Türkiye goes green in record time

Türkiye plans to invest up to USD 100 billion by 2035 in doubling renewable energy capacity and upgrading the grid. The World Bank calls this “one of the most ambitious programmes the world has seen among energy transition countries.”

Given the strong position Sweden-based companies like Hitachi Energy and NKT Cables enjoy in delivering equipment that facilitates the energy transition – such as high-voltage cables and converter stations – EKN hopes to further strengthen its support of Türkiye’s ambitious climate programme in cooperation with international lenders.

With an outstanding guarantee volume of SEK 13 billion, Türkiye is the third largest market outside of the high-income OECD group in EKN’s portfolio, with several green projects. One of the largest ongoing projects is the new 201 km electric high-speed railway between Osmaneli and Bandirma via Bursa in northwestern Türkiye. The project involves a range of Sweden-based suppliers: Volvo CE, Epiroc and Sandvik supply construction and tunnelling equipment, while Vossloh delivers rail technology, and Alstom signalling equipment. In all, Swedish deliveries amount to EUR 462 million, funded and insured by the Swedish Export Credit System.

EKN is incentivising the transition to a greener economy by providing favourable financing conditions for sustainable projects or technology that align with the goal set out by the 2015 Paris Agreement, according to Senior Country Analyst André Lundvall, who gives an example. “We are offering a 100 per cent cover in export transactions were the export product or end use activity contributes to climate transition or adaptation through our Green Export Credit Guarantee.”

Radical reduction

The new EU Carbon Border Adjustment Mechanism (CBAM) provides another strong incentive for Türkiye’s businesses to accelerate the energy transition. This initiative will, in fact, create a tax on third-party emissions that may hit the export sector – where 40 percent goes to the EU – unless steps are taken to radically reduce CO2 emissions.

“The energy transition requires large investments, but aside from the climate benefits there is a tremendous upside from capturing the low-carbon trade benefits, such as lower operating costs, new green jobs and better competitive advantages,” says Lundvall and adds: “The EKN Green Export Credit Guarantee adds further benefits such as attractive financing when sourcing from Swedish greentech suppliers.”

Despite a challenging business environment during the last few years, with high inflation and a deteriorating sovereign credit rating, EKN has in fact doubled its exposure to the Turkish market in the past ten years. “The country has many underlying strengths, from a diversified open economy and strong growth to favourable demographics and healthy public finances,” says Lundvall. “Even though Türkiye represents a large chunk of our portfolio today, we think that there are good reasons to increase this slice even more, if the right opportunity arises.”

Sweden’s relations with Türkiye go a long way back, since the country has always been an important market for Swedish businesses; especially when it comes to sectors such as transportation, mining, telecoms and metals. “The first guarantee by EKN for Swedish exports dates back to 1933, the year EKN was founded.”