish suppliers,particularly those integrated into the EU markets,this trans

115、ition poses both challenges and opportunities.Traditionally characterized by a one-directional flow of goods,value chains might evolve into dynamic ecosystems where suppliers engage in postconsumer repair and maintenance,fostering closer consumer interactions.This redefines traditional supply chain

116、roles,urging suppliers to adapt to new business models that are more interactive and service oriented.This fundamental shift toward a CE is laden with uncertainties,from the direction of future regulatory actions to the readiness of markets to embrace new models.Yet,these uncertainties are balanced

117、by the potential for pioneers of new circular business models to deliver promising risk-return profiles,even as the current landscape remains dominated by linear production models.In conclusion,the journey toward a fully realized CE is a comprehensive venture that redefines product design,usage,and

118、maintenance,transcending the traditional environmental or efficiency imperatives.It heralds a new era of economic opportunities and innovation for Turkish GVC firms and beyond,demanding strategic,systemic changes alongside business model innovation to navigate the evolving regulatory landscape:1.Str

119、ategic Vision and Innovation Beyond environmental impact minimization:While incorporating the environmental strategies of the light scenario,the full transition expands the goal from merely reducing environmental impact to actively promoting a system where products are kept in use longer,with recycl

120、ing as a last resort rather than a primary activity.Value chain innovation:Encourages innovation across products,processes,and the entire value chain,fostering a systemic shift toward circular principles.Long-term structural change:Acknowledges the transition to a full CE as a profound,long-term str

121、uctural shift,requiring sustained commitment and strategic planning.2.Business Model Transformation 8 Redesign of products,business models,and financing:This calls for a radical rethinking and redesigning not just of products but also of the underlying business models and financing mechanisms,to ali

122、gn with CE principles.Focus on reuse and repair:The emphasis shifts to service-oriented solutions and product-as-service models,promoting reuse and repair over mere recycling.It reduces the need for new materials and extends product lifecycles.Transformation of supplier business models:For Turkish s

123、uppliers in the EU market,this transition means evolving from traditional supply chains,characterized by a one-directional flow of goods,to engaging in a more interactive,two-way flow,which also encompasses a growing role for postconsumer activities in the production process and revenue streams.3.Ad

124、aptive Regulatory Alignment and Forward-Thinking Policy and Market Engagement Uncertainty and regulatory considerations:Recognizes the challenges and uncertainties,particularly in regulatory landscapes,that come with ambitious transitions,emphasizing the need for adaptive strategies and forward-thin

125、king policy engagement.Potential for new economic opportunities:Highlights the economic potential inherent in circular business models,suggesting that despite uncertainties,there are significant opportunities for innovation and value creation,as well as attractive risk-return profiles,within circula

126、r frameworks that possibly extend to the whole economy,even to linear value chains that will support the new circular business models from the periphery of the industrial ecosystem.2.3 Factors Enabling Circular Economy Readiness In the global move toward CEs,strategic positioning and competitiveness

127、 hinge on several key factors,each playing a pivotal role in enabling a successful transition.At the core of the CE is the need for effective traceability and robust digital monitoring systems.These systems are crucial for ensuring carbon and material efficiency in key sectors,tracking resource flow

128、s,identifying inefficiencies,and minimizing waste.Access to and use of recycled inputs is another fundamental aspect of a successful transition.The demand for recycled inputs under a weak CE scenario tends to increase,presenting countries in transition with two strategic options:securing foreign rec

129、ycled materials or developing a domestic recycling industry.Hence,fostering growth in domestic recycling rates and securing adequate access to imported recycled materials are important and complementary enablers.As economies progress from light to full circularity,the focus expands from merely ensur

130、ing access to recycled inputs to maintaining products in the usage cycle for longer periods,thereby reducing reliance on both new materials and recycled ones.Ultimately,the transition requires innovation.Technological upgrades,advancing the innovation frontier,and upskilling the workforce are theref

131、ore fundamental ingredients too.Seamlessly transitioning to the CE necessitates significant technological advancements across all sectors of the economy.As circular technologies and practices become more prevalent in the domestic economy,the cost of adoption per unit of output decreases more rapidly

132、.Technological upgrades include at least three key strategies:swiftly deploying technologies that conserve resources,upgrading machinery,and investing heavily in workforce upskilling to reduce the material footprint of production.Agility in adopting and adapting to new technologies is therefore cruc

133、ial for implementing CE practices,whether in light scenarios or more comprehensive ones.However,transitioning effectively goes beyond mere technological upgrades;it requires a strong push toward innovation and R&D.It is about rethinking business models,products,and processes to fully integrate circu

134、lar principles.Innovation in the value chain is key,demanding a proactive stance in crafting new,sustainable business strategies.The goal is to create new products from prototypes or new patents and to make commercially viable technical solutions that may be still at the experimentation stage.Those

135、firms and countries who lead in such frontier efforts can secure a first-mover advantage once the innovation becomes economically viable.Clearly supporting such transformations requires new skills and competencies across the entire society.It also requires carefully designed and adaptable financing

136、frameworks.These frameworks should cater to the diverse needs of various firms and industries,facilitating their shift toward more 9 asset-light,circular business models.Such financial support structures should be inclusive,accommodating the evolving challenges of different market players during thi

137、s structural transition.A comprehensive financing strategy that leverages the different sources of financing is suggested.Financing can originate from many different sources:own capital,intra-GVC financing,private financial investors,such as institutional investors and private equity,and public subs

138、idies and finances.These differ from one another in time horizon,investment size class,criteria for financing,and domestic versus international considerations.Finally,demand and supply dynamics also matter.The broader context of consumer preferences and market demands significantly steers the pace a

139、nd direction of the transition.Aligning national sustainability trends with global movements and responding to the changing demands within key partner markets can accelerate the adoption of CE practices.Domestically,fostering a shift in material consumption patterns can act as a powerful catalyst,bo

140、lstering the local private sectors capacity for circular initiatives.In acknowledging these enablers,it becomes evident that a multifaceted approach,encompassing technological,strategic,and financial dimensions,is essential for economies aiming to thrive in a circular future.Section 3 will delve int

141、o Trkiyes preparedness to embrace these enablers,setting the stage for a detailed exploration of its strategic readiness for a circular transformation.10 3.Trkiyes Circular Economy Today:Achievements and Challenges Building upon the foundational principles of CE readiness discussed in Section 2,this

142、 section delves into the current outlook of the CE in Trkiye,with a spotlight on the textile-apparel and automotive machinery-equipment sectors whenever industry-specific evidence is available.3 These sectors not only stand at the forefront of Trkiyes export economy,particularly to the EU,but also,d

143、ue to their unique market structures and GVC engagements,encounter distinct yet complementary industry-specific challenges and opportunities amid the EUs evolving sustainability regulations.This diversity offers valuable insights for shaping a more holistic national strategy.4 As we further explore

