The effects of imported coal plants on the Turkish economy

Türkiye has experienced rapid growth in electricity demand while remaining dependent on imported energy sources. Although the country has substantial domestic lignite reserves, the technical limitations of lignite and the need for reliable baseload electricity have increased the role of imported coal in electricity generation. This has created an important policy debate, since imported coal raises concerns about external dependence and environmental sustainability, yet it may also support economic activity by strengthening electricity supply, facilitating industrial production, and channeling private investment in the electricity production. Thus, this study aims to examine the economic effects of electricity generation from imported coal in Türkiye and compares them with those of electricity generation from domestic coal. Using annual data for 2000–2023, the study investigates the relationship among electricity production from imported coal, electricity production from domestic coal, real gross domestic product, and employment through unit root, causality, cointegration, and long-run estimation methods with Fourier extension. The results show that electricity production from both imported and domestic coal have a causal effect on economic growth. The findings also indicate a long-run cointegration relationship among electricity generation from imported and domestic coal, economic growth, and employment. Long-run estimates reveal that electricity production from imported coal has a positive and statistically significant effect on economic growth, whereas electricity production from domestic coal has a positive but statistically insignificant effect. The study concludes that electricity generation from imported coal has played a stronger growth-supporting role than electricity generation from domestic coal in Türkiye. However, given the environmental costs of coal, this result should be interpreted as evidence for a careful energy transition rather than continued coal dependence.