Newsletter
A Preliminary Assessment of the Regulations over Greenhouse Gas Emissions Offset Programs
On July 5, 2023, by Paragraph 2, Article 24 of the Climate Change Response Act (“Act”), the Environmental Protection Administration announced the Regulations over Greenhouse Gas Emissions Offset Programs, a bill to mitigate the impact of greenhouse gas emissions from new or modified sources. The bill elevates carbon offsetting from a suggestion in environmental impact assessment to a blanket legal requirement that applies to all project owners emitting greenhouse gas over a certain volume. The bill also names multiple means of carbon reduction to encourage enterprises to compensate for their emissions. A project owner can be fined up to NT$1 million for each time it violates the carbon offset requirement and fails to meet the deadline set for rectification.
Realizing that compensating for carbon emissions by making equivalent carbon reductions may not be practicable for some enterprises, lawmakers allow enterprises to purchase carbon credits to offset their emissions, and authorize national regulators to create an application procedure and calculation formula for the credits. While the legislative intent behind Article 24 of the Act is clear about the introduction of the carbon credit system, the bill itself contains no stipulations concerning it. And because of Taiwan’s physical size, the amount of local carbon reduction can be quite limited. Without a complete suite of measures for emission reduction, such as foreign credit transferring, trading or auctioning, local enterprises may find it hard to offset their emissions when there are no sufficient means of carbon reduction. Such difficulty could conceivably discourage enterprises from greenlighting or continuing with development projects.
Some say carbon credits, once enforced, may become a convenient system of buying and selling indulgences for enterprises looking to lighten their emission reduction obligations, defeating the purpose of the Act. However, this concern can be dispelled, and various economic interests can be protected, as long as regulators clearly define “difficulty in making equivalent carbon reductions,” the eligibility criterion for buying carbon credits in Article 24 of the Act, and make the price of carbon credits floating or adjustable based on the volume of actual carbon emissions and the sum of the carbon fees. The bill is currently under public review. Whether regulators will include carbon credits into the bill after the review period remains to be seen.