144、Trkiyes readiness for a CE transition,the analysis will compare the current state of CE in Trkiye to peers in Europe and Central Asia;it will detail the differences and similarities across industries,international engagement,production tier,and size of firms;and discuss the main achievements and cha

145、llenges as they emerge from statistical evidence and stakeholder consultations during fieldwork.3.1 Trkiyes Preparedness to a Light Transition Scenario:Technological Upgrades and Their Drivers The first step in transitioning toward a circular economy requires the adoption of globally established tec

146、hnologies.The adoption spectrum encompasses both general-purpose and green technologies that are critical for expanding recycling possibilities,extending product lifecycles,enhancing efficiency,and fostering sustainable practices.Advanced recycling solutions technologies employ sophisticated machine

147、ry and software solutions designed to optimize the recovery of valuable materials from electronic waste,mitigating data security concerns while promoting material circularity.Lifecycle extension software allows for updates and features to be delivered via software to prolong the usability of product

148、s,reducing the necessity for frequent physical replacements.Finally,integration with the Internet of Things(IoT)helps improve product traceability,facilitate efficient tracking,and streamline repair processes,thereby enhancing overall product longevity and resource utilization.The adoption of these

149、and related technologies among Turkish firms can be evaluated by examining outcomes in several interconnected areas,which are discussed in the remainder of this section of the report.Delving into each of these areas will allow to assess Trkiyes performance against comparable countries and to investi

150、gate any variations in size,operational tier,and sectoral engagement.3.1.1 Adoption of Resource-Efficient Production Technologies Several Turkish firms have made significant strides in adopting resource-efficient production technologies,yet there are gaps compared to firms in other European and Cent

151、ral Asian economies in some sectors,as evidenced by the most recent World Bank Enterprise Survey(2019).5 On average,19 percent of Turkish firms adopted waste minimization,recycling or waste management practices.Notably,firms in the garments and textiles sectors have been much more successful in intr

152、oducing waste and recycling management than their counterparts in the fabricated metal products and machinery sectors(see Figure 2).While more than 40 percent of firms in the Turkish garments and textiles sectors adopted circularity practices,a proportion substantially higher than the one posted by

153、Europe and Central Asia peers,in the fabricated metal products and the machinery and equipment sector,Turkish firms lag behind those in Hungary,Poland,and Romania.In line with international 3 The focus on Trkiyes textile-apparel and automotive machinery-equipment sectors in the transition to a CE is

154、 driven by their significant export contributions,particularly to the EU.These sectors are vital to Trkiyes economy,highly influenced by EU CE policies,and essential for strategic planning in response to EU sustainability regulations.For more on sector selection,see Annex A.4 The textile-apparel and

155、 machinery-equipment sectors highlight Trkiyes need for varied approaches to CE integration.The textile sector navigates sustainability and fast fashion pressures,aiming for market differentiation through eco-friendly practices.In contrast,the automotive machinery sector adapts to electrification an

156、d EU environmental norms,focusing on technological advancements.Trkiyes R&D and production capabilities support the transition in both industries,yet their differences call for tailored policy support.A detailed sector comparison is in the reports in Annex C.5 Subsection F.2 describes the survey dat

157、a and details how indicators are computed and peer groups are formed.11 evidence,in Trkiye,a greater number of larger firms as well as firms selling on the international markets(that is,direct exporters)adopted resource-efficient solutions.Figure 2:Adoption of CE practices Source:Original analysis N

158、ote:This figure shows the percentage of firms that adopted CE practices such as waste minimization,recycling,or waste management in the three years preceding the latest World Bank Enterprise Survey(WBES).The left panel depicts adoption rates in the aggregate Turkish economy,broken down by establishm

159、ent size and export status.The right panel illustrates adoption rates in the four CE priority sectors with representative coverage and adds sectoral averages of surveyed Europe and Central Asia economies with the same industry stratum(for details,see subsection F.2).Whenever inference is possible,95

160、%confidence intervals are included.Only 35 percent of the surveyed firms have taken steps to improve their energy efficiency,with such initiatives being more common in larger companies,whereas export activity does not seem to influence this trend(see Figure 3).A significant portion of these firms ha

161、ve developed their energy efficiency measures inhouse,as detailed in Table 1.The adoption of energy efficiency practices differs markedly between the apparel-textiles sector and the automotive machinery and equipment industry:the textiles sector shows significant energy efficiency activities,outpaci

162、ng some regional competitors.Meanwhile,Turkish firms in the machinery and equipment sector are below their peers in Bulgaria,Hungary,and Poland.Among nonadopters,there is a noted lack of financial resources and prioritization for these initiatives,especially among smaller and domestic-oriented firms

163、(see Figure 16,Figure 17).Figure 3:Energy efficiency enhancing measures Source:Original analysis Note:This figure shows the percentage of firms that adopted measures to enhance their energy efficiency in the three years preceding the latest WBES.The left panel depicts adoption rates in the aggregate

164、 Turkish economy,broken down by establishment size and export status.The right panel illustrates adoption rates in the four CE priority sectors with representative coverage and adds sectoral averages of surveyed Europe and Central Asia economies with the same industry stratum(for details,see subsect

165、ion F.2).Whenever inference is possible,95%confidence intervals are included.12 Table 1:Descriptive statistics Percent of firms N Any energy efficiency measures self-developed 54.01 337 Innovation new to market 56.37 129 Establishment emits CO2 5.51 1,604 Establishment monitors its CO2 emissions 26.

166、67 74 Completed external audit on energy efficiency 2.72 812 Source:Original analysis.Note:This table shows additional descriptive statistics for the aggregate Turkish economy from the 2019 WBES.A third relevant metric covers resource productivity and carbon footprint.In these areas there is signifi

167、cant scope for improvement.While these measures are only available for the national aggregate,and against different peers from those presented above,the data confirm the picture of below-par energy efficiency.Trkiyes overall resource productivity ranges in the bottom half in Europe,with approximatel

168、y 1.8 units of purchasing power adjusted GDP generated out of every kilogram of domestic material consumption,where domestic material consumption is computed as domestic material inputs,that is,the sum of domestic extraction plus physical imports,minus physical exports.This compares to an EU average

169、 of 2.3 purchasing power standards per kilogram(see Figure 4).Similarly,the Turkish manufacturing sector is more carbon intensive than the EU average(World Bank Group 2022).Figure 4:Resource productivity Source:Eurostat 2021.Note:This figure depicts resource productivity in 2021 for Trkiye,on averag

170、e across the EU27,and for the top and bottom 3 countries out of 34 European states with Eurostat data records.6 The 34 countries include the EU27 plus Iceland,Norway,Bosnia and Herzegovina,North Macedonia,Albania,and Serbia in addition to Trkiye.Firm interviews confirmed the important sectoral and f

