As Taiwan inaugurates its maiden international carbon trading initiative, the trajectory of diverse carbon pricing mechanisms is poised to captivate global attention. Deloitte asserts that the Carbon Border Adjustment Mechanism (CBAM), pioneered by the European Union, is anticipated to overhaul global trade dynamics. Particularly for Taiwan, a linchpin in the global supply chain, scrutiny turns to whether other regions will align with the EU's CBAM policy. Contemplations on future carbon levies may also reverberate across supply chain strategies and configurations in the realm of globalization.
Expectedly, Taiwan is on the cusp of unveiling a carbon fee system in early 2024, stipulating the levy per metric ton of carbon emissions. Nevertheless, experts highlight that Taiwan's pace in implementing carbon pricing trails somewhat behind international benchmarks. The consensus is that earlier adoption of carbon pricing would mitigate the pressure for carbon reduction.
In 2019, Singapore emerged as Asia's pioneer in instituting a carbon tax. Enterprises emitting over 2,000 tons of greenhouse gases were mandated to register and declare, facing a carbon tax of SGD5 per ton for emissions exceeding 25,000 tons. Forecasts project an increase to SGD25 per ton in 2024 and a further surge to SGD45 per ton in 2026, reaching an estimated SGD50-80 per ton by 2030.
Deloitte underscores that, compared to Singapore's proactive deployment and explicit governmental carbon tax objectives to align with global standards, many other Asian regions are also venturing into carbon tax legislation. However, a discernible differential persists in the magnitude of carbon taxation when juxtaposed with the EU.
From a corporate vantage point, Deloitte observes that some enterprises contemplate adjusting production locales to regions with relatively lenient carbon tax regimes, given the disparate vigor and timelines of global carbon taxation measures. However, under the overarching influence of the Paris Agreement and CBAM, such shifts are deemed transient. Deloitte recommends a vigilant corporate posture, advocating continuous monitoring of legislative dynamics and carbon tax benchmarks globally for nimble adaptability.
Presently, countries such as the United States and the United Kingdom are gearing up to emulate the EU by introducing CBAM. The UK's slated imposition of a carbon tax on imported goods from 2027 and a prospective US implementation by 2024 epitomize this global trend.
The future calculus of carbon costs by corporations is destined to cast ripples across the strategic tapestry and configuration of global supply chains. Some companies are adopting a bifurcated approach, tailoring quotes for customers with or without carbon disclosure information, contingent on the client's emphasis on carbon costs. Concurrently, the execution of carbon taxes resonates through procurement strategies and the overarching global layout of supply chains. A proximity-based production model may gain traction as suppliers seek to curtail costs.
In the face of carbon taxes, businesses are inclined to opt for low-carbon raw materials and components, necessitating a recalibration and realignment of the supply chain towards eco-friendly and low-carbon alternatives or suppliers. A lack of preparedness may render Taiwanese manufacturers susceptible to profit erosion from escalating carbon costs.
Deloitte also issues a cautionary note, underscoring that although CBAM's trial period entails no tax liabilities for declarations, it serves as a foundational reference for future EU audits. Despite its trial status adhering to the prevailing EU customs framework, companies are urged not to underestimate the significance, as declaration records persist in EU government databases. Should CBAM attain formal implementation, any unexplained discrepancies or inaccuracies in reported manufacturer information regarding carbon emissions could attract heightened scrutiny during EU audits for analogous goods and high-carbon industries.
