Evidence-based analysis of Türkiye's energy efficiency obligation scheme: sectoral applications, energy poverty, flexibility options and policy implications

Abstract

Energy efficiency is a fundamental pillar of energy transition. It plays a crucial role in enhancing energy security, reducing greenhouse gas emissions, and driving the transition to a low-carbon economy. Among the various policy instruments developed to promote energy efficiency, market-based mechanisms, particularly Energy Efficiency Obligation Schemes (EEOS), stand out for their flexibility, cost-effectiveness, and potential to mobilize private sector participation. With the 2012/27/EU Energy Efficiency Directive (EED), EEOS has become a key policy tool across European Union (EU), where its importance has grown in parallel with rising climate ambition and increasing focus on energy poverty. Following the adoption of the 2007 Energy Efficiency Law, Türkiye introduced a series of legislations and strategic documents aimed at enhancing energy efficiency across all sectors. In alignment with EU EED, Türkiye published its first National Energy Efficiency Action Plan (NEEAP) for the 2017–2023 period, which included the implementation of an EEOS action. However, despite this clear intent, the EEOS was not implemented during the plan period, primarily due to institutional, regulatory, and technical challenges. In 2024, Energy Efficiency 2030 strategy and the second NEEAP reaffirms Türkiye's commitment and schedules the implementation of the scheme by 2027. This Ph.D. thesis aims to contribute to the successful realization of a EEOS in Türkiye through analytical groundwork, policy-oriented modeling, and applied research. Beyond academic contribution, this Ph.D. thesis seeks to offer practical insights for policymakers, support better understanding among potential scheme participants, and serve as a reference for the institutionalization and internalization of the EEOS within Türkiye's energy policy landscape. The primary purpose of this thesis is to provide a comprehensive, evidence-based foundation for the potential implementation of an EEOS in Türkiye. Based on existing international experience and lessons learned, this Ph.D. thesis aims to address the multidimensional requirements of such a scheme, including its sectoral applications, economic feasibility, social equity implications, internal flexibility mechanisms, institutional design, and policy integration. These objectives are pursued through applied, data-oriented and evidence-based research, policy-relevant modeling, and strategic recommendations. The ultimate goal is to support Türkiye in developing a cost-effective, socially inclusive, and institutionally viable EEOS tailored to its national circumstances. The thesis is structured into ten chapters. Chapter 1 introduces the background, motivation, and structure of the thesis. It begins by establishing the critical role of energy efficiency, explains how EEOS emerged, traces its development within the EU framework, and discusses Türkiye's evolving policy landscape. The chapter also outlines the motivation, contribution, and purpose of the thesis. Chapter 2 introduces the EEOS by examining its conceptual foundations, core components, and global evolution as a policy tool. The chapter provides a structured review of international implementation experiences, with particular focus on European countries, and evaluates the academic literature to identify key design considerations, operational challenges, and success factors. By synthesizing lessons learned from both practice and research, the chapter lays the groundwork for understanding how EEOS can be adapted to Türkiye's context, offering early insights into the opportunities and constraints shaping its potential adoption. Chapter 3 presents an ex-ante cost-benefit assessment of a possible EEOS structure for Türkiye, focusing on the industrial sub-sectors and commercial buildings. Within this framework, incumbent electricity suppliers are designated as obligated parties. A two-level distributed optimization model is employed, allowing obligated parties and end-users to independently pursue their economic objectives while preserving market realism. By evaluating various policy scenarios such as different obligation structures, EEOS fee rates, and penalty levels, the chapter offers insights into the financial feasibility, cost distribution, and policy effectiveness of a basic EEOS model. The findings support the conclusion that a self-financing, balanced scheme can be established in Türkiye, provided that design parameters are carefully calibrated. Chapter 4 explores the intersection of energy poverty and EEOS. It begins by distinguishing between fuel poverty and energy poverty, making the case for adopting the energy poverty terminology in the Turkish context. The chapter then traces the historical development of