To establish a carbon pricing system in Taiwan and promote steady carbon reduction, on August 29 the Ministry of Environment (MOENV) announced three carbon fee related regulations: the "Regulations Governing the Collection of Carbon Fees," the "Designated Greenhouse Gas Reduction Goals for Entities Subject to Carbon Fees," and the "Regulations for Administration of Self-Determined Reduction Plans." These three regulations comprise the supporting mechanism for implementation of the carbon fee system. They also align with President Lai Ching-te's strategy of promoting a "dual-axis transition to digital and green industries." By promoting carbon pricing and market mechanisms, companies are encouraged to pursue low-carbon transitions. The implementation of the carbon fee system marks Taiwan's official entry into the era of carbon pricing. In the future, the government will combine public and private sector funds to make the carbon fee system a new driving force for Taiwan's green growth.
The MOENV emphasizes that the purpose of carbon fee collection is to accelerate and scale up the carbon reduction efforts of entities subject to carbon fees. If all entities subject to carbon fees can submit Self-Determined Reduction Plans, it is estimated that by 2030, CO2e emissions could be reduced by 37 million metric tons, approximately 14% of the nation’s 2005 emission levels. The MOENV and MOEA will conduct more than 10 informational sessions related to the three Carbon Fee regulations and provide sufficient time for entities to prepare and plan their carbon reduction measures up to 2030, and seek the most suitable reduction paths and technologies. This will be supported by preferential rates and related assistance mechanisms from the Ministry of Economic Affairs, creating opportunities for green growth.
On April 29, 2024, the MOENV announced the draft of three supporting sub-laws for the carbon fee system. It also convened nine briefing sessions and one public hearing with industry and civil society groups to fully communicate on issues. After considering the opinions and suggestions from different stakeholders, the MOENV made adjustments to the provisions. Below are the key points of the three regulations on carbon fees:
"Regulations Governing the Collection of Carbon Fees"
"Designated Greenhouse Gas Reduction Goal for Entities Subject to Carbon Fees" and "Regulations for Administration of Self-Determined Reduction Plans":
According to Article 29 of the Climate Change Act, entities that submit a self-determined reduction plan—including strategies such as switching to low-carbon fuels, adopting negative emission technologies, improving energy efficiency, utilizing renewable energy, or enhancing industrial processes—may apply for approval of preferential rates.
To encourage carbon fee payers to drive reductions among non-payers, the MOENV has set a ratio of 1.2 for the use of emission reduction credits from voluntary reduction projects and offset projects towards deductions from chargeable emissions, with a cap of 10% of the feepayer's total chargeable emissions. Additionally, for industries that are not at high risk of carbon leakage, the ratio for using the credits from pre-implementation project reductions in the first two years of carbon fee implementation is set at 0.3. These non-high-risk industries are also permitted to use internationally recognized reduction credits, up to 5% of their chargeable emissions.
The MOENV pointed out that carbon pricing has become an international trend. The Ministry plans to hold the 5th Carbon Fee Rate Review Committee meeting on September 9 to discuss the impact of different rate scenarios on individual industries. It is expected that the rate review and announcement will be completed by the end of the year, thus finalizing the last piece of Taiwan's carbon pricing system and steadily advancing towards the net-zero transition goal.
Taiwan's Ministry of Environment Announces Three Carbon Fee Regulations, Officially Ushering in the Era of... by ccappr on Scribd