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Forum on Voluntary Greenhouse Gas Reduction Hears Expert Suggestions

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The EPA held the Expert Forum on Voluntary Greenhouse Gas Reduction Promotion Strategy on 18 May 2023. The forum was chaired by Deputy Minister Shen Chih-Hsiu and attended by four domestic experts and scholars specializing in voluntary greenhouse gas reduction. In-depth discussions were held on international mechanisms for voluntary emission reduction, the current promotion of voluntary reduction in Taiwan, and future revisions and directions. The EPA is currently formulating subsidiary laws of the Climate Change Response Act (氣候變遷因應法), and suggestions from participants will be considered for incorporation into the legal version.

The Climate Change Response Act (hereinafter referred to as the Climate Act) has officially come into effect, incorporating the 2050 net-zero emission target into law, and strengthening Taiwan's management mechanisms for greenhouse gas reduction. The act sets out the levying and collection of carbon fees for dedicated funds. It also requires enterprises that establish new emission sources, or enterprises that make changes to existing sources that cause them to reach a certain scale, to engage in emission offsetting. It also encourages enterprises and all levels of government to independently or jointly propose voluntary reduction projects, apply for and obtain reduction credits, and transfer, trade, or auction the credits to interested parties.

The credits generated from voluntary reduction are known internationally as "carbon credits." Recently, public concern has risen regarding the operational mechanisms of voluntary reduction, the review of reduction credits, and the trading of credits. The EPA organized this forum to promote understanding of the operational mechanisms and latest trends in domestic and international voluntary reduction systems, as well as to gather opinions from different sectors.

Liou Je-Liang, Director of the Energy and Environment Research Center at the Chung-Hua Institution for Economic Research, pointed out that the voluntary reduction mechanism serves as a complementary measure to carbon pricing mechanisms. The generation of credits should adhere to criteria such as additionality, permanence, leakage deduction, and avoidance of double counting.

The EPA presented a special report on the current promotion of voluntary reduction and offset projects and proposed revisions in Taiwan. The presentation emphasized that the review of credits will be based on five major principles used internationally for issuing reduction credits so as to ensure genuine emission reductions. There are also plans to simplify relevant procedures to enhance the efficiency of credit reviews. At this stage, enterprises are advised to prioritize the understanding of their own emissions and plan reduction measures. If necessary, they can utilize the voluntary reduction credit trading mechanism to assist in achieving their reduction goals.

Professor Liu Chung-En from the Department of Sociology at National Taiwan University proposed that the implementation of voluntary reduction and carbon offset measures in Taiwan should be supported by a robust carbon pricing mechanism as the market foundation. It is important to ensure genuine emission reductions and exercise strict scrutiny in the credit review process. This is necessary to avoid the issuance of invalid credits that could impede other net-zero policies and hinder the achievement of the net-zero target.

Professor Liou Ming-Lone, a visiting scholar at the London School of Economics and Political Science, mentioned that enterprises should prioritize internal emission reductions, and the utilization of reduction credits should be considered as a last resort. Moreover, the credits should meet quality standards and undergo verification of additionality to ensure genuine carbon reduction benefits. He also cautioned that the use of early-stage greenhouse gas project credits issued prior to the implementation of the Greenhouse Gas Reduction and Management Act (溫室氣體減量及管理法) and overseas credits should be approached with caution to avoid delaying Taiwan's progress in achieving reduction targets.

Senior Researcher Chen Honda from the Taiwan Academy of Banking and Finance pointed out that international society is scrutinizing voluntary reduction mechanisms again. The European Union (EU) no longer accepts carbon credits issued under the United Nations Clean Development Mechanism, and it is expected that the EU's Carbon Border Adjustment Mechanism will also not recognize them. He also cautioned that carbon credit trading may become limited in the future and urged enterprises to prioritize internal emission reduction efforts.

Professor Yuh-Ming Lee, a distinguished professor at the Institute of Natural Resources Management at National Taipei University, provided an overview of carbon pricing and voluntary reduction mechanisms in Taiwan. He emphasized the need for cautious quantification of emissions and highlighted that the issuance of credits should primarily focus on additionality to ensure genuine emission reductions.

At the end of the forum, the moderator, Deputy Minister Shen Chih-Hsiu, also mentioned that voluntary greenhouse gas reduction, as designed in the Climate Act, serves as a complementary measure to carbon pricing to enhance cost-effectiveness. The EPA is currently developing relevant subsidiary laws, and the suggestions provided by the experts, scholars and attendees will be taken into account. In the future, the EPA will rigorously establish regulations based on international principles to review credits. Additionally, it is hoped that voluntary reduction mechanisms can incentivize domestic emission reduction efforts to ensure the acceleration of overall national reduction and achieve the net-zero target.

Excerpt from Major Environmental Policies, May 2023

Ministry of Environment