Taiwan's environmental ministry introduced a new carbon fee in September, one that angered environmental groups and industry leaders alike. Carbon fees imposed on companies are meant to mitigate industrial contributions to climate change.
On this episode of Zoom In Zoom Out, TaiwanPlus reporter Herel Hughes sits down with Chris Hsu, a campaigner at Greenpeace Taiwan. We first zoom in on the practical details of Taiwan's new carbon pricing system, then zoom out to learn how it compares to other systems in Asia.
On this episode of Zoom In Zoom Out, TaiwanPlus reporter Herel Hughes sits down with Chris Hsu, a campaigner at Greenpeace Taiwan. We first zoom in on the practical details of Taiwan's new carbon pricing system, then zoom out to learn how it compares to other systems in Asia.
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00:00Welcome to Zoom In, Zoom Out, your global look at news from Taiwan.
00:15I'm Harrell Hughes.
00:17Taiwan's Ministry of Environment introduced a new carbon fee in September, one that angered
00:21environmental groups and industry leaders alike.
00:25Before we zoom in on the debate with our guest today, let's first go to our reporter, Joyce
00:29Sung, as she breaks down the numbers.
00:31Let's take a look.
00:34After multiple meetings and months of deliberation, the Environment Ministry has made a long-delayed
00:40recommendation targeting the heaviest emitters with a basic carbon fee of just over US$9
00:47per metric tonne of carbon emissions and preferential rates A and B for those who proactively reduce
00:55fumes.
00:56The proposed fees would initially apply to companies
01:10emitting over 25,000 metric tonnes a year, a threshold that covers about 500 emitters
01:17who together account for 54% of Taiwan's total carbon emissions.
01:23That means the biggest polluters, expelling over 10 million tonnes a year, will have to
01:28pay over US$93 million annually in basic carbon taxes.
01:34For environmental groups, these proposed rates are too low.
01:40They're calling big corporations giant babies for reportedly lobbying for revised preferential
01:46rates as low as under a quarter of a US dollar.
02:02You can watch the full report on the Taiwan Plus website.
02:04Now, to further go over the ins and outs of the new carbon fee, we're joined today by
02:09Chris Hsu, a campaigner at Greenpeace who is also present at that protest we just saw.
02:14Chris, welcome to the show.
02:16Thank you for having me.
02:17Now, first, we want to zoom in on the news from Taiwan.
02:20There's this fee now, but what does it mean in practice for businesses?
02:25The fee is actually, we call it the carbon price system, that the government imparts
02:31this certain fee rate based on the emission amounts made by those emitters.
02:38We call it entities.
02:40It's not actually all the entities have to observe this carbon fee system.
02:47It's actually 512 entities that will have to pay for the carbon fee.
02:54The impact for the business is that they have to pay the extra cost for their emissions.
03:01When will this take effect?
03:03Next year, but it's actually, they're trying to collect their data of their emission, but
03:09the actual time for collecting the carbon fee will start in 2026.
03:15And with this fee, is there a flat rate going forward, or is it expected to increase in
03:20the future?
03:21They decided to raise the fee rates by every two years.
03:28So we expect that, although the general fee rate will start at the 300, but it's expected
03:35to raise to 1,500 or to 2,000 by 2030.
03:42So Chris, you mentioned that about 500 companies will be affected by this fee.
03:46Is that spread out throughout different industries, or is it only really affecting a couple?
03:51I would say the traditional industry might be the most impacted corporation comparing
03:58to the ICT industry, because they have a different structure of the carbon emission.
04:05For the traditional industry, basically all the carbon emissions are made by their producing
04:14process.
04:15For the steel, you see the Zonggang, and for the Comet, you see Tiny.
04:21They're all the corporations that are famous, and also they will be part of the entities
04:28that should pay the carbon fee.
04:30But for the ICT industry, it's mainly about their power usage.
04:34As you know, TSMC is exactly the one who will be affected by the carbon fee.
04:40What have their reactions been to this introduction?
04:43As we see from the media, their reaction is quite different.
04:47For the ICT companies, or the representative of the associations, they tend to accept the
04:54result since, I think, part of them starting doing the internal carbon pricing system already.
05:01So they're, I won't say happy, but they can accept the current fee rate, which is $300.
05:10On the other hand, for the traditional industries, like steel or the Comet, they tend to refuse
05:18this kind of result because I believe they expect a lower fee rate, which will be $100, the highest.
05:26And then there are descriptions of a preferential rate.
05:30Can you explain a bit more about what that is and how that will really look in practice?
05:34There's another two preferential rates.
05:38We just call it A and B. It's actually also an official phrase used in the Act.
05:44So for the preferential fee rate A, you have to submit the self-determined reduction plan
05:51and have to fit the certain goal of the reduction, which is follow the rules set by the science-based
06:01initiatives targets.
06:03So for the preferential rate B, you have to fit the NDC, nationally determined contributions,
06:13which means the Taiwanese government set the goal for our whole carbon reduction amounts.