171、irm-size differences discussed above.The apparel and textiles sector posts many examples of innovation and sustainable production methods.In contrast,the automotive machinery and equipment industrys initiatives emerged as more focused on compliance and adaptation to external pressures.Smaller and lo

172、wer-tier firms across both sectors appeared to face instead significant challenges and greater fixed costs in keeping pace with these sustainability transitions.6 Eurostat(Statistical Office of the European Communities),Resource productivity env ac rp,https:/ec.europa.eu/eurostat/databrowser/product

173、/page/env ac rp$defaultview,accessed December 15,2023.13 3.1.2 Traceability and Monitoring:Digital and Reporting Infrastructure Building on the previous discussion,the deployment of digital tracking and oversight systems holds significant promise for elevating Trkiyes resource efficiency metrics.Fur

174、thermore,enhancing the infrastructure for comprehensive digital data collection and processing is useful along two additional dimensions.First,it would enable companies in Trkiye to disseminate crucial information to their customers while also complying with the EU DPPs information requirements(see

175、Annex B).Second,it would allow businesses to evaluate their material footprint,signaling potential areas for improvement.In alignment with findings from Section 3.1.1,the evidence from the WBES confirms that Trkiyes efforts in tracking crucial environmental metrics beyond energy usage are modest and

176、 limited in scope.According to the 2019 survey,while a majority(56 percent)of Turkish firms monitor their energy consumption(Figure 5,panel a),only about one-third keep tabs on water use(Figure 5,panel b),and a mere fraction(less than 5 percent)tracks CO2 emissions within their supply chains(Figure

177、5,panel c).7 Direct exporters do slightly better(9 percent).Notably,the textile sector stands out,with around 20 percent of firms assessing their suppliers emissions,showcasing its advanced approach compared to other Europe and Central Asian countries.Evidence on comparable peers(for example,eastern

178、 members of the European Union EU)is not available,but in countries like Uzbekistan less than 5 percent of textile producers monitor such emissions.Sustainability reporting represents another important dimension of sustainability-related traceability and monitoring efforts.Familiarity with internati

179、onally recognized quality certifications and external audits could potentially ease the transition to new reporting standards.In Trkiye,although there is widespread adoption of general quality certifications,the uptake of certifications related to sustainability needs to improve.Specifically,29.5 pe

180、rcent of firms hold general quality certifications(see Figure 6),a number that exceeds the average across surveyed Europe and Central Asian economies by approximately 7 percentage points.Among exporters and larger enterprises,the rate climbs to above 60 percent.Meanwhile,the certification of environ

181、mental standards needs to increase.For example,under 3 percent of surveyed firms across the Turkish economy had completed external energy consumption audits as of 2019(see Table 1).Finally,company-level practices that could speed up the adoption of this and other critical infrastructure and tools ar

182、e not very common.For example,assigning responsibilities for environmental issues at the management level,as well as the ability to draw from within company IT expertise,could speed up the firms transition toward a comprehensive digital reporting infrastructure focused on environmental footprint mon

183、itoring,but there is little evidence of either of these practices in Trkiye(see Section 3.1.6).The preexistence of digital tools and communication channels between the firm and its customers could lessen the regulatory compliance burden.In 2023,around 38.9 percent of Turkish firms utilized digital r

184、esources such as Enterprise Resource Planning(ERP)software,Customer Relationship Management(CRM)software,or Business Intelligence software or shared supply chain information electronically with their suppliers or customers.Although this rate increases to 81.9 percent among larger enterprises,it stil

185、l lags more than 10 percentage points behind the EU average across all firm sizes(Figure 12 right panel).Findings from field research in September 2023 were consistent with the above statistical evidence.Interviews revealed that despite a surge in monitoring activities among larger firms,driven by E

186、U customer requirements,there is widespread lack of effective digital infrastructure for environmental footprint monitoring.While all interviewees recognized that effective monitoring and tracing systems are crucial to success,most of them declared limiting themselves to monitoring basic measures on

187、ly,such as energy and water consumption.More detailed monitoring,including CO2 emissions tracking,is uncommon.Few companies declared having experience with quality certification and external audits relative to environmental standards.When this was found,the driver was brand-led environmental certifi

188、cation requirements.Finally,interviewees confirmed that rarely companies in Trkiye integrate environmental issues at the management level and/or employ IT specialists dedicated to sustainability goals(see subsection C.2 for additional discussion of firms views).7 Notably,nearly all surveyed firms re

189、ported that they do not emit CO2.Among the few that do declare that they emit CO2,only about one-fourth monitor their emission levels.However,due to the limited number of respondents acknowledging CO2 emissions,this finding is not statistically significant at the 95%confidence level(see Table 1).14

190、Figure 5:Environmental footprint monitoring(a)Energy consumption (b)Water consumption (c)Suppliers CO2 emissions Source:Original analysis.Note:This figure shows the percentage of firms that monitored their energy consumption(panel a),their water consumption(panel b),and their suppliers CO2 emissions

191、(panel c)in the three years preceding the latest WBES.The left panel depicts adoption rates in the aggregate Turkish economy,broken down by establishment size and export status.The right panel illustrates adoption rates in the four CE priority sectors with representative coverage and adds sectoral a

192、verages of surveyed Europe and Central Asian economies with the same industry stratum(for details,see subsection F.2).Whenever inference is possible,95%confidence intervals are included.15 Figure 6:Certification Source:Original analysis.Note:This figure shows the percentage of firms that have an int

193、ernationally recognized quality certification,on average across surveyed Europe and Central Asia economies,on average in Trkiye,and within firm size groups and export exposure in Trkiye.Whenever inference is possible,95%confidence intervals are included.3.1.3 Other Machinery Upgrades and Process Inn

194、ovations Metrics documenting other machinery upgrades and process innovation offers a comparable perspective to the above.Despite notable individual initiatives of adoption of solar energy,pre-consumer recycling,industry 4.0,waste-water treatment facilities,and replacement of old machinery,there is

195、no systemic approach:improvements are applied oddly,with lower tiers of GVCs,domestic-oriented,and smaller firms lagging significantly behind.According to the WBES,8 approximately 25 percent of Turkish firms declared to engage in the use of recently upgraded machinery,yet fewer than 3 percent have a

196、dopted new or substantially improved processes.This indicates a significant lag in process innovation adoption compared to the average across the Europe and Central Asia region,where 21.5 percent of firms report introducing new processes.The disparity is particularly pronounced in sectors such as fa

197、bricated metal products and machinery.Direct exporters and larger firms are more inclined to undertake machinery upgrades,reinforcing the notion that company size and international exposure are pivotal factors in embracing technological advancements,as illustrated in the upper panels of Figure 7.Not

198、ably,and despite the overall low rate of process improvement in Trkiye relative to the Europe and Central Asia average,the gap in process innovation between Turkish exporters and their EU counterparts is significantly narrower,as depicted in the lower panel of Figure 7.Meanwhile large firms are only

