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Carbon Fee Imposition for Dedicated Funds

Carbon pricing is an important strategy for reducing emission. To increase the rate of reduction, the economic incentive of imposing carbon fees has been added to the Climate Act. To facilitate greenhouse gas reduction and low-carbon economy development and steadily promote the actual overall national reduction towards net zero goals, funds will be dedicated towards greenhouse gas reduction works, low-carbon and negative emissions technology and industry development, as well as greenhouse gas reduction investment subsidies and awards.

The carbon fee will be implemented gradually in phases according to Taiwan’s emission reduction goals. Initially, it will be levied on power and manufacturing businesses that emit more than 25,000 tons of carbon dioxide equivalent per year. According to Article 28, Paragraph 3 of the Climate Act, the rate of carbon fee shall be assessed by the fee rate review committee set by the central competent authority, according to the current status of Taiwan's greenhouse gas reduction, the type of emission source, the type of greenhouse gas emissions, the scale of emissions, the status of voluntary reduction, reduction results and other relevant factors. The fee rate will be approved and announced by the central competent authority and reviewed regularly.

The carbon fee is an economic rather than a fiscal instrument, and its objective is to promote real reductions. Therefore, Article 29 of the Climate Act also stipulates parties that can effectively reduce greenhouse gas emissions and achieve specified targets by implementing reduction measures such as switching to low-carbon fuels, adopting negative emission technologies, improving energy efficiency, using renewable energy, or process improvement may submit voluntary reduction plans to apply for approval of preferential rates. The design of various fees encourages businesses with high emissions to actively reduce emissions.

Carbon fee revenues will be placed into the “Greenhouse Gas Management Fund,” which is dedicated to the reduction of greenhouse gas and climate change adaptation. Article 33 of the Climate Act specifies the purpose of the fund, including the development of low-carbon and negative emission technologies, subsidies and incentives for investing in greenhouse gas reduction technologies, promotion of climate change adaptation work, carbon footprint management mechanism, education advocacy and supporting just transition, etc. Through proper planning, the fund enhances reduction efficiency. Results of the policy are regularly disclosed.

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