◎ Chen Qi
The Ministry of Environment and the Ministry of Economic Affairs recently jointly announced that Taiwan’s carbon fee collection mechanism will complete the statutory inventory and be officially implemented before the end of the year. The first wave of collection targets more than 500 large carbon emitters in Taiwan. Subsequently, it is also planned to gradually introduce independent emission reduction and carbon pricing mechanisms within two years for small and medium-sized manufacturing and commercial service industries with low emissions but large quantities. Although this major climate policy, which is related to the green transformation of Taiwan's industrial structure and the competitiveness of the global supply chain, demonstrates the government's determination to implement the Climate Change Response Act and the "2050 Net-Zero Emissions" goal, during the implementation process, it faces institutional challenges such as disputes over carbon fee rate review, excessive review thresholds for independent reduction plans, and the lack of carbon inventory capabilities of small and medium-sized enterprises. How to achieve a legal balance between the policy incentives for carbon pricing, the international competitiveness of the industry, and the burden of corporate transformation has become an unavoidable public policy focus for the central authorities.
Taiwan’s carbon fee collection mechanism will be implemented at the end of the year, and the first wave of collection targets more than 500 large carbon emitters in Taiwan. The picture shows Linyuan Petrochemical Zone.
The essence of the carbon pricing mechanism is to "internalize the external costs of greenhouse gas emissions" and thereby guide capital and technology investment in low-carbon innovation. However, if the design of the carbon fee system focuses too much on the fiscal collection function and ignores the economic subsidies for the research and development of substantial carbon reduction technologies for enterprises, it will easily lead to the risk of "carbon leakage". That is, domestic enterprises will weaken their international competitiveness due to high carbon fee costs, and even force production lines to move to countries with looser carbon controls. In the end, not only will they fail to achieve the global total carbon reduction target, but they will severely damage the local industrial economy. In addition, if the current review mechanism for voluntary reduction plans lacks legal clarity and objective quantitative indicators, it will easily lead to biased discretion by administrative agencies, leading to unfair competition among different industries and infringing on the property rights and business freedom of enterprises guaranteed by the Constitution.
Deepening the transformation and governance of the carbon fee system must be based on a legal framework with stable rules, transparent procedures and predictability. With reference to the practical experience of the European Union's Carbon Border Adjustment Mechanism (CBAM) and Singapore's carbon tax system, establishing "dedicated carbon fees" and "phased tax credits" are the only ways to maintain the resilience of industrial transformation. When promoting the collection of carbon fees, the central competent authority should establish that 100% of the carbon fee revenue collected must be invested in the "Greenhouse Gas Reduction Fund" in accordance with the law, with the funds earmarked to subsidize enterprises for low-carbon equipment upgrades, green energy technology research and development, and carbon capture (CCUS) technology testing. Only with clear due procedures for financial feedback and technical support can enterprises be legally exempted from the existential panic caused by double taxation and the surge in transformation costs.
If the central competent authority wants to comprehensively improve Taiwan's carbon pricing defense network and guide the industry to smoothly integrate, it needs to amend the "Voluntary Reduction Plan Review Measures" and establish a legal threshold for blocking high preferential rates. The Ministry of Environment should revise the regulations to directly grant a high proportion of carbon fee deductions to companies that actively introduce green electricity and improve energy efficiency to meet legal standards, and establish a standardized and digital online review channel to cut off the regulatory uncertainty caused by cumbersome administrative review from the early stage of the process.
An inter-ministerial "Public-Private Coordination Mechanism for Carbon Inventory and Carbon Reduction Transformation of Small and Medium-Sized Enterprises" should be established. The Ministry of Economic Affairs and the Ministry of Digital Development should jointly take stock of the digital and green transformation needs of small and medium-sized enterprises, develop decentralized, free carbon inventory tools that do not require high-cost software, and introduce third-party independent verification agencies to assist traditional industries with limited resources to establish compliant carbon footprint data and ensure their fair competitive position in the supply chain.
This new carbon fee collection policy, which is about to be fully implemented, is Taiwan’s uncompromising line of defense towards net-zero transformation and the international green supply chain. The challenge of climate change is urgent, but the path of industrial transformation must be based on justice, rationality and the rule of law. It is expected that the Ministry of Environment, the Ministry of Economic Affairs, and the Executive Yuan will respond positively to the demands of the industry and environmental groups, and start with cross-ministerial climate regulations and industry incentives to accurately transform the carbon fee mechanism into a sustainable engine to promote Taiwan's industrial upgrading. Only by returning this supervision mechanism, which is related to national competitiveness and environmental justice, to professionalism, rigor, and legal due process, so that every rate review and reduction review can withstand practical tests, can the climate crisis be truly turned into an opportunity for transformation, and ensure that Taiwan has a more stable, more resilient, and worry-free economic development environment in the international wave of sustainability.
It is hoped that the government can respond positively to the demands of the industry and environmental groups and accurately transform the carbon fee mechanism into a sustainable engine to promote Taiwan's industrial upgrading. Pictured is the Carbon Exchange.