199、 slightly more prone than smaller ones to process innovation.The dominant disparity in adoption for firms with different degrees of exposure to international markets underscores the crucial role of cross-border and firm-to-firm links in driving process innovation and its relevance for the transition

200、 to a circular economy.These observations align with the findings of Bastos et al.(2024),who offer an in-depth analysis of the influence of multinational firms and GVCs on technology diffusion in their recent study.By examining 29 disruptive technologies across 17 countries and 46,000 firms from 201

201、4 to 2022,their research challenges the traditional belief that proximity to technology invention centers automatically facilitates faster technology diffusion.Instead,their data suggest that diffusion patterns are more complex and are significantly influenced by supply chain connections and firm-to

202、-firm relationships,underscoring the intricate dynamics at play in the spread of technological innovations.8 World Bank Enterprise Surveys,https:/www.enterprisesurveys.org/en/enterprisesurveys,accessed:December 5,2023.16 Figure 7:Machinery upgrades and process innovation Source:Original analysis.Not

203、e:The upper panels show the percentage of firms that upgraded their machinery and equipment in the three years preceding the latest WBES.The left panel depicts upgrading in the aggregate Turkish economy,broken down by establishment size and export status.The right panel illustrates upgrade rates in

204、the four CE priority sectors with representative coverage and adds sectoral averages of surveyed Europe and Central Asia economies with the same industry stratum(for details,see subsection F.2).Whenever inference is possible,95%confidence intervals are included.The bottom panel shows the share of fi

205、rms that introduced any new or significantly improved process,on average across surveyed Europe and Central Asia economies.3.1.4 Licensing Agreements for Foreign Technology Licensing agreements are also important,since they facilitate the spread of technology by creating a structured and mutually be

206、neficial framework for sharing innovations,reducing market entry barriers,and fostering collaborative advancements across industries and borders.In Trkiye,however,the adoption of foreign technology through licensing remains modest,with only 14 percent of manufacturing establishments operating under

207、such agreements.This figure,while limited,is not significantly different from the average across Europe and Central Asia,as depicted in Figure 8.Notably,Turkish exporters are more than three times likely to utilize licensed technology compared to firms focused solely on the domestic market.17 Figure

208、 8:Technology licensing Source:Original analysis.Note:This figure shows the percentage of manufacturing firms using technology licensed from foreign companies,on average across surveyed Europe and Central Asia economies,on average in Trkiye,and within firm size groups and export exposure in Trkiye.W

209、henever inference is possible,95%confidence intervals are included.The landscape of technology adoption within the same sectors varies significantly across countries.For instance,in the machinery and equipment sector,Romanian firms are significantly more inclined than their Turkish counterparts to e

210、ngage in production under licensing agreements,as evidenced by their higher acquisition rates of copyrights,patents,and other intangible assets(see Figure 9).The uneven diffusion of technology,particularly to smaller firms and those in lower tiers,observed in the data(Figure 8)represents a main obst

211、acle to broader technology adoption.Figure 9:Purchasing of trademarks,copyrights,patents,or other intangible assets Source:Original analysis.Note:This figure shows the percentage of firms that purchased or acquired trademarks,copyrights,patents,licenses,service contracts,franchise agreements,or othe

212、r intangible assets in the year leading up to the latest WBES.The left panel depicts shares in the aggregate Turkish economy,broken down by establishment size and export status.The right panel illustrates shares in the four CE priority sectors with representative coverage and adds sectoral averages

213、of surveyed Europe and Central Asia economies with the same industry stratum(for details,see subsection F.2).Whenever inference is possible,95%confidence intervals are included.Around 8%establishments acquired trademarks or similar intangibles.3.1.5 Access to and Use of Recycled Inputs Section 2.3 d

214、iscussed the importance of access to and use of recycled inputs as a fundamental enabler of a successful transition,particularly in the light transition CE model.It emerges that,access to and use of recycled inputs requires significant and urgent upgrading in the two surveyed industries.They both ne

215、ed innovation and face significant hurdles impeding large-scale adoption.Broadly speaking,meeting current minimal recycling standards is feasible through pre-consumer recycling,an avenue sometimes more cost-effective than using virgin materials,18 owing to either lower prices or substantial premiums

216、.However,in a scenario where recycling requisites become more prevalent,including a need for postconsumer recycling,Trkiye faces a strategic bottleneck.Field mission findings and hard evidence suggest that Trkiyes CE transition could substantially benefit from an improved waste management and recycl

217、ing ecosystem.For example,in 2020,Trkiyes recycling rates for municipal waste stood at a mere 12.3 percent,a stark contrast to the EU average of 48.7 percent(Figure 10).More recent data from Turkish national sources indicates a substantial catching-up in the recycling rate to 35 percent in 2023,leav

218、ing some room for further improvement.9 In the textiles industry,where the use of recycled inputs often deals with concerns over diminished quality and durability of downstream products,the availability of inputs for recycled content is severely constrained by the interaction of diverse factors.Exce

219、pt for a few and recent initiatives,multiple hurdles to the creation of an effective recycling ecosystem are a significant handicap in this industry.10 For example,interviewed stakeholders indicated that less than 10 percent of postconsumer textiles are collected domestically for recycling(Field Res

220、earch,2023).At the same time,there is a shortage of inputs from waste management for recycling and there are import restrictions for used clothes that significantly limit the availability of used garments as recycling inputs.Additionally,few firms have engaged in clothes recycling due to limited mar

221、ket readiness and high costs.The result is a recycling ecosystem that is still in its infancy and reliant on imports from countries such as Malaysia,Thailand,and China to meet its demand.Access to and use of recycled inputs in the automotive sector in Trkiye is also problematic.Interviewed stakehold

222、ers signaled opportunities in upgrading Trkiyes end-of-life vehicle(ELV)recycling ecosystem.Trkiye only scraps a fraction of the number of cars compared to European and Japanese countries,resulting in a low supply of inputs available for the recycling sector.There is also a lack of demand from the a

223、utomotive sector for secondary materials,which provides little incentive for recyclers to invest.Additionally,there is insufficient steel and plastic produced locally with the technical requirements of the industry,leading to heavy reliance on imports.This presents challenges for the automotive indu

224、stry in terms of accessing recycled raw materials and controlling emissions throughout the supply chain.Going forward,the growing demand for recycled inputs under a light CE scenario presents Trkiye with two strategic options:securing foreign recycled materials or further developing its domestic rec

225、ycling industry.If Trkiye opts for increasing reliance on imports of foreign recycled materials(that is,bolstering imports),there are several challenging aspects to consider.First,increasing reliance on imported recycled materials introduces Trkiye to the complexities of waste shipment regulations.T

226、his encompasses ramifications of the EU waste shipment directive(see Annex B)which might reduce,for instance,the supply of ferrous metal scrap,an important input for Trkiyes steel industry.Additionally,there are implications regarding Turkish import regulations,recycling firms efforts of circumventi

