August 2024, Taiwan's Ministry of Environment (MOENV) announced three carbon fee related regulations that establish a carbon pricing system. The first regulation, entitled “Regulations Governing the Collection of Carbon Fees”, outlines how the carbon fees will be collected from entities.
Scope:
Entities subject to carbon fees: Power and gas supply industries, along with manufacturing industries emitting 25,000 metric tons or more of CO2e annually, will be subject to carbon fees.
Payment Timing:
Starting from the year after the fee rate takes effect, entities must pay carbon fees annually by the end of May. Payment is based on the total emissions of the preceding year, calculated using the announced rates. For instance, if the rates become effective on January 1, 2025, then payment for emissions during 2025 would be due by May 2026.
Transitional Adjustment Mechanism:
To ease the transition, a mechanism adjusts chargeable emissions, particularly for industries susceptible to carbon leakage, through an adjustment coefficient that increases over time. The emission adjustment coefficient value for the first period is 0.2, 0.4 for the second, and 0.6 for the third period.
Carbon credits:
Entities can utilize both domestic and carbon credits. Domestic credits can offset up to 10% of chargeable emissions. International credits require MOENV approval and can only be used by industries not considered high risk for carbon leakage.
Implementation Timeline:
Following a trial declaration without payment in 2025, payments based on 2025 emission levels will commence in 2026. The fee rate, to be determined by October 2024 and effective from January 1, 2025, will be reviewed annually.
