Taiwan's legislature passed the "Climate Change Response Act" on Jan. 10, establishing a carbon fee system for large emitters and setting a goal of reaching net-zero emissions by 2050.
The legislation, which was first authorized by the Executive Yuan in April, received its third and final reading on Jan. 10, following negotiations between lawmakers from the ruling and opposition parties.
The approved version of the act establishes a goal of reaching net-zero carbon emissions in Taiwan by 2050, meaning that the amount of greenhouse gases emitted would be no more than the amount removed from the atmosphere.
The Executive Yuan's National Council for Sustainable Development will lead the endeavor, coordinating with central government agencies and other stakeholders to prepare climate "action plans."
According to the legislation, the plans will be reviewed at least every four years and implemented by local governments.
To reach the net-zero goal, the act will introduce in phases a mechanism to collect carbon fees on "direct," and later "indirect" emissions from entities whose emissions reach a certain threshold.
The system is expected to go into force in early 2024, imposing levies on an estimated 287 Taiwanese firms and other entities with annual carbon dioxide emissions of at least 25,000 tonnes.
Notably, the legislation will also establish a carbon border adjustment mechanism (CBAM), or tax on imports of carbon intensive products designated by regulatory authorities.
In terms of incentives, the act will allow companies to apply for carbon fee discounts if they switch to using low carbon fuel, adopt carbon negative technologies, or use renewable energy sources to reduce their emissions.
Meanwhile, all revenues from the carbon fee system will be placed into a "Greenhouse Gas Management Fund," which will be used for such purposes as subsidizing corporate investment in carbon reduction technologies and reimbursing local governments for climate policy-related costs.