227、ng bans on imports like used cars and clothes,the extent of material retention within the country,and so on.This landscape suggests that while opportunities exist to increase Trkiyes access to recycled inputs through imports,they are accompanied by a complex regulatory and operational framework that

228、 the country needs to navigate.The second option,involving enhancement of its domestic recycling capabilities,needs significant investments in the current waste collection and recycling ecosystem,and leapfrogging in postconsumer recycling.This includes nontrivial challenges in developing postconsume

229、r recycling,contingent on the pioneer stage of many technological solutions which both globally and in Trkiye are still nascent.11 While it is important to note that Turkish stakeholders are keen on staying abreast of the global advancements in this field,on the whole,these considerations suggest th

230、at relying exclusively on postconsumer recycling is a longer-term solution.12 For now,a blend of securing better access to post-consumer materials to be recycled in Trkiye,strengthening the capacity of domestic collection of used garments,increasing domestic recycling 10 A new technology has recentl

231、y been developed by a large Turkish producer,to transform postconsumer cotton,polyester,and most importantly polycotton textile waste into high-quality,sustainable,and ready-to-spin recycled raw materials(see Annex C.2.1).11 Some recent examples of innovative activity of Turkish firms in advancing(p

232、ost-consumer)recycling technologies are discussed in Annex C.2.1.12 Turkish stakeholders organized,for instance,field trips to Finnish and Dutch recycling facilities,which represent the highest standard globally.This is an area in which innovation is growing at a rapid pace and large-scale adoption

233、gives a competitive hedge to those countries facilitating such activities.How Trkiye could potentially lead innovation in this,and other frontier sustainability technologies,is discussed in Section 4.2.19 capabilities,and fostering Trkiyes participation to global R&D efforts in advancing postconsume

234、r recycling seems the best approach.Figure 10:Recycling rate Source:Original analysis.Note:This figure shows recycling rates across the EU27 and in Trkiye.Data for the EU27 and the estimate for Trkiye for 2020,is obtained from Eurostat.13 More recent data from Turkish national sources indicate a rec

235、ycling rate of 27.2 percent for 2021,of 30.13 percent for 2022 and of 35 percent in 2023.14 3.1.6 Skills The challenge of facing limited technology diffusion across all the above fronts is compounded by the fact that investments in upgrading workforce skills in Trkiye lag the Europe and Central Asia

236、 average.Skill inadequacy was a recurrent theme in the field interviews,with firms lamenting the shortage of skilled personnel in areas relevant to green transitions,such as sustainability experts,digital professionals,and recycling technicians.This skill gap was unanimously viewed a significant cha

237、llenge for Turkish firms attempting to comply with the EUs green requirements.While overall labor force productivity substantially increased during the past two decades and there has been a significant move from low-productivity agriculture to industry and services,skill adequacy remains a major con

238、cern for employers(World Bank Group 2024).In particular,job seekers are both underqualified and overqualified,underscoring that the mismatch is not only rooted in general educational attainment(World Bank Group 2024).Since many of the technologies needed for the green transition are still in their i

239、nfancy globally,further constraints are in order in this context.Statistical evidence confirms local stakeholders sentiment.Formal training is offered by 31 percent of establishments,which is 6 percentage points below the average across surveyed Europe and Central Asia economies(Figure 11).This disc

240、repancy may be related to the relatively low number of firms that view an inadequately educated workforce as a major impediment:every fifth firm identifies insufficient workforce skills as a major constraint,relative to a Europe and Central Asia average of 25 percent(right-hand side panel of Figure

241、11).Furthermore,formal training programs are more prevalent in larger firms,which are also more likely to cite concerns about workforce education levels,underscoring a potential skills gap that could hinder the effective adoption and implementation of licensed technologies.This interdependence betwe

242、en technology diffusion and workforce skills is reflected in the data.Firms that moved forward with the green transition(for example,by adopting climate-friendly energy generation on site,machinery and equipment upgrades)are more frequently identifying retraining needs as well as a need to improve s

243、kills compared to non-adopters(World Bank Group 2024).More than 20 percent of firms identified skills as the main obstacle for not investing in the development of innovative green products or processes,and over 80 percent called for government support to build the relevant 13 Eurostat,Recycling Rate

244、 of Municipal Waste ceiwm011,https:/ec.europa.eu/eurostat/databrowser/product/page/cei_wm011,accessed October 28,2024.The latest available data reported for Trkiye by Eurostat is 2020.14 Ministry of Environment,Urbanization and Climate Change,https:/cygm.csb.gov.tr/sifir-atik-ile-geri-kazanim-orani-

245、35e-ulasti.-haber-286897.20 knowledge in the firm(World Bank Group 2024).15 Finally,Turkish firms also fall behind the EU average in employing IT specialists(18 percent versus 21 percent,Figure 12 left panel)and providing information and communication technology(ICT)skill training(16 percent versus

246、the EUs 22 percent,Figure 12 middle panel).Assigning responsibilities for environmental issues at the management level is often not appreciated enough.High managerial sensitivity to the sustainability agenda can considerably speed up the CE transition.Yet,as of 2019,a mere fraction of establishments

247、(under 5 percent)had a designated manager for environmental and climate change issues,though this figure rose to 12 percent for direct exporters and about 15 percent for larger firms(see Figure 13).In the European context,sectors such as fabricated metal products and machinery and equipment see a hi

248、gher integration of environmental concerns at the management level,particularly in Hungary,Poland,Romania,and Bulgaria.Figure 11:Workforce skills Source:Original analysis.Note:The left panel shows the share of firms that offer formal training for their employees,on average across surveyed Europe and

249、 Central Asia economies,on average in Trkiye,and within firm size groups and export exposure in Trkiye.Whenever inference is possible,95%confidence intervals are included.The right panel depicts the share of firms that consider an inadequately educated labor force as a major constraint.Figure 12:IT

250、skills and usage Source:Eurostat 2022a,2022b,2023b.16 Note:This figure shows the percentage of enterprises across the EU27 and in Trkiye that employ ICT specialists(left panel)and that provided training to develop/upgrade ICT skills of their personnel(middle panel)in 2022.The right panel shows the s

251、hare of enterprises using ERP software,CRM software,or Business Intelligence or share supply chain management information 15 The increasing demand for green skills is also reflected in high-skill job ads on LinkedIn,a leading platform for matching demand and supply of labor.In Trkiye,about 1 in 10 o

252、penings state green skills among required candidate characteristics,similar to comparator countries in Latin America and Europe(World Bank Group 2024).16 Eurostat,Enterprises that employ ICT specialists by size class of enterprise isoc ske itspe,https:/ec.europa.eu/eurostat/databrowser/product/page/

