Taiwan’s cap and trade system, which the Ministry of Environment expects to be launched in four years, would start with a pilot program that involves companies with a good record in decarbonization, Minister of Environment Peng Chi-ming (彭啟明) said on Thursday.
Peng, who had just returned from a trip to Europe, said he expected Taiwan to have its own cap and trade system in four years.
Under a cap and trade system, the sectors involved have a cap on greenhouse gas (GHG) emissions, and those that exceed the limit set by authorities have to trade “emission allowances” with others that fall under the limit.
Photo: CNA
The EU has such a system, called an Emissions Trading System (ETS), while Taiwan has a carbon pricing system that directly applies fees for exceeding set GHG emission levels.
Peng said the EU is planning to implement an extended version of its system by 2027, which would be called the ETS2 and would cover 85 percent of its emissions.
The ETS covers the power production and energy-intensive industries, as well as the aviation and maritime shipping sectors.
The ETS2 would extend to emissions from fuel combustion in buildings, road transportation and smaller industries, Peng said.
When Taiwan’s cap and trade system first takes effect, it would not be as extensive as the ETS2, he said.
Rather, it would follow the Japan model, with about 500 companies involved in the trial stage, and it would start with a pilot program for those that have made good progress in decarbonization, Peng said.
The government plans to assign personnel from the ministry to the EU to participate in discussions on environmental issues there, including the Global Plastic Treaty, management of PFAS chemical and the circular economy, Peng said.
Stationed in Brussels, these ministry personnel would attend working meetings on the carbon border adjustment mechanism, which would impose carbon tariffs from 2026 on products imported from non-EU countries, Peng said.
If all goes according to plan, there is also a chance that ministry personnel would be assigned to other parts of the world to help the ministry build long-term cooperative ties with those areas on environmental efforts, he said.
These include the US’ Clean Competition Act and Japan’s Green Transformation policy, which are geared toward decarbonization, he said.
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