the concept in academic and policy literature, examining key definitions and measurement methods. It continues with a review of international experiences where social concerns have been integrated into EEOS design, highlighting various targeting strategies and associated risks. The chapter also assesses Türkiye's current policy framework and research efforts related to energy poverty, identifying existing gaps and opportunities. By providing a comprehensive understanding of the conceptual, policy, and practical dimensions of energy poverty, this chapter lays a critical foundation for the analyses presented in Chapters 5 and 6. Chapter 5 conducts a comparative assessment of income- and energy expenditure-based definitions of energy poverty to determine their effectiveness in identifying vulnerable households in Türkiye. Drawing on microdata from the Turkish statistical Institute's (TurkStat) 2022 Household Budget Survey, the chapter examines key energy poverty drivers to evaluate how each definition reflects actual deprivation. Furthermore, a simulation of an EEOS-related cost increase in households' energy bills is performed to analyse its potential impact on energy poverty rates under these definitions, incorporating updated energy price dynamics and macroeconomic trends for 2024. The results provide evidence-based insights into the strengths and limitations of each definition and offer critical implications for the equitable integration of energy poverty concerns into a future EEOS framework. Chapter 6 builds upon the previous chapter's findings by proposing a more comprehensive and context-sensitive approach to identifying and targeting energy-poor households within the EEOS framework in Türkiye. Recognizing the limitations of conventional income- and expenditure-based definitions, this chapter develops a custom statistically robust eligibility index using detailed housing and socio-economic data from the TurkStat Survey on Income and Living Conditions. By combining indicators of physical inefficiency, financial difficulty, and regional differences the study categorizes households into three groups (priority energy-poor, at-risk, and regular) using clustering techniques. Finally, the spatial distribution of these groups and their corresponding energy efficiency needs are mapped across Türkiye, offering policymakers a data-driven and geographically informed strategy for equitable EEOS implementation. Chapter 7 expands the discussion by focusing on design elements that can enhance the adaptability, cost-effectiveness, and policy coherence of a potential EEOS of Türkiye. Building on earlier findings, the chapter examines key flexibility mechanisms for compliance (buy-out, banking, borrowing, and saving trading) that allow obligated parties to meet their targets with greater efficiency. In addition to reviewing international practices, the chapter evaluates the applicability and implications of these flexibility options within the context of Türkiye. It then turns to the market-based feature of EEOS, the white certificate schemes, exploring their evolution, institutional typologies, and implementation experiences across Europe. Drawing from these international insights, the chapter proposes a reference framework for Türkiye, outlining how a well-structured white certificate scheme could be integrated into national energy efficiency policy. The framework is designed to reflect Türkiye's institutional capacity and policy context, supporting the launch of a pilot program that is both technically sound and socially equitable. Chapter 8 focuses on the strategic positioning of a potential EEOS within Türkiye's broader energy efficiency policy mix. The interactions between EEOS and other existing policy instruments are discussed through a review of relevant literature, aiming to establish connections with the current policy frameworks in Türkiye. Based on the existing energy efficiency mechanisms and the targets set in Türkiye's Energy Efficiency 2030 Strategy and 2nd NEEAP, an attempt will be made to forecast the future role of the EEOS within the country's broader energy efficiency strategy. Chapter 9 synthesizes the key findings of the thesis and presents forward-looking policy recommendations to inform the design and implementation of an EEOS in Türkiye, building on the analytical results and insights developed throughout the thesis study. Chapter 10 presents the conclusion of the thesis by offering an overall evaluation of the findings, synthesizing insights from previous chapters. The chapter also revisits the main policy recommendations and reflects on their potential to shape Türkiye's energy efficiency agenda. Finally, it outlines possible directions for future research, emphasizing the need for continued empirical work, institutional learning, and policy innovation to ensure the long-term success of EEOS in the national context.