253、isoc ske itspe$defaultview,accessed December 13,2023;Enterprises that provided training to develop/upgrade ICT skills of their personnel by size class of enterprise isoc ske itts,https:/ec.europa.eu/eurostat/databrowser/product/page/isoc ske itts$defaultview,accessed December 13,2023;Integration of

254、internal processes by size class of enterprise isoc eb iip,https:/ec.europa.eu/eurostat/databrowser/product/page/isoc eb iip,accessed December 13,2023.21 electronically with suppliers or customers in 2023 by company size.Enterprises from the nonfinancial sector with 10 employees or more are included

255、.Figure 13:Manager responsibilities for climate and environmental issues Source:Original analysis.Note:This figure shows the percentage of firms that had a manager responsible for environmental and climate change issues in the fiscal year preceding the latest WBES.The left panel depicts shares in th

256、e aggregate Turkish economy,broken down by establishment size and export status.The right panel illustrates shares in the four CE priority sectors with representative coverage and adds sectoral averages of surveyed Europe and Central Asia economies with the same industry stratum(for details,see subs

257、ection F.2).Whenever inference is possible,95%confidence intervals are included.3.2 Trkiyes Preparedness to a Full Transition Scenario:Contributing to Advancing the Circular Economy Global Innovation Frontier Challenges impeding the broader adoption of mature technology and R&D in emerging fields in

258、clude paradoxically also countries not being at the technological frontier or pushing it(Cirera and Maloney,2017).Being behind the technological curve can limit access to the latest advancements and best practices,making it harder to implement existing mature technologies effectively or innovate wit

259、hin new fields.Additionally,without pushing the technological frontier,the country may struggle to cultivate a culture of innovation and attract the necessary investments in R&D,further impeding progress and adoption in both established and emerging technological domains.This creates a cycle where t

260、he lack of advancement reinforces the barriers to adopting and developing new technologies.In the realm of technology,particularly product innovation in nascent areas,the overarching goal is to achieve reduced unit costs and enhance global availability.This involves cutting-edge fields like nanotech

261、nology,which enables products to dematerialize and self-repair but also more mundane innovation in,for example,technical and specialty textiles or packaging solutions.Being a pioneer in such innovation often grants a significant competitive edge.This raises the question:how actively is Trkiye partic

262、ipating in these innovative ventures?To answer this question,in this section we will explore the objective of achieving lower unit costs and greater availability at a global scale through innovation at the global technological frontier.Additionally,we will assess Trkiyes involvement in these efforts

263、 and compare it to other European and Central Asian countries.We will also discuss the challenges faced by Trkiye in increasing the diffusion of mature technology and engaging in R&D activities in nascent technologies.3.2.1 Innovative Activities and R&D Expenditures Turkish firms display a varied la

264、ndscape of innovative activities,with an overall performance that trails behind their European and Central Asian counterparts.Data from the latest WBES reveal a striking contrast:only 7 percent of Turkish firms have introduced a novel or significantly improved product or service in the past three ye

265、ars,markedly lower than the 37 percent average in the surveyed economies of the Europe and Central Asia region(see Figure 14,left panel).Notably,a significant portion of these innovations(56 percent)were new to their main markets(see Table 1).The prevalence of innovation is higher among firms that a

266、re direct exporters(22 percent)compared to those focused on the domestic market or indirect exporters.Size also plays a role,with medium to large firms exhibiting more innovative activities(see Figure 14,left panel).22 Figure 14:Innovative activity and R&D spending Source:Original analysis.Note:The

267、left panel shows the share of firms that introduced new or significantly improved products or services over the three years preceding the latest WBES,on average across surveyed Europe and Central Asia economies,on average in Trkiye,and within firm size groups and export exposure in Trkiye.The right

268、panel depicts the share of firms that spent on formal R&D activities during the last fiscal year.Whenever inference is possible,95%confidence intervals are included.The proportion of Turkish firms investing in R&D also varies with firm size and export orientation,lagging the Europe and Central Asia

269、average by 9 percentage points(see Figure 14,right panel).On average,11 percent of Turkish firms allocate funds to R&D activities.Direct exporters and larger firms are more inclined to invest in R&D.A survey of Turkiyes Top 500 industrial enterprises finds that 265 of them have engaged in R&D in 202

270、3,reaching a plateau after a steady increase prior to 2018.17 However,there are notable sectoral differences.Trkiyes investment in R&D in some sectors,including fabricated metal,garments,machinery and equipment,and textiles,does not significantly diverge from most of its Europe and Central Asia comp

271、etitors.3.2.2 Anecdotal Evidence on Entrepreneurial Potential in Trkiye Field missions reveal that Trkiyes shift toward a circular economy predominantly follows a light transition model,yet some initiatives,especially in the textiles and apparel sector,are proving to be transformative(refer to Annex

272、 C.2).This sector is making notable investments in sustainable innovations,such as water-efficient dyeing methods,and advanced technologies,such as fully integrated robotic dispensing systems.It is also exploring closed-loop recycling for specialized markets and enhancing sustainability in raw mater

273、ial procurement,notably through the Politeks initiative,which utilizes recycled polyester from PET bottles powered by renewable energy without using freshwater.In comparison,the textiles and apparel industry,characterized by its typical industrial dynamics and GVC power relations in the global marke

274、t,shows a higher propensity for innovation than sectors like automotive machinery and equipment.The latters initiatives tend to focus on compliance,targeting of carbon emission reduction,and waste management to meet EU standards and consumer expectations.However,there are significant efforts within

275、this sector to modernize facilities and embrace Industry 4.0 technologies.While innovation among smaller and lower-tier firms is scarce,there is a keen interest in contributing to national sustainability efforts,provided challenges such as resource limitations,exclusion from certification programs,a

276、nd the financial strains of sustainable transitions are addressed.In summary,Trkiyes entrepreneurs are making significant strides in sustainable innovation,demonstrating the countrys potential to lead in eco-friendly practices and technological advancements within a CE framework.With the right long-

277、term policy support,Turkish ingenuity could significantly contribute to global innovations in areas like cotton recycling and waterless dyeing techniques.3.3 Financing the Transition While flexible access to finance is critical to both the light transition approach and the full transition scenario,f

278、irms of all sizes in Trkiye face significant challenges in accessing finance 17 https:/www.iso500.org.tr/sunum-ve-konusma-metni-iso-500-eng.23(see FIgure 15a).18 Approximately 29 percent of Turkish companies cite financing difficulties as a major barrier,a figure that is substantially higher than th

279、e 9 percent average in the Europe and Central Asia region(Figure 15a).This issue affects companies uniformly across different sizes but is more pronounced among those focused on the domestic market compared to those engaged in direct exporting.Additionally,between 20 percent and 25 percent of busine

280、sses highlight institutional constraints such as regulatory uncertainty or high tax rates as their primary concerns,surpassing the Europe and Central Asia averages by over 10 and 5 percentage points,respectively.These concerns are similarly widespread across firms of all sizes and are independent of

