Taiwan has collected NT$4.97 billion (US$166 million) from its first round of carbon fee payments, marking a milestone in the island’s efforts to reduce greenhouse gas emissions and accelerate its transition to a low-carbon economy, according to its Environment Ministry.
The carbon fee scheme, which took effect last year, applies to major emitters producing more than 25,000 metric tons of carbon dioxide equivalent annually. A total of 240 companies operating 461 facilities completed their declarations and payments.
Environment minister Peng Chi-ming said the government would continue evaluating increases to carbon fee rates in line with international trends and would also tighten preferential treatment for industries deemed at high risk of carbon leakage.
Taiwan is also preparing to launch a pilot version of an emissions trading system (ETS) by the end of this year to align with the island’s long-term emissions reduction pathway, Peng added.
According to the Climate Change Administration, an agency under the environment ministry, semiconductor manufacturers were the largest contributors to the first round of payments, accounting for NT$2.2 billion or 44.4 per cent of total carbon fee revenue, across 123 facilities.
The power generation sector contributed NT$630 million from 19 facilities, while steel and cement producers, considered among the most carbon-intensive industries, paid a combined NT$530 million from 38 facilities.
Taiwan’s carbon fee is currently set at NT$300 per metric ton of emissions. However, companies approved under voluntary emissions reduction programmes qualified for discounted rates of either NT$50 or NT$100 per ton, depending on the ambition of their reduction targets. Officials have said the carbon fee rate will be gradually increased in the future as Taiwan strengthens its climate policies.
The ministry said 402 facilities had secured approval for emissions reduction plans involving measures such as switching to lower-carbon fuels and improving industrial processes. These initiatives are expected to cut emissions by 47.45 million metric tons by 2030 compared with 2025 levels.
To help preserve the international competitiveness of carbon-intensive industries such as steel and cement, 224 facilities classified as facing a high risk of carbon leakage were allowed to apply a 0.2 adjustment factor to their emissions when calculating carbon fees.
Peng explained that adjustment factor would be increased to 0.4 in the next phase of the programme, while carbon fee rates would also gradually rise to provide stronger incentives for decarbonisation.
Companies receiving preferential treatment will be required to submit annual progress reports on their emissions reduction commitments by April 30 each year. Authorities will conduct reviews in the second half of the year and may recover unpaid fee differences from firms that fail to meet their targets.
Revenue from the carbon fee programme will be transferred to Taiwan’s Greenhouse Gas Management Fund and used to support emissions reduction and climate adaptation projects by businesses and local governments, officials said.
Separately, Climate Change Administration’s director-general Tsai Ling-yi said approximately NT$2.1 billion had been earmarked in the first phase to support local governments and industries implementing emissions reduction and adaptation measures.
Additional allocations include NT$500 million for net zero transition financing programmes and loan guarantees, as well as NT$200 million for climate justice initiatives promoted by Taiwan’s National Development Council.
Taiwan’s planned ETS pilot will initially operate as a simulation without financial settlements or actual trading, allowing companies to familiarise themselves with the mechanism before a full-scale launch.
Tsai said the cap-and-trade system would be designed to complement, rather than replace, the carbon fee programme, with emissions caps aligned to Taiwan’s national climate targets. She added that the government would seek to avoid excessive free allocations that could weaken incentives for companies to reduce emissions under the carbon fee system.
