Over 500 emission sources in Taiwan with carbon emissions exceeding 25,000 tons will be subject to a carbon fee. On the 3rd, the Ministry of Environment proposed allowing businesses to deduct 25,000 metric tons of emissions before calculating their carbon allowances. This was criticized by environmental groups as tantamount to granting businesses 25,000 free carbon allowances. The Green Citizens Action Alliance pointed out that if the carbon fee is calculated at a rate of NT$300 to NT$500 per ton, Taiwan's annual carbon fee revenue would be reduced by NT$3.7 to NT$6 billion. The Ministry of Environment responded that similar practices exist in income tax and air pollution fees, and that it would respect the opinions of environmental groups and continue to communicate with all parties.
Environmental groups slam the Ministry of Environment for offering 25,000 tons of "free carbon emission quotas."
Major carbon emitters will pay carbon fees in 2025 based on the results of this year's (2024) inventory. However, the progress of related sub-laws has been slower than expected. The Ministry of Environment held a "Carbon Fee Collection Sub-Law Promotion Progress Exchange Seminar" on the 3rd, but still did not propose a carbon fee rate. However, for the first time, it proposed a calculation method of "emissions deduction of 25,000 metric tons and then multiplied by the fee rate", which caused dissatisfaction among the civil groups present.
Chen Yizhen, commissioner of the Green Citizens Action Alliance, stated that the 25,000-ton deduction is equivalent to giving businesses "free emission quotas," potentially reducing their pressure to reduce carbon emissions. He also pointed out that if 500 emission sources are charged NT$300 to NT$500 per ton, Taiwan's carbon fee revenue would be reduced by NT$3.7 to NT$6 billion. Furthermore, since the carbon fee is levied on individual factories, the more factories a company owns, the more free quotas it receives, making it easier for companies to circumvent the fee by adjusting production lines.
Chen Yonghui, director of the Wilderness Society's climate change group, said the reduction could lower the carbon fee's coverage of national emissions. According to the Ministry of Environment, before the 25,000-ton reduction, the carbon fee covered approximately 55-60% of national emissions. If the 25,000-ton reduction is implemented, "will it even cover 50%?"
Regarding carbon fee coverage, Climate Agency Director Tsai Ling-yee cited World Bank data, stating that the global average is only about 25%, which is not considered low in Singapore. However, World Bank data shows that Singapore's carbon tax coverage is 80%, and South Korea's is 74%.
The Climate Agency claims to be taking care of marginal companies, including TSMC and AUO.
Tsai Ling-yi explained that the design of the "25,000-ton deduction" for carbon fees is to prevent manufacturers on the edge of the threshold from being in a situation where they have to pay the full 25,100 tons but not pay the 24,900 tons at all, thereby reducing administrative difficulties. She also pointed out that similar practices also exist for income tax and air pollution fees.
Chia-Wei Chia, director of the Taiwan Climate Action Network Research Center, still questioned that if the goal is just to address the issue of marginal manufacturers, "how can it be universally applicable to all 500 manufacturers?" Moreover, companies such as TSMC and AUO, which are at the edge of 25,000 metric tons, are competitive in the market and do not need free quotas.
Allowing Carbon Credits to Deduct Carbon Fees: Environmental Groups Say Non-Additive "Garbage Carbon Credits" Are Included
In addition to the carbon fee algorithm, the Ministry of Environment also confirmed at the meeting that government-approved foreign carbon credits can be used to offset carbon fees within a 5% quota; domestic voluntary reduction projects, exchange projects, and advance projects, three types of carbon credits, can also be used to offset carbon fees at a certain percentage, but "advance projects" are only limited to emissions in 2024 and 2025.
Lin Yuxuan, a researcher at the Taiwan Climate Action Network Research Center, criticized the EPA's approval of over 60 million tons of carbon credits years ago, stating that the standards were loose and non-additive, making them tantamount to "junk carbon credits." If all of these credits were used to offset carbon fees, it would weaken the effectiveness of the fees and impact the value of other domestic carbon credits. As for foreign carbon credits, they must only be available for offsetting after the carbon fee rate reaches a certain level to avoid disrupting the carbon credit market.
Companies that strive to reduce carbon emissions can enjoy carbon fee discounts. How to set "effort targets"?
Companies that work hard to reduce carbon emissions can enjoy carbon fee discounts. "In terms of preferential carbon fee rates, the Ministry of Environment has also proposed statutory "designated targets". Businesses that meet the carbon reduction standards will be able to obtain discounts through "voluntary reduction plans", but the Ministry of Environment is still negotiating with all parties on how to set the standards. How to set "effort targets"?
Zhao Jiawei pointed out that the Ministry of Environment (MOEN) currently links its designated targets to Taiwan's 2030 Nationally Determined Contribution (NDC), which aims to reduce emissions by 23% to 25% by 2030. He noted that the public has repeatedly criticized this target as lagging behind. He added that if the MOEN continues to set it accordingly, it will likely struggle to accelerate carbon reduction in industry through voluntary reductions and implement polluter-pays policies. The MOEN's designated targets should be aligned with the upcoming "Phase III Control Targets" (2026-2030) or future NDC targets.
Zhao Jiawei also reminded that the government should comply with the "Science-Based Reduction Targets" (SBTi) when granting preferential rates. However, industries such as coal and petroleum products currently do not have internationally recognized targets, making it difficult to cite overseas data. Therefore, any preferential treatment for related industries should be temporarily suspended.
Even if the industry already has SBTi internationally, the Ministry of Environment should not relax the standards due to lobbying by the industry. He specifically mentioned China Steel Corporation, which has only promised to reduce carbon emissions by 25%, but the international community has already set a carbon reduction target of 35 to 42% for the steel industry by 2030.
Source: Environmental Information Centre