281、 their export activities.19 Figure 15:Major obstacle as identified by firms(a)Access to finance(b)Institutional Constraints (c)Tax rates Source:Original analysis based on World Bank Enterprise Survey data(2019),Note:This figure shows the percentage of firms that identify access or the cost of financ

282、e(panel a),institutional constraints(panel b),or tax rates(panel c)as a major or very severe obstacle.The panels display average shares across surveyed Europe and Central Asia economies,in Trkiye,and within firm size groups and export exposure in Trkiye.Whenever inference is possible,95%confidence i

283、ntervals are included.A survey of Turkish companies that have not pursued energy efficiency enhancements confirms that financing is among the primary reasons.Approximately half of these nonadopters report prioritizing other investments over energy efficiency measures.Around 20 percent of them attrib

284、ute their inaction to concerns about profitability or insufficient financial resources.Interestingly,the findings also indicate that uncertainties regarding future regulations and pricing,along with operational or technical risks,are not considered significant deterrents by the majority of these com

285、panies(Figure 16,Figure 17).18 Experimentation with business models and process innovation is necessary to achieve technological transformation,but this is hindered by lack of tailored financing,along with regulatory ones.Innovation in business models,particularly around concepts like repair,reuse,a

286、nd product-as-a-service,could offer Turkish firms opportunities to become integral parts of a service-oriented circular economy,particularly in their proximity to the EU market.Financing the transition in any of the above dimensions can be done by using own funds or by tapping into the resources of

287、GVC firms,private investors,and public subsidies.But each of these face challenges too,due to macroeconomic uncertainties and the cost of finance locally and internationally.The previously mentioned skill gap,evidenced by Trkiyes lower proportion of green jobs and a higher need for upskilling furthe

288、r,also complicates the availability of finance.World Bank Enterprise Survey(2019);https:/www.enterprisesurveys.org/en/enterprisesurveys,accessed:December 5,2023.19 Trkiye Country Economic Memorandum on jobs(forthcoming),.24 Figure 16:Main impediment for non-adoption of energy efficiency enhancing me

289、asures Source:Original analysis.Note:This figure shows the main impediment for the subset of firms not implementing any energy efficiency improvements in the three years preceding the latest WBES.Figure 17:Energy efficiency measures:Main impediment for non-adopters(a)By size(b)By exporter status Sou

290、rce:Original analysis.Note:This figure shows the main impediment for the subset of firms not implementing any measures to enhance their energy efficiency,broken down by firm size and export status.Relative to larger companies,smaller firms mention more often a lack of financial resources(panel a).Su

291、rveyed domestic-oriented firms more often deem energy efficiency enhancing measures a lower priority investment(panel b).Evidence for the aggregate Turkish economy is presented in Figure 16.Field interviews with firms in the textile-apparel and automotive sectors offer deeper insights into the finan

292、cing challenges.Key observations include that small and medium enterprises(SMEs)in particular face difficulties due to inadequate scale and substantial fixed costs,which impede their transition efforts.Additionally,even projects that could potentially break even encounter financial access barriers,p

293、rimarily because firms struggle to cover the initial,up-front company-specific investment expenses.Moreover,financial access constraints such as high interest rates and short lending terms stand out as an additional significant obstacle to securing financing for change.These issues are examined in g

294、reater detail below:Insufficient scale and high fixed costs to invest in the transition:The interviews highlighted the challenges faced by smaller firms in Trkiyes textiles and apparel industry in adapting to the EUs sustainability requirements.These firms struggle with the high fixed costs and insu

295、fficient scale necessary to invest in green technologies and processes.An example of this is the lack of finance for green transition initiatives,particularly at the tier 2 and 3 levels,due to restricted access to financing through the banking sector and shorter loan maturities.This has resulted in

296、several sustainability projects in the sector being halted.As a result of the situation,many tier 2 and tier 3 suppliers in Trkiye are focused on incremental process upgrading rather than large-scale transitions due to the high up-front investment costs.These suppliers are limited to accessing finan

297、cing through the banking sector.The lack of 25 long-term loans and high borrowing costs are posing constraints to financing green transition initiatives.Inability to fund firm-specific investments up front:The interviews discussed the difficulties faced by firms in funding up-front investments for f

298、irm-specific changes.This is particularly relevant in the context of adapting to new EU regulations that demand specific technological upgrades and process changes and for lower-tier firms.Acquisition of industry 4.0 technologies by tier 2 and tier 3 suppliers to produce parts for the electric vehic

299、le(EV)segment or installing of more energy-efficient machines is a case in point.These initiatives are generally outside the scope of most incentive programs and hence need to be fully funded by firms own resources,which smaller and lower tier firms do not have,or through the banking system,which en

300、tails high financing costs particularly for tier 2 and tier 3 suppliers.This limitation hampers their ability to fund firm-specific investments up front,particularly for sustainability measures in their operations.Access to finance for break-even projects:The interviews identified a lack of access t

301、o financing as a major barrier for Turkish firms,particularly in the context of implementing sustainability initiatives.Multiple firms report that they have not been able to proceed with investment-ready projects due to the shortage of available finance within the Turkish banking system.Specifically

302、,limited availability of long term and affordable loans are quite limited.Firms also noted that rising costs resulting from inflation and minimum wage increases have constrained their internal financing capacity.This has made it difficult for firms to secure the necessary funds for transition projec

303、ts that may only break even.Firms ability to finance change:Trkiyes macroeconomic environment impacts firms action as it influences their ability to access finance to implement sustainability initiatives.The interviews specifically addressed how periods of fluctuating exchange rates and inflation an

304、d resulting uncertainty,affect firms ability and willingness to invest in long-term changes required for compliance with the EUs environmental standards.Macroeconomic uncertainty,high inflation,and high interest rates tend to raise the costs of financing green transition initiatives.This is perceive

305、d as a major hurdle.Additionally,concerns on political outlook and tax rates are major concerns for all interviewed firms,affecting foreign direct investment flows and overall economic stability.3.4 Regulatory Alignment within Trkiye and with the EU The Turkish government,led by the Ministry of Trad

306、e,is aware of the EUs wide-sweeping legislative agenda and has initiated legislative efforts and strategies in response.Numerous action plans and incentive programs have been launched or are under development to support exporters in the transition.However,these have not yet been sufficient to suppor

307、t the transition and need to be both accelerated and reviewed to ensure that all stakeholders,including small and medium-size firms,have access to these instruments.In addition,multiple complementary policies are needed with respect to increased stakeholder coordination,besides those discussed in ea

308、rlier parts of the report(that is,training and education,technology development,deployment of green infrastructure,better financing,and the establishment of a mature recycling ecosystem).3.4.1 Trkiyes Action Plans and Incentive Programs Mirroring the EUs approach,Trkiyes response is focused on two k

