Taiwan and the UK have joined hands to launch a report, titled Carbon pricing options for Taiwan, and would further collaborate on climate action, the Environmental Protection Administration (EPA) said, as the nation prepares to collect a levy on carbon emissions.
The report was the result of its cooperation with the British Office Taipei, the EPA said in a news release on Friday.
The two sides commissioned the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and Political Science to evaluate carbon pricing systems for Taiwan, it said.
Josh Burke, policy fellow at the institute and one of the report’s authors, had visited Taiwan early this year to share information on the UK’s carbon pricing policy, it added.
The 49-page report was published on the institute’s Web site on Tuesday.
As a small, export-oriented economy that imports fossil fuels for most of its energy demand, Taiwan faces a range of challenges in reaching its target of lowering greenhouse gas emissions by 50 percent from 2005 levels by 2050, let alone the more ambitious emissions reductions targets needed to align with global ambitions under the Paris Agreement, the report said.
The report recommends that Taiwan start with a simple carbon levy, initially at a low level, but with a clear trajectory to increase the levy to levels required to meet international climate goals under the Paris Agreement.
Companies would be prepared for such a levy, as opposed to an emissions trading system, because they are familiar with environmental protection fees, it added.
The levy should cover large emitters in the manufacturing and electricity sectors, the report said, adding that the electricity sector in 2017 accounted for 59 percent of Taiwan’s carbon emissions.
If designed well, carbon pricing alongside complementary policies would help Taiwan reduce its greenhouse gas emissions, while growing its economy and playing a part in the international effort to combat climate change, it said.
There is considerable room for Taiwan to implement a carbon price starting from NT$300 per tonne of carbon dioxide, the report said, citing a 2018 survey that showed that on average, respondents were willing to accept a 13.2 percent electricity price hike if that were necessary for integrating more renewables into the power mix.
A carbon pricing policy can be improved by enhancing companies’ capacities to participate and ensuring their early engagement to address concerns, the report said.
In preparing draft amendments to the Greenhouse Gas Reduction and Management Act (溫室氣體減量及管理法), the EPA is mulling collecting a carbon levy of NT$110 per tonne of carbon dioxide, local media reported in October.
The draft amendments would be forwarded to the Executive Yuan next year, the EPA said at that time.
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