Effect of fossil fuel consumption on import-export balance in Turkey
- Adil Can Kavcar
- 25 Ağu 2023
- 6 dakikada okunur
Counted among "developing countries" by financial categorisation, Turkey has left an agriculturally based economy in 1950s and moved towards industrial development.
As a requisite of this development model, use of fossil fuels has expanded in almost all fields in Turkey.
For example, in 1965 many countries actively using petroleum had also started to utilise natural gas, while Turkey still predominantly consumed coal energy at the same period.
Fossil Fuel Type | Global Consumption (TWh) | Turkish Consumption (TWh) |
Petrol | 17.990 | 42 |
Natural Gas | 6.304 | 0 |
Coal | 16.140 | 43 |
Total Consumption | 40.434 | 85 |
Table-1: Year 1965 Fossil Fuel Consumption Values (Global and Turkish Comparison) (1)
As seen in Table-1, the Turkey of 1965 only consumed 0.21% of the total fossil fuels used globally.
It is also clear the Turkish energy mix was predominantly provided by coal and petrol in those years. At the time it is seen that natural gas is not yet a preferred fossil fuel in Turkey.
In the time since then, industrial developments, ease of use in household environments, integration in mass transport vehicles and advantages in electric power generation has led to a significant increase in use of natural gas.
When we reach 2021 we can clearly see fossil fuel consumption values in Turkey show an increase above the global consumption trends.
Fossil Fuel Type | Global Consumption (TWh) | Turkish Consumption (TWh) |
Petrol | 51.170 | 525 |
Natural Gas | 40.375 | 573 |
Coal | 44.473 | 484 |
Total Consumption | 136.018 | 1.582 |
Table-2: Year 2021 Fossil Fuel Consumption Values (Global and Turkish Comparison) (1)
As seen on Table-2, Turkey has not only converted to active use of natural gas, but also rose to become the 15th largest global consumer in this category.
In comparison to total global fossil fuel consumption, the Turkish consumption in the 56 year period from 1965 to 2021 has reached from 0.21% to 1.16%, with a 5.54 fold increase.
In result of industrial developments the energy needs of the industry has continued the increase and the demand for fossil fuels has grown and continues to grow alongside this trend year by year.
In addition, millions of vehicles in Turkey still run on fossil fuels.
However, it is a well-known fact the current needs in Turkey cannot be met with fossil fuels which are obtained from sources found in very little numbers in our borders.
In 2022, even electric power generation in Turkey uses a significant amount of fossil fuel sources.
Source | Type | Generated Electric Power (TWh) | Share in National Power Generation (%) |
Coal | Fossil Fuel - Domestic | 112.83 | 34.6 |
Natural Gas | Fossil Fuel - Imported | 72.39 | 22.2 |
Hydroelectric | Domestic | 67.18 | 20.6 |
Wind | Renewable Domestic | 35.21 | 10.8 |
Geothermal | Renewable Domestic | 15.32 | 4.7 |
Other Sources | - | 12.07 | 3.7 |
| Total | 326.1 | 100 |
Table-3: Year 2022 Turkish Electric Power Generation Sources (2)
As seen in Table-3, natural gas is also used as a source for 22.2%, a significant percentage of power generation.
Again, data of the Statistic Institute show that there are 26,482,847 vehicles registered for traffic in Turkey as of 2022.
Considering that 98% of these vehicles run on fossil fuel engines and the average age of traffic registered vehicles is 14.8 (which shows old generation vehicles which do not offer fuel savings are in the majority) it is clear that there is a colossal amount of fuel consumed in total for these vehicles.
Furthermore, even considering the 5 year period between 2018 and 2022, it can be seen that there is a direct correlation between the rate of increase in import and the use of fossil fuels.
Period | Total Import Data (Billion $) | Import of Fossil Fuels and similar Products (Billion $) | Total Import Volume Share of Fossil Fuels and similar Products (%) |
2018 | 223.05 | 43.00 | 19.28 |
2019 | 210.35 | 41.73 | 19.84 |
2020 | 219.51 | 28.93 | 13.18 |
2021 | 271.42 | 50.69 | 18.68 |
2022 | 363.71 | 96.55 | 26.54 |
Table-4: Total annual import impact of fossil fuel imports in the 2018 - 2022 period (3)
As seen in Table-4, import of fossil fuels and similar products has the greatest impact on the total import volume in Turkey throughout the period.
In addition to all these facts, the general percentages remain in the 14-26% range, even if the figures change year by year.
In 2022 the total import expenses of Turkey were recoded as $ 363 billion. Approximately $ 96.5 billion, the largest slice of this volume, originates from expenses related to fossil fuels and similar products.
Proportionately, import of fossil fuels is the largest expense item of Turkey, singlehandedly accounting for 26.54% of the total import volume.
Moreover, Turkey is not self-sufficient in fossil fuel sources, and depends on foreign sourced for up to 85% of these resources.
Again, considering year 2022, total export income of Turkey is recorded at approximately $ 254.2 billion.
