To establish a mechanism for a transparent carbon quota trading market, the Taiwan Environmental Protection Administration released the “Greenhouse Gas Emission Reduction Quota Trading Auction and Transfer Management Measures” yesterday, set to be officially implemented on August 15. The Environmental Protection Administration expects that the first domestic carbon quota transaction will take place as early as the end of September on the Carbon Quota Exchange.
Taiwan has officially entered the era of priced carbon emissions. The Environmental Protection Administration is implementing carbon levies alongside voluntary reductions. Businesses and various levels of government can execute voluntary reduction projects to obtain emission reduction quotas (commonly known as carbon credits), which can then be traded on the Carbon Quota Exchange. They are available for purchase by entities subject to carbon fees or requiring incremental offset.
The Carbon Quota Trading Measures will soon come into effect. In order to establish a transparent voluntary reduction trading market in the country, the Environmental Protection Administration issued the “Greenhouse Gas Emission Reduction Quota Trading Auction and Transfer Management Measures” yesterday, which consists of 38 articles outlining regulations governing domestic emission quotas (carbon credits) across stages like holding, trading, auctioning, transaction, and utilization, scheduled to be enforced on August 15 this year.
The regulations stipulate that the three types of targets for domestic carbon credit trading or auctioning include “early projects,” “offset projects,” and “voluntary reduction projects.” Additionally, three major trading methods are defined: “fixed-price trading,” “negotiated trading,” and “auctions.” Sellers can list carbon credits on the exchange with specified prices and quantities, buyers can place orders, and auctions set a minimum price for bidders to compete.
In the future, trading will be conducted on the platform established by the Carbon Exchange, barring general private entities from mediating, acting as agents, or engaging in the trading of emission reduction quotas, ensuring centralized management of the market to prevent carbon fraud. Emission reduction quotas are denominated in one metric ton of carbon dioxide equivalent. Trading and auction-related information will be publicly available on the trading platform for scrutiny, preventing concerns about greenwashing. Currently, only businesses can act as buyers, with each emission reduction quota unit allowed one transfer after trading or auctioning.
It is expected that the first domestic carbon credit transaction will emerge by September. Deputy Director of the Climate Change Bureau at the Environmental Protection Administration, Huang Wei-ming, noted that businesses aiming to offset their carbon responsibilities through purchasing emission reduction quotas will be levied a 5% transaction fee for fixed-price and auction transactions. In negotiated transactions, buyers will be required to pay 5% of the transaction amount calculated based on the carbon fee rate per unit of emission reduction quota or 5% of the most recent transaction price for a similar project.
Before the first domestic carbon credit is listed on the Carbon Exchange by the end of September or early October, sellers of emission reduction quotas must be identified. Regarding the issue of levying sales tax on the sale of emission reduction quotas, discussions have already been held with the Ministry of Finance to apply a tax similar to that on renewable energy certificates. In December last year, the Taiwan Carbon Exchange initiated the first batch of international carbon credit trading, with 27 domestic enterprises collectively purchasing over 88,000 metric tons on the first day, amounting to approximately $800,000. The Chairman of the Taiwan Carbon Exchange, Lin Hsiu-ming, had previously announced his hopes to launch a domestic carbon credit platform in the second half of 2024, marking a significant milestone in Taiwan’s journey towards net zero.