First Carbon Fee Nears NT$5 Billion; Environmental Groups Urge Rate Hike Announcement by Year-End

The Ministry of Environment announced on the 3rd the results of the first carbon fee collection. A total of 461 plants (240 companies) that are major carbon emitters were required to pay, with the final collection amount reaching NT$4.97 billion. Lin Yu-hsuan, a researcher at the Taiwan Climate Action Network, pointed out that according to the previous resolution of the Carbon Fee Rate Review Committee, the fee rate is planned to be reviewed and adjusted every two years, with a target of NT$1,200 to NT$1,800 per ton by 2030. Therefore, the next period's fee rate should be announced before the end of this year to give companies ample time for planning and response. Lin believes that raising the rate will not only strengthen incentives for carbon reduction but also increase the cost of non-compliance for companies that fail to implement their voluntary reduction plans, urging them to fulfill their commitments. Regarding the pilot planning for an Emissions Trading System (ETS), Lin noted that there are voices from academia, civil groups, and industry calling for careful evaluation and a postponement. Introducing an ETS pilot concurrently with the initial implementation of the current carbon fee system and voluntary reduction plans could increase government administrative costs and corporate learning costs, leading to unclear policy signals and affecting corporate low-carbon investment decisions. Tang Lin-hsiang, Director of the Environmental Rights Protection Foundation, suggested that the Ministry of Environment should strictly limit subsidies and grants to businesses and local governments to prevent them from flowing back to the entities subject to the carbon fee, avoiding the erroneous logic of 'subsidizing polluters.' He recommended referencing Japan's approach of using carbon tax revenue to support small and medium-sized enterprises in adopting renewable energy or energy efficiency. Tang also pointed out that subsidies to local governments should prioritize projects already listed in their 'Greenhouse Gas Reduction Implementation Plans' or 'Adaptation Implementation Plans' to avoid funding projects without prior detailed planning. Considering that local governments' revenue has generally increased following the amendment of the Local Tax Allocation Act, the government should require them to increase their matching fund ratios. Furthermore, Tang suggested that carbon fee subsidy projects could reference California's practice of allocating 35% of carbon trading revenue to support disadvantaged and low-income communities. This would encourage local governments to include support for vulnerable groups in their proposed projects, aligning with the just transition purpose of the carbon fee.