Restructuring energy markets for net-zero: the role of market-based solutions

Climate change demands transformative economic restructuring, posing unique challenges for emerging economies in transition. This study examines the critical role of carbon pricing and emissions trading systems (ETS) in advancing sustainable development while achieving net-zero greenhouse gas (GHG) emissions. Focusing on the EU-Turkiye relationship, the paper explores how transitional economies can align carbon markets with growth strategies, navigating the interplay of economic equity, environmental sustainability, and global cooperation. The research redefines climate change as a challenge of market design, arguing that integrating negative externalities into economic systems via carbon pricing can drive the shift to low-carbon economies. A key finding highlights the energy sector’s pivotal role, particularly through ETS, in balancing emissions reductions with economic resilience. The study advances existing literature by proposing equitable burden-sharing mechanisms between developed and developing nations, addressing the historical responsibility of developed countries and the developmental needs of emerging economies. This work offers a framework to harmonize climate policy with broader development goals, emphasizing scalable, market-based solutions. By presenting the EU-Turkiye partnership as a case study, the findings provide actionable insights for integrating economic restructuring with climate mitigation, contributing to a global model for sustainable transition.