06:21And there will be a certain percentage, and it's also legally invited in our regulations.
06:29As part of the carbon fee system right now for the preferential fee rates B, so for the
06:36corporation who wants to use the preferential rates B, they have to submit the plan.
06:43They stick to those NDC targets.
06:47So why does a preferential rate exist?
06:50Because based on the opinion of the ministry, they believe that if they impose this kind
06:57of fee rate directly, the competitiveness of the industry might be damaged and it will
07:07be difficult for the steel or the carbon industry to compete with the foreign companies, such
07:14as those from maybe Southeast Asia or from Japan and Korea.
07:20So that's why the government decided to insert this kind of preferential system into the
07:27current act.
07:29And what has the reaction been from activists and other environmental groups in Taiwan?
07:34Of course, the reason why we will have those kinds of protests, which means we do not like
07:40to see those preferential system in the current act, because when we see the reports made
07:48by the LSE in, I believe, in 2021, it says that they suggest the Taiwan's carbon fee
07:56system, that the rates should start from $300.
08:00But there's no such many of the preferential system in that.
08:06So when we see now they have the preferential rates A and B, these kind of beneficial system
08:15to the corporates will definitely damage the effect by the carbon fee system.
08:22And what's at the heart of the issue of putting a price on carbon for you?
08:27I think it's a system to make those emitters can internalize the external cost.
08:35But when we said the external cost, it also includes the damage, no matter to the buildings
08:41or to the people made by the floods or the droughts, those extreme weathers.
08:48We all know those extreme weathers is made by the climate change.
08:53And the carbon emission is the fact that caused the climate change.
08:58So if we want to keep our temperature rising less than the two degrees, we have to take
09:06the action to reduce the carbon emission as soon as possible.
09:12Well, now we want to zoom out and see how Taiwan's policy compares with the rest of
09:18the world.
09:19So some of the countries have a carbon tax, and actually Taiwan's government was really
09:24specific in introducing a carbon fee as opposed to a carbon tax.
09:29Do you know why that was?
09:30I believe because based on the successful experience on the air pollution funds, they
09:39tend to use the similar system, which is the carbon fee, because it's collected and
09:46proceeded by only one ministry, which is the Ministry of Environment.
09:51That's why they tend not to use the carbon tax, because in the other country, the carbon
09:57tax is usually being collected by the Ministry of Finance.
10:02So they have the same effect, but lead by the different public sector.
10:10So Taiwan's policy is part of a much bigger story.
10:13We see in the European Union that they announced the Carbon Border Adjustment Mechanism, or
10:19CBAM, which is essentially a tariff on carbon-intensive products imported into the EU.
10:26Is Taiwan's policy a step towards aligning itself with other global standards?
10:30Well, I believe CBAM is part of the incentive for Taiwan to finally implement the carbon
10:40fee.
10:41It's officially confirmed that in the future, the carbon fee collected by the Taiwanese
10:47government can be deducted from the fee they should pay to the EU under the CBAM system.
10:54And what about the US?
10:55How does Taiwan's policy compare to that?
10:57Since 2022, the US has developed the IRA, which is the Inflation Reduction Act.
11:06Under this policy, the government has the incentives for the corporations, also the
11:12people, to have the funds or subsidies to build more renewable energy or other clean
11:19energies, which is a great contribution to reduce the carbon emission.
11:25That's why we always say that Taiwan should have a similar policy to greatly reduce the
11:32carbon emission, not only for the power supply, but also for those power incentive industries,
11:40like especially the ICT industry.
11:43That's what they need.
11:44And also they have promised the RE100 initiative, which means those ICT companies like TSMC,
11:53they have to use 100% of renewable energy at a certain time.
11:58That's why we need to increase the renewable energy, just like the US is doing right now.
12:04Well, it looks like many countries around the world, including Taiwan, are trying to
12:08take action when it comes to these carbon emissions.
12:11Is it too little, too late?
12:13Well, it's never too late to take action, right?
12:17Because it's better than doing nothing.
12:20And we hope the Taiwanese government have to catch up with the other system.
12:28As we see, Korea has started their ETS, the emission trading system, since 2015.
12:35So after that, they have directly limitation on the total carbon emission.
12:42And for Japan, they are now having the GX policy.
12:46So GX means green transition policy.
12:50So what they are doing is they put more funds on developing technology related to the carbon
12:56emission, but especially they have the green bonds.
13:01The green bonds is the main source for those investments.
13:06But what they pay for the green bonds is they're going to collect more carbon tax from the
13:12corporation.
13:14So when you see the people says, you see that Japan and Korea, they have the lower fee rates
13:20than Taiwan.
13:21It's actually not correct.
13:23So Taiwan should follow the same track as those countries doing.
13:27Well, Chris, thanks so much for joining us today and for all that insight.
13:31Thank you so much for having me.
13:34This has been Zoom In Zoom Out.
13:35For more stories from Taiwan Plus, follow us on social media.
13:39Thanks for joining us and we'll see you next time.
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