Taiwan will begin collecting its first carbon fee next month under a carbon fee discount scheme for high risk industries. Major emitters must pay based on their 2025 emissions by the end of May. However, the Climate Change Administration announced that 224 facilities qualify for an 80 percent reduction. These facilities represent approximately 76 percent of total taxable emissions nationwide. The carbon fee discount applies to industries facing high carbon leakage risks.
The Regulations Governing the Collection of Carbon Fees took effect in August 2024. Entities emitting 25,000 tonnes or more annually must pay the fee. The carbon fee discount uses an emissions adjustment coefficient of 0.2 for eligible facilities. This coefficient effectively reduces their payment to only 20 percent of the standard rate. Companies must obtain approval for self determined reduction plans first. They also need recognition as belonging to high carbon leakage risk industries.
High carbon leakage risk industries fall into two distinct categories. Category 1 follows a positive list based on official industry classifications. It considers trade exposure, emissions intensity, and carbon fee levels. Category 2 covers companies that can prove profit impacts from carbon leakage. This includes products facing anti dumping duties currently. US tariff policies also qualify as a significant impact factor.
The Climate Change Administration estimated 260 Category 1 facilities initially. However, only 204 facilities applied and passed the review process. Additionally, 20 facilities qualified under Category 2 rules. Therefore, the total approved facilities reached 224. Director General Tsai Ling-yi provided these figures during a briefing today. She compared Taiwan’s approach to the European Union’s emissions trading system. The EU gives up to 90 percent of carbon allowances for free. Consequently, Taiwan’s carbon fee discount represents a relatively strict approach.
Companies adopting the stricter Type A reduction plan qualify for a preferential rate. That rate stands at NT$50 per tonne of carbon dioxide. Under the carbon fee discount formula, a company emitting 1 million tonnes would pay only for 200,000 tonnes. Tsai identified Taiwan Cement Corp as one such company benefiting from this arrangement.
The carbon fee discount aims to balance environmental goals with industrial competitiveness. Policymakers worry that high fees could drive factories overseas. Such relocations would simply shift emissions rather than reduce global totals. Therefore, protecting vulnerable industries remains a priority for regulators. Nevertheless, environmental groups have criticized the generous discount structure. They argue that 80 percent reductions weaken incentives for genuine emission cuts.
The discount rates may change in future phases. Authorities will monitor how companies respond to the current incentives. The effectiveness of the carbon fee discount will become clearer after the first payment cycle. For now, 224 facilities will pay significantly reduced carbon fees next month. Most of Taiwan’s industrial emissions will face only a modest financial impact. This approach prioritizes gradual transition over abrupt economic disruption.
