After six months of discussion, the carbon fee rate has been initially determined. The Ministry of Environment held another carbon fee rate review meeting today (9th). During the meeting, the committee members gave a clear carbon fee range. The general fee rate will start at 300 to 500 yuan per ton, and will be increased in stages over a period of 2 to 3 years. The preferential fee rate range will be determined at the next meeting. The Ministry of Environment stated that after the two fee rate ranges are determined, the actual carbon fee rate will be determined. It is expected that the rate will be announced at the end of the year and will be used to calculate and collect carbon fees from enterprises in 2025.
The carbon fee will start at 300 to 500 yuan per ton, pending final approval from the Ministry of Environment.
Large carbon emitters will begin trial applications for carbon fees next year (2025), with payment starting in 2026. The Ministry of Environment held its fifth carbon fee review meeting today, which lasted four and a half hours and resulted in a preliminary finalization of the carbon fee figure.
In an interview after the meeting, Huang Weiming, Deputy Director of the Climate Agency, stated that a general tariff range has been determined: a starting price of NT$300 to NT$500 per ton, with a phased increase to NT$1,200 to NT$1,800 after 2030. Huang Weiming also stated that the Ministry of Environment will finalize the specific figure after the sixth meeting in late September or early October, taking into account various factors.
Huang Weiming said that the carbon fee rate range was set with reference to the carbon pricing experience of neighboring countries and international assessment reports. For example, Singapore's carbon tax currently charges more than NT$500 per ton.
Lin Yanting, a civil society representative on the carbon fee review committee and a researcher at the Environmental Rights Protection Foundation, expressed frustration that the rate falls short of expectations, and that the current rate, even after discounts, may be less than NT$300. Regarding the final announced rate, environmental groups hope the Ministry of Environment will adhere to the bottom line of "above NT$300 after discounts" and "above NT$500 before discounts." The discounted rate should also be gradually increased and phased out by 2030.
The preferential rates will be released as early as the end of this month and will be reviewed every 2 to 3 years.
Regarding the preferential rates, Huang Weiming stated that while there have been discussions, "no good proposals have emerged yet," and that they will be determined at the next meeting. Many committee members at the meeting believed that the preferential rates should provide sufficient incentives for businesses to reduce emissions, and therefore there will be a certain difference from the standard rates. He pointed out, "If the system design encourages them to reduce carbon emissions, it doesn't matter if we receive less money."
As for how the carbon fee will be raised, Huang Weiming stated that there are discussions about reviewing and adjusting the fee every two or three years. "The situation may change in the future, and the extent to which industries will invest in carbon reduction efforts is something we cannot currently consider." The initial setting of a fee of NT$1,200 to NT$1,800 for 2030 is intended to provide businesses with a clear price signal, letting them know that if they don't reduce carbon emissions, future costs will likely continue to rise.
Impact of carbon pricing on industries not yet announced; Ministry of Environment warns of "anchor pricing"
At the fourth carbon fee review meeting in July, the Ministry of Environment simulated a carbon fee ranging from 100 to 1,000 yuan per ton, considering a 0.2 discount factor for industries with high carbon leakage risks. The estimated impact on the Consumer Price Index (CPI) was approximately 0.0121% to 0.121%. While the committee members at the time considered the economic impact to be minimal, they also noted the lack of assessment of the impact on individual industries.
The Ministry of Environment also reported simulation results to committee members today regarding the impact of carbon fees on corporate gross profit margins. However, Huang Weiming stated that some committee members pointed out that the Ministry of Environment sampled industry data from the past five years, which included business cycles. The impact assessment results "may not be very appropriate," so the Ministry may evaluate other indicators before discussing the impact on industries. The results will not be released publicly for now. "The content of the report could easily influence the outside world to anchor the carbon fee."
Sources: Environmental Information Center
