Taiwan’s carbon fees would reduce the tariff that domestic exporters would be subject to under the Carbon Border Adjustment Mechanism (CBAM) when exporting to the EU, but the exact amount would depend on many other factors, Climate Change Administration Director-General Tsai Ling-yi (蔡玲儀) said on Tuesday.
The European Economic and Trade Office (EETO) and the Climate Change Administration held held a press luncheon to explain the implementation of CBAM, the transitional phase of which started on Oct. 1.
EETO trade section head Aleksandra Kozlowska said that CBAM, a carbon tariff on carbon-intensive products imported by the EU, is a measure to address the risk of carbon leakage, because when the EU Emissions Trading System’s (ETS) free carbon emissions allowance allocation is gradually phased out in the EU, European producers might move their production sites to countries with no carbon emission restrictions.
Photo: Wu Po-hsuan, Taipei Times
Six energy-intensive sectors — cement, steel, aluminum, fertilizer, hydrogen and electricity — would be the first covered by CBAM, because there is a high risk of carbon leakage in these industries and they account for a high proportion of greenhouse gas emissions in the EU, Kozlowska said.
During the transition period, which runs to the end of 2025, no fees would have to be paid nor certificates purchased; rather, it is a period of “monitoring, reporting and learning” for the EU and those exporting into the EU, to ensure a smooth rollout of the mechanism from 2026 onward, she said.
Tsai said that the Ministry of Economic Affairs had organized CBAM consultation events for domestic traders and manufacturers, including seven conferences last month, four CBAM product carbon content calculation workshops this month and more before the end of the year.
The cost of the CBAM tariffs would be total emissions, minus the free allowance allocation granted to EU counterparts, multiplied by the EU’s ETS carbon price at the time, Kozlowska said.
Adjustments could be made to CBAM obligations when “a carbon price has been effectively paid in the country of origin” of the products,” as that could be claimed as a rebate, she added.
“So if you ask how much Taiwanese exporters will have to pay at the border starting in 2026, I cannot tell you, as it will depend on the design of Taiwan’s [carbon pricing] system, whether it’s rigid or flexible like the EU’s ETS and the price of the ETS allowance, which could range from 6 euros to 100 euros [US$6.40 to US$106.65] if my memory serves correctly,” Kozlowska said.
Asked whether Taiwan’s carbon fee rate should match the ETS price to claim the rebate in its entirety, she said that looking only at CBAM when designing Taiwan’s carbon pricing would not be the right approach, because the range of carbon fee coverage is much broader than CBAM.
Tsai said that Taiwan’s carbon pricing mechanism and other supporting measures, such as voluntary emission reduction projects, would aim to reduce the country’s overall carbon emissions.
“After all, products exported to the EU account for only a small part of the country’s carbon emissions, so the emphasis of our design of the [pricing] system would be placed on boosting domestic manufacturers’ carbon reductions,” Tsai said.
Asked whether it is feasible for Taiwan to implement a flexible rate, as Kozlowska suggested, Tsai said a carbon fee rate review committee would be established to examine the effectiveness of the carbon price on carbon reductions, but how often the rate would be reviewed is still under discussion.
The carbon fee rate is slated to be announced by the end of this year.
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