In other words, Turkey's import/export balance for year 2022 is $ -108.8 billion.
This means Turkey has lost $ 108.8 billion to foreign countries in year 2022.
Based on these figures, even managing to eliminate foreign dependence on energy on its own could restore import/export balance , i.e. prevent excessive loss of currency to foreign countries.
However, how could this be possible in a fossil fuel dependent country who is particularly poor in underground fossil fuel resources?
Solution 1: European-South Korea model industrialisation and high value added production
Converse to their well-developed industrial bases, countries in the European geography are quite poor in fossil fuel resources.
Particularly northern countries like Germany, the Netherlands, Norway, Sweden, Switzerland and Ireland are known to be most foreign dependent countries in energy resources despite their development levels above global average, due to both their location and the pace of their industrial development.
Nevertheless, with the high level of added value of their products due to their industrial development and their successful export operations, each of these countries earn more in export revenues than the money they lose on energy imports.
Country | Year 2022 Exports (Billion $) | Year 2022 Imports (Billion $) | Balance (Billion $) |
Germany | 1.656 | 1.572 | +84 |
Netherlands | 966 | 898 | +68 |
Norway | 270 | 107 | +163 |
Sweden | 198 | 202 | -4 |
Ireland | 214 | 146 | +68 |
Switzerland | 402 | 357 | +45 |
Table-5: Year 2022 Import/Export Data of industrially developed countries (4)
As seen in Table-5, these six industrially developed countries have reached import/export balance, and some have even achieved an export surplus.
In this context, the policy Turkey should target could look similar to the policies of these six countries.
Turkey should catch up to global technology and industrial development trends, create companies capable of international operations, and produce and export more value added products in order eliminate the load of energy costs on the national budget.
A position should be claimed in the global market for the produced high value added products and a suitable environment should be created for exports.
This way the import/export balance of the country can be gradually accelerated towards the positive in order to reach balance in this regard.
However, it should be reminded this method cannot be put into practice in the short term.
In order achieve all these steps changes in many fields will be required, including significant structural reforms, embrace of absolute superiority of law by all factions, reforms in family life, reorganisation of educational activities, increases in cultural and artistic activities and deepening of scientific research.
The average time committed to complete industrial development by the six countries listed above ranges between 40 and 60 years.
Implementation of this model based on a difficult by definite solution will result in industrial development, but also bring agricultural activities almost to a complete stop.
Despite becoming completely dependent on foreign sources on consumables, such a country may close this gap with a comfortable margin by international brands and high value added products.
Solution 2: Agriculturally based and introverted balance economy
This solution means implementation of a policy similar to that of the Turkey of 1950s.
This solution is based on practice and promotion of agricultural production as much as possible.
In addition development is limited to embrace a more controlled growth regime.
Needs of the people are met by domestic resources as much as possible.
This leads to partial disconnect from the outside world, thus reaching the look of a self-sufficient nation.
All these initiatives result in national import/export balance.
However, an agriculturally based and closed solution has mostly lost its practically today.
The reason of this is the fact that today population of Turkey is not in the vicinity of 20 million as it was in 1950s, but nearly reaching 90 million.
Today, needs of such a large population cannot be met by domestic resources of the country.
In addition, in today's worlds every country must act in an extroverted approach.
The shortening distances of the world allow trade from the most suitable source, allowing more economical costs.
In the current circumstances, failing to suit this trend can lead to large losses.
Solution 3: Proliferation of renewable energy sources, forestalling foreign dependence in energy
In fact, there is almost no difference between this solution and Solution 2 in regard of methodology.
An economic model based on minimising the need for fossil fuels, which constitute the largest import expense item of the country, can only be achieved by domestically developed renewable energy solutions.
This can realised in a shorter term in comparison to Solution 1. However, as the as the population and thus the amount of energy needed by the population continue to increase, this solution which is expected to be effective in short term can again lose its effectiveness in the long term.
In consideration of all these solution, rather than selecting any single option, the most effective path looks like taking what works from each model and creating our own solution.
Because with its young population, geography, suitable land structure and its environment allowing use of renewable energy sources to their fullest potential, Turkey is one of the rare countries which can enjoy benefits of all these three models.
While accepting the first model as the main theme, the agricultural policy from the second model and conversion to renewable energy model from the third solution can be implemented all together, allowing development of international companies and high value added exports, while also forestalling foreign dependence in agriculture which has arisen in the recent years.
Meanwhile, in addition to industrial establishments operating on fossil fuel basis, land, marine and air transport industries can also be incentivised to gradually convert to models running on electric energy.
Abundant area and solar absorption periods, wind capacity and sufficient availability other alternative renewable energy resources allow sourcing of a significant portion of energy news from renewable resources.
Simultaneous implementation all these solutions will allow Turkey not only to reach import/export balance and partially overcome foreign dependence in energy, but also become a country who has completed its industrial conversion and reforms, moved into positive progress in exports and ensured sustainability in all these fields.
Adil Can KAVCAR, 13.05.2023
Sources:
Kommentare