The EPA cooperated with the British Office in Taipei in July 2020 to commission the Grantham Research Institute on Climate Change and the Environment, an internationally renowned think tank specialized in climate policy research, to assess and give suggestions on Taiwan’s greenhouse gas (GHG) reduction policies and carbon pricing system. The Institute prepared a report titled Carbon Pricing Options for Taiwan, and published it on the website of the London School of Economics and Political Science (https://www.lse.ac.uk/granthaminstitute/publication/carbon-pricing-options-for-taiwan/).

The EPA explains that the cooperation with the international research think tank directly represents Taiwan’s stance on climate change and allows joint evaluation of feasible reduction measures. The EPA will continue promoting future international collaboration on the foundation of this experience. The report adopted a qualitative research approach and covers a comprehensive analysis on Taiwan’s economy and greenhouse gas emissions. The report also evaluates the market readiness of Taiwan’s government and industries, and analyzes the most affected industrial sectors.

According to the report, carbon pricing instruments should be gradually implemented as a policy tool in the face of GHG reduction challenges. The report estimates that carbon pricing can contribute to reaching national GHG emission reduction goals and support green growth and transition. The report also indicates that Taiwan can start developing its carbon pricing policies by implementing a carbon levy. It recommends setting a relatively low carbon levy level in the beginning and gradually increasing the price with a clear trajectory to ensure incentives for emission reduction.

In addition, the report points out that carbon pricing has been widely adopted all over the world. Currently, there are more than 60 countries that are implementing a carbon pricing instrument. If Taiwan was to adopt the policy design for implementing an emissions trading system (ETS) at this juncture, Taiwan may face challenges such as insufficient market liquidity or reduced market competitiveness. On the other hand, imposing carbon levies is comparatively simple and can be executed based on Taiwan’s experiences in energy and environmental taxes.

The collaboration on the report between Taiwan and the U.K. was brought about by the British Office in Taiwan. Josh Burke, author of the report, was invited to visit Taiwan early this year to share U.K.’s policy making experiences in carbon pricing, which could allow Taiwan to learn and improve its own carbon pricing policies. The EPA anticipates a long-term collaboration between Taiwan and the U.K. in climate change.

Excerpt from Major Environmental Policies, Jan 2021