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Important Regulations Announced to Ready Taiwan for Carbon Pricing Era

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The MOENV announced on 12 October the Management Regulations for Voluntary Greenhouse Gas Reduction Projects (溫室氣體自願減量專案管理辦法) and the Management Regulations for Greenhouse Gas Emission Increase Offsets (溫室氣體排放量增量抵換管理辦法). These are important subsidiary laws aimed at promoting emission reduction. The regulations for the trading of voluntary reduction credits and other subsidiary laws pertinent to carbon fee collection are being developed, readying Taiwan for the era of carbon pricing in 2024.

The Climate Change Response Act (氣候變遷因應法) was promulgated and came into effect on 15 February this year. It includes a range of diverse tools to promote effective carbon reduction, such as greenhouse gas inventory, inspection, carbon fee collection, voluntary reduction, and emission increase offsets. Following the recent amendments and publication of the three related subsidiary laws on inventory and inspection, regulations related to emission reduction were also put into effect in early October.

The MOENV stated that, in order to achieve the "net-zero carbon emissions by 2050" goal, carbon fee collection is the most crucial measure, with voluntary reduction and emission increase offsetting being two important complementary measures. During the climate act amendment process, consensus was reached among all sectors that carbon fees should be collected from major emitters, and this should be accompanied by specific targets and voluntary reduction plans to enhance and expedite their emission reductions. Meanwhile, a voluntary reduction mechanism is being promoted to encourage enterprises and government agencies at all levels to propose voluntary reduction projects and implement them. Upon implementation, these enterprises and agencies can obtain "reduction credits," commonly known as "carbon credits," which can be used by enterprises to offset carbon fees or be traded with those in need.

The Management Regulations for Voluntary Greenhouse Gas Reduction Projects (hereinafter referred to as Voluntary Reduction Regulations), is a regulatory framework that governs the application for domestic emission reduction credits. Its contents include how to establish voluntary emission reduction measures, verification methods and more, in accordance with the law. The formulation of this sub-law primarily referenced international trends in voluntary carbon market developments and adopted the "three-plus-five principles" (measurable, reportable, and verifiable; additional, conservative, permanent, avoiding environmental harm and avoiding double-counting situations). It also reviewed the past experiences of implementing the Management Regulations for Greenhouse Gas Increase Offsets in Taiwan to streamline procedures and enhance efficiency. The sub-law consists of a total of 23 articles.

Applicants should plan and implement emission reduction measures based on the reduction methods approved and published by the MOENV. They can choose from various types of measures, such as "removal" (e.g., afforestation, forest carbon sinks, marine carbon sinks, etc.) or "reduction or avoidance of emissions" (e.g., energy efficiency improvements). The application process involves the registration and credits review stages, which require third-party confirmation and verification. For applications with reduction methods that are mature, involve easy and clear calculation, and have been implemented in Taiwan (e.g., replacement of lighting fixtures or water chillers), verification is exempt in the registration stage to reduce the burden on applicants. If there are no applicable reduction methods, new reduction methods can be applied for approval.

During the time when the Greenhouse Gas Reduction and Management Act (溫室氣體減量及管理法) was in effect, 93 emission offsetting projects had been approved, resulting in a total reduction of 24.37 million metric tons of carbon emissions via means such as energy efficiency enhancements, switches to low-carbon fuels, destruction and removal of fluorinated gases, green energy, waste recycling, and low-carbon transportation. Entities that have already applied for renewable energy certificates, and factories of enterprises that fall within the scope of carbon fee collection and have implemented emission reduction or prevention measures for over three years are not eligible to apply for voluntary reduction projects. This ensures compliance with the aforementioned "three-plus-five principles." Applicants who originally applied for emission offset projects under the Management Regulations for Greenhouse Gas Offset Projects (溫室氣體抵換專案管理辦法) can still proceed with their approved offset plans and apply for reduction credit verification under that regulation, or they can apply to switch to voluntary reduction projects within two years.

