Taiwan to Launch Carbon Credit Exchange That Could Rake in US$131 Billion by 2030

On October 2, 2024, Taiwan will take a significant step toward addressing climate change by launching its domestic carbon credit exchange platform, the Taiwan Carbon Solution Exchange (TCX). This development follows detailed discussions between TCX and Taiwan’s Ministry of Environment regarding the trading of domestic carbon credits. It began after the relevant regulations were enacted on August 15, 2024.

The trading platform is set to play a crucial role in the nation’s carbon reduction efforts, aiming to align Taiwan with global carbon trading mechanisms while fostering a more sustainable industrial structure. Its initial focus will be on those planning to establish new factories, as the carbon fee scheme—targeting entities emitting more than 25,000 metric tons of carbon dioxide equivalent annually—is yet to be implemented.

A New Dawn in Taiwan’s Carbon Trading

Current regulations require new large-scale factories and high-rise construction projects to offset their emissions by purchasing carbon credits from voluntary projects or implementing other offsetting measures, such as adopting high-efficiency equipment and energy-saving technologies.

Voluntary carbon emission reduction projects can be initiated by entities with annual emissions below 25,000 metric tons. These projects must adhere to internationally accepted standards for being measurable, reportable, and verifiable (MRV).

Carbon credits generated from these offsetting measures will be available for sale on the TCX platform. It will be primarily catering to buyers needing to meet environmental assessment requirements for construction and development projects.

Additionally, these domestic carbon credits may be used to partially offset carbon fees once the collection begins, projected for 2026, with 2025 serving as a preparation period.

How TCX Will Transform Taiwan’s Carbon Market and Helps in Net Zero Goal

The TCX, operational since December 2023, is Taiwan’s only certified platform for trading international and domestic carbon credits. It serves as a marketplace where enterprises can trade, transfer, and auction carbon credits in a transparent manner.

The platform’s core mission is to establish a robust carbon trading market that complements the international carbon trading framework. This initiative is particularly important given Taiwan’s ambitious goals to achieve net zero by 2050.

Taiwan’s net-zero goal by 2050 is a comprehensive roadmap aimed at transforming the country’s energy, industrial, and economic landscape. The plan includes a focus on four key transition strategies:

energy transformation,
industrial innovation,
lifestyle changes, and
social inclusion.

Taiwan intends to reduce its reliance on fossil fuels, increase renewable energy use, and invest in green technologies. The roadmap also emphasizes the importance of public and private sector collaboration to achieve these ambitious targets, positioning Taiwan as a leader in global sustainability efforts.

The TCX encourages businesses to adopt more sustainable practices, contributing to the broader national and global objectives of reducing greenhouse gas emissions.

Key Features of the Carbon Trading Platform

Taiwan’s carbon credit exchange will initially focus on purchasing high-quality carbon credits from the international market to offset the shortfall in domestic emission reductions. This approach is to meet the immediate needs of Taiwanese enterprises while the country ramps up its domestic emission reduction capabilities.

Over time, the platform is expected to foster a more self-sufficient carbon credit market within Taiwan, reducing reliance on international credits.

The platform also includes strict regulations to ensure transparency and prevent greenwashing—a practice where companies falsely claim environmental benefits for their actions. Only sellers with government-overseen emission reduction projects can auction or sell domestic carbon credits.

Additionally, buyers cannot resell traded or auctioned domestic carbon credits, a measure designed to stabilize the market and maintain its integrity.

The Environment Minister, Peng Chi-ming, indicated that the carbon fee rate is expected to be finalized by the end of 2024, with fee collection slated to start in 2026. During the interim period, businesses will still be required to report their emissions for 2024.

From Regulation to Innovation: TCX’s Role in Taiwan’s Carbon Neutrality Journey

The introduction of the TCX is expected to have a profound economic impact. The platform could attract significant private investment, potentially bringing in over NT$4 trillion (about US$131 billion) by 2030. This influx of capital can create more than 550,000 jobs in sectors related to carbon reduction and sustainability.

Furthermore, the TCX will contribute to Taiwan’s broader environmental goals by encouraging companies to invest in emission reduction technologies and projects, thus driving innovation in green technologies.

Challenges and Future Outlook

Despite its potential, the success of the TCX will depend on several factors, including:

the active participation of businesses,
the effectiveness of government policies, and
the platform’s ability to integrate with international carbon markets.

Taiwan’s industrial sector, which is a significant contributor to the nation’s carbon emissions, will play a critical role in this transition. Companies will need to adapt to the new regulations and market dynamics, which may involve significant operational changes and investments in sustainable practices.

Moreover, the TCX’s success will also hinge on its ability to evolve alongside global carbon trading systems. As international carbon markets become more interconnected, the platform must ensure that Taiwan remains competitive and compliant with global standards. This includes adhering to international carbon neutrality standards and ensuring that domestic carbon credits are recognized and valued in the global marketplace.

The launch of Taiwan’s domestic carbon credit exchange platform in October marks a pivotal moment in the country’s climate strategy. By creating a structured and transparent market for carbon credits, the TCX aims to accelerate Taiwan’s transition to a low-carbon economy while fostering innovation and economic growth.

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