309、ey action plans:the Turkish Green Deal Action Plan(GDAP)and the National Circular Economy Strategy and Action Plan(NCEAP).The countrys GDAP was announced in July 2021 and was developed as a multistakeholder plan under the coordination of the Ministry of Trade.The focus of these initiatives is primar

310、ily on supporting exporters in the transition to comply with the EU requirements.The GDAP is currently in the process of being updated to reflect recent developments in relevant EU regulations.The Turkish NCEAP is being developed by the Ministry of Environment,Urbanization and Climate Change with fi

311、nancial support of the EU and Trkiye.The Turkish CEAP is oriented toward regulating the domestic economy.Numerous other complementary policies and roadmaps are also under development,including the Green Finance 26 Taxonomy and the Growth Technology Roadmap.These policies are detailed in Table 2.An o

312、verview of the evolving CE landscape in the EU is presented in Annex B,where sustainability policies,strategies,and action plans affecting the circular economy directly and indirectly are listed.Table 2:Principal Turkish Sustainability Strategies and Action Plans Policy Agency Description Turkish GD

313、AP(July 2021,currently undergoing an update)Ministry of Trade Establishes key objectives to harmonize response to the European Green Deal.Relevant priorities include Carbon Border Adjustment Mechanism(CBAM),Green and CE regulations,Green Finance,Renewable Energy Supply,Sustainable Agriculture,and Su

314、stainable and Smart Mobility.National Circular Economy Strategy and Action Plan(under development by the DEEP project)Ministry of Environment,Urbanization and Climate Change Sets out the priorities for implementing regulatory changes for a circular economy to ensure alignment with the EUs CEAP.Will

315、establish processes and requirements for life cycle analysis(LCA),focused on six priority sectors(textile,plastics,food,batteries and vehicles,packaging,electronics and information and communications technology).Medium-Term Program 20232025(September 2023)Ministry of Treasury and Finance Reiterates

316、priorities with respect to the European Union Action Plan(EUGDAP)and the NCEAP.Relevant points include completion of Green Organized Industrial Zones and Green Industrial Zone certification systems and accreditation,increase in rate of recycled raw materials from industrial waste,development of ince

317、ntives and guidance,increase in use of renewable energy,mainstreaming of response to eco-design for sustainable products legislation,establishment of calculation and monitoring methodologies for LCA and carbon footprint,and so on.Analyze labor market impacts and foster skills development for the tra

318、nsition.Mobility Vehicles and Technologies Roadmap(June 2022)Ministry of Industry and Technology Developing the EV supply chain,including localization of the supply base(75%)and becoming a regional battery manufacturing center Green Finance Taxonomy(Under development)Ministry of Environment,Urbaniza

319、tion and Climate Change The taxonomy aligns closely with the criteria established by the EU,with both employing similar checklists for identifying green investments,facilitating private sector investments.Climate Change Adaption and Mitigation Action Plan(2024-2030)Ministry of Environment,Urbanizati

320、on and Climate Change Establishes sectoral GHG emission reduction strategies in seven main mitigation sectors(energy,industry,buildings,transport,waste,agriculture and land use,land use change and forestry),and two cross-cutting thematic areas(just transition and carbon pricing mechanisms).Designate

321、s responsible institutions and organizations and determines monitoring indicators.Long-Term Low-Emission Development Strategy(Under development)Ministry of Environment,Urbanization and Climate Change;Presidency of Strategy and Budget Details long-term low greenhouse gas emission development strategy

322、 in line with Paris Agreement,to be submitted to UNFCCC.12th Development Plan Presidency of Strategy and Budget Lays out a holistic roadmap for the years 2024-2028 to advance on the long-term objective of sustainable development,mentioning among other policies and measures support for increased circ

323、ular economy practices.Green Growth Technology Roadmap TBITAK(Scientific and Technological Research Council of Trkiye)Identification of the technologies,R&D efforts,and financial resources needed to increase green production of key industries,including iron and steel,aluminum,plastics,chemicals,ceme

324、nt,and fertilizer.27 Policy Agency Description Low-Carbon Pathway(LCP)Roadmaps Ministry of Industry and Technology Identification of roadmap or activities to support the reduction of greenhouse gas emissions in the steel,cement,aluminum,and fertilizer sectors that are within the scope of CBAM.Source

325、s:Field research 2023,Republic of Trkiye,2020,Low-Carbon Pathway:https:/www.sanayi.gov.tr/merkezbirimi/6f188a931f68/projeler/b81284,Climate Change Adaption and Mitigation Action Plan:https:/iklim.gov.tr/db/turkce/icerikler/files/CLIMATE%20CHANGE%20MITIGATION%20STRATEGY%20AND%20ACTION%20PLAN%20_EN(1)

326、.pdf,12th Development Plan:https:/www.sbb.gov.tr/wp-content/uploads/2024/06/Twelfth-Development-Plan_2024-2028.pdf.The Ministry of Industry and Technology has begun to develop programs to support firms in the Green Transition(Table 3).This support is primarily based on tax incentives with only a few

327、 programs offering grants or loans.These include large-scale investment incentives oriented to transformational projects with significant technological components.These incentives have a minimal investment threshold and must be approved by Presidential Decree.Other incentives cover wastewater manage

328、ment,renewable energy installations,and green innovation grants.A new Green Transition Incentive program has been announced with more comprehensive coverage and available to all firms regardless of size;however,it is not yet available(Table 3).Table 3:Relevant Turkish Incentives Focused on Enhancing

329、 Green and Circular Production Incentives Agency Description Priority Investment Incentives(September 2016)Ministry of Industry and Technology Min.fixed investment:US$55,000.Incentives:value added tax(VAT)and customs duty exemption,corporate tax deduction(up to 40%of capital expenditure),social secu

330、rity support,land allocation,and subsidies on the interest rate(2 to 5 points).Prioritized areas:energy efficiency investments,electricity generation via waste heat recycling(excluding natural gas production facilities),turbine and generator production for renewable energy generation,investments ach

331、ieving a minimum 15%of water savings or emissions/water reduction,and so on.Project-Based Investment Incentives(September 2016)Ministry of Industry and Technology and Presidential Decree Focused on large investments(minimum fixed investment:US$37 million)Incentives include those of the priority inve

332、stment scheme plus financial incentives for energy and capital contribution,infrastructure support,qualified personnel employment support,streamlined procedures,and purchasing guarantee.Green Transformation Incentives(KOSGEB)Ministry of Industry&Technology Focused on SMEs Financial assistance for en

333、ergy-efficient equipment,grants for energy efficiency and renewable energy,consulting services for green business practices Financial assistance for digital product and services development,digitalization,and ecommerce Reimbursable grants to adopt green transformation plans Funded by a World Bank Loan:US$250 million Wastewater Management Incentives(May 2023)Ministry of the Environment,Urbanization