The Management Regulations for Greenhouse Gas Emission Increase Offsets (hereinafter referred to as the Increase Offset Regulations) deal with the impacts of greenhouse gas emissions resulting from new development projects on climate change and aim to establish a consistent approach nationwide. In the past, central and local governments required developers of projects that required environmental impact assessments (EIAs), such as science parks, industrial parks, or high-rise buildings, to carry out offsets for a certain proportion of greenhouse gas emission increase caused by the projects. The Principles for Reviewing Greenhouse Gas Emission Offsets of Development Activities (行政院環境保護署審查開發行為溫室氣體排放量增量抵換處理原則) has also been formulated to include this requirement in EIAs.

In accordance with the Increase Offset Regulations, the entities required to implement increase offset are development activities that require EIAs and cause increases in greenhouse gas emissions. These include factories with annual emissions of over 25,000 metric tons of carbon dioxide equivalents, the construction or expansion of industrial parks, the construction of thermal power plants, cogeneration plants or the addition of generators in them, and the development of high-rise buildings.

Those required to carry out increase offsets must implement them at a rate of 10% per year for ten consecutive years, or they can choose to offset more than 10% each year and complete the offsets early. Violations of the related regulations will incur penalties. For development activities that had passed EIAs before the implementation of the Increase Offset Regulations, the Principles for Reviewing Greenhouse Gas Emission Offsets of Development Activities still apply.

Offsets may come from the use of greenhouse gas reduction credits, replacing old vehicles with electric vehicles, replacing air conditioning, lighting, fishing vessel fish-attracting lights, old agricultural machinery, or oxygenation equipment with high-efficiency equipment, as well as the emission reduction benefits achieved beyond the specified targets through voluntary carbon reduction projects under the carbon fee collection system. Public carbon reducing actions such as vehicle replacement, agricultural and fishery machinery replacement with subsidies from the Ministry of Agriculture, or cooperation of businesses with schools, communities and other organizations in replacing air conditioning and lighting equipment are all included. Therefore, the Increase Offset Regulations enable the expansion of participation in carbon reduction for all sectors.

Based on the offsetting needs of existing developers subject to EIAs, it is estimated that there will be a demand for offsets ranging from 0.1 to 1.8 million metric tons per year in the future. Currently, there are 3.18 million metric tons of reduction benefits available to allow offsets to be carried out. The MOENV encourages enterprises and the public to collaborate in carbon reduction and facilitate offsets through trading of reduction benefits.

The MOENV emphasized the need for a diverse set of tools to promote greenhouse gas reduction, and it has announced the Enterprise Emission Sources Subject to Inventory, Registration and Inspection of Greenhouse Gas Emissions (事業應盤查登錄及查驗溫室氣體排放量之排放源)  as well as amended and promulgated the Management Regulations for the Inventory, Registration and Inspection of Greenhouse Gas Emissions (溫室氣體排放量盤查登錄及查驗管理辦法) and the Management Regulations for Greenhouse Gas Certification and Inspection Organizations (溫室氣體認證機構及查驗機構管理辦法) to strengthen the system of greenhouse gas inventory, inspection and registration and manage emissions effectively. Meanwhile, the completion of the two subsidiary laws will allow a wider participation by all sectors.

Goal

By the end of this year, the MOENV will announce the drafts of enforcement rules and  management regulations for the trading of reduction credits, regulations for voluntary emission reduction plans and other related regulations. It pointed out that carbon pricing is already an international trend and a key focus of Taiwan's efforts to reduce carbon emissions. By implementing the aforementioned subsidiary laws, Taiwan will gradually establish a carbon pricing system and make steady progress toward the goal of achieving a net-zero transition.

Excerpt from Major Environmental Policies, October 2023
Source: 
Ministry of Environment
Updated: 
2023-12-07
Hit: 
2030