Latest News

Maguire: Nearshoring boom in Turkey comes with a climate catch

Turkey's low energy prices and skilled workforce have made it an attractive destination for companies looking to establish supply chains near Europe and Central Asia. The industrial boom is not without its environmental costs.

By 2025, the power companies in Turkey will have polluted more power than any other European country. They will even surpass Germany in this region.

The country's rapidly growing power requirements are reflected in the rising emissions. This is because companies have built or expanded their production capacity to take advantage of Turkey's proximity to European consumers, and to reduce its reliance on Asian factories hubs.

According to data from the energy think tank Ember between 2019 and 2024, Turkey’s electricity demand increased by 14%. This contrasts with a decline of Europe’s overall electricity consumption over the same time period.

Diverging power trends show how nearshoring has not only boosted the industrial economy of Turkey, but also shifted a large amount of pollution to Turkey.

Cheap Power

Turkey's low electricity costs are a major attraction for heavy industry and manufacturers.

Turkey's electricity prices fell between mid-2022 and 2024, when the majority of European power prices soared after Russia invaded Ukraine. This was due to generous government subsidies that were designed to protect consumers from inflation.

Eurostat data shows that the average household price in Turkey in late 2024 was 5.5 euroscents per kilowatt-hour (kWh), compared to 7.5 euroscents/kWh at mid-2022.

The roughly 25% drop in Turkish electricity rates contrasts starkly with the trend in Germany, Europe's largest manufacturing and industrial hub.

Germany's electricity prices for consumers rose by nearly 50% from 19 cents/kWh around 2022 to near 28 cents/kWh at the end of 2024.

While the cost of industrial power in Turkey is lower than in Germany, it tends to follow electricity prices.

A RESULTS-BASED IMPACT AT AN INDUSTRIAL SCALE

Data on the production of key components and commodities in Turkey shows the impact of increased production capacity.

Turkey's relative lower energy costs in comparison to Germany are also reflected in the production trends for these same products since 2022.

Turkey has seen its production of energy-intensive products such as cement, chemicals, and refined products steadily increase over the last five years.

In that same time period, German production has decreased, revealing an increase in production capacity in Turkey, driven by the large energy cost difference between the two countries.

BUILDING MOMENTUM

In recent years, the production of Turkey's more developed goods and products has also reached record highs. Meanwhile, Germany has seen its output of these same goods and materials fall to multi-year lows.

The growth of energy-intensive products as well as higher-valued components and products indicates that Turkey's economy can grow and increase wealth for its people.

The economy of the country is also facing substantial risks, including high inflation, rising levels of government debt, and a weakening dollar that reduces the purchasing power.

Turkey's hubs of production are heavily dependent on European countries as consumers. They therefore face a risk of a decline in demand if there is a recession in Europe.

The strong links between Turkey and the Middle East, North Africa, and Central Asia, however, help to diversify Turkey’s consumer market risk and means that Turkey-made goods have a strong potential for sales into these markets.

Cement, building materials and basic chemical products made in Turkey are also gaining popularity in the Middle East and Africa.

The large number of consumers in Turkey bodes well for the producers of raw materials and commodities, but the pollution associated with it will also grow. This could make Turkey the next major emitter globally.

These are the opinions of a columnist who writes for.

You like this article? Check it out

Open Interest

The new global financial commentary source (ROI) is your go-to for all the latest news and information. ROI provides data-driven, thought-provoking analysis on everything from soybeans to swap rates. The markets are changing faster than ever. ROI can help you keep up. Follow ROI on

You can find us on LinkedIn.

(source: Reuters)