Taiwan is set to implement its carbon fee at NT$300 per metric ton of CO₂ equivalent starting January 1, 2025, with regulated companies to pay for 2025 emissions by May 2026.
Approximately 281 companies, accounting for 500 facilities, are expected to pay carbon fees on roughly 155 million metric tons of CO₂, covering about 54% of the nation's emissions. Taiwan's Ministry of Economic Affairs(MOEA), noting the country's export-oriented economy, highlighted that companies are sensitive to production cost shifts and may adjust their setups accordingly.
With the carbon fee set to launch, Taiwan's Ministry of Environment underscored that Japan and South Korea impose significantly higher fossil fuel tax averages, at NT$881 and NT$962 per metric ton of CO₂ equivalent respectively, compared to Taiwan's NT$331. This places Taiwan's carbon cost at a competitive level even with the introduction of the new carbon pricing mechanism.
The Industrial Development Administration (IDA) under the Ministry of Economic Affairs emphasized that while the carbon fee's primary objective is to reduce emissions, it's crucial to consider its broader economic and social impacts. Neighboring markets, including Singapore and South Korea, have introduced policies to balance carbon reduction with industrial competitiveness.
Singapore, which began carbon taxation in 2019, will raise rates in 2024 and offer exemptions for energy-intensive sectors presenting emissions reduction plans. South Korea's cap-and-trade system retains a 100% free allocation for industries vulnerable to carbon leakage, gradually reducing allocations to maintain competitiveness.
The ministry also highlighted that companies prioritizing carbon reduction typically begin with replacing outdated equipment and improving processes—steps that require significant capital. Transitioning to renewable energy or advanced carbon-reduction technologies demands even greater investment, making liquidity essential. The Ministry of Economic Affairs plans to help companies navigate the carbon fee framework and devise emissions reduction plans to qualify for discounted rates and meet set targets.
According to data from the Ministry of Environment, Taiwan's carbon price could reach between NT$1,200 and NT$1,800 per ton by 2030. A 2020 study by the London School of Economics and Political Science (LSE), commissioned by Taiwan's government, recommended a lower initial fee, starting at NT$300 per ton, but advised a clear path for gradual rate increases to drive substantial emissions reductions.
