Newly unveiled carbon fee calculating formula slammed by critics

Taipei, Jan. 3 (CNA) Taiwan's Ministry of Environment (MOENV) unveiled a carbon fee charging method that diverges significantly from what was widely expected and is less stringent on big emitters, during a meeting Wednesday, attracting immediate criticism from environmental groups.

Tsai Ling-yi (蔡玲儀), director-general of the Climate Change Administration (CCA) under the Ministry of Environment met with representatives from civil environmental groups at an event held by the CCA in Taipei on Wednesday.

At the meeting, Tsai said the carbon fee to be paid in 2025 by big emitters will be their total emissions minus 25,000 metric tons of carbon dioxide equivalent (tCO2e), multiplied by the carbon fee rate (Carbon fee = (emissions - 25,000) x fee rate)

This came as a surprise to many of those in attendance as it had been expected that the carbon fee formula would be the fee rate multiplied by the whole amount of the carbon dioxide equivalent emitted for big emitters (Carbon fee = emissions x fee rate).

On Friday the CCA released the tentative outline of Taiwan's future carbon pricing structure to be reviewed by stakeholders ahead of the publication of an official draft.

The tentative outline showed the carbon fee formula as total emissions multiplied by the carbon fee rate.

According to the tentative outline released last Friday, big emitters were defined as companies whose direct and indirect annual emissions exceed 25,000 metric tons. They were to pay carbon fees starting in 2025 based on their emissions measured in 2024.

An estimated 512 companies in the electricity industry, iron and steel, oil refining, cement, semiconductors, thin-film transistor liquid-crystal display (TFT-LCD), and all companies with simply direct fossil fuel emissions exceeding the 25,000-ton threshold were to be subject to fees, according to the CCA.

Wednesday's newly publicized information amounts to granting big emitters "free allowances," which is totally at odds with what had been expected before Wednesday.

Tsai explained that the newly proposed formula is to prevent emitters from trying to avoid paying carbon fees entirely by reducing emissions to just below the 25,000 threshold.

There would have been a big difference between an emitter with 24,900 metric tons and one with 25,000 tons, which would have increased the incentive for companies to circumvent the regulations, Tsai said.

A representative from the Environmental Rights Foundation said that based on Wednesday's formula, carbon fees would exert insufficient pressure on companies to decarbonize.

For example, a 26,000-ton emitter will now only have to pay NT$300,000 (US$9,677) if the carbon fee rate is set at NT$300 per ton, which is much lower than the previously expected NT$7.8 million, the representative said.

The Society of Wilderness representative said if decarbonization is the country's top priority, it is doubtful the current plan will make much of a contribution to ensuring firms work toward that goal.

The director-general said of the estimated 512 big emitters, those responsible for most of the country's emissions emit several million metric tons per year, and to them emissions of "25,000 tons is like single digits."

Many small companies, on the other hand, have total emissions per year of 25,000, 30,000, or 40,000 metric tons, mostly from electricity use, she added.

Such small businesses will be incentivized to use electricity more efficiently or use renewable energy if their annual emissions are only slightly above the fee threshold, Tsai said.

The CCA released the tentative outline as a pre-draft of an official draft of the regulations on Friday because, according to CCA Deputy Director-General Huang Wei-ming (黃偉鳴), this would allow for "wider communication with society and create a more solid consensus."

The meeting on Wednesday was the first roundtable meeting intended to facilitate such wider communication.

In March, Chang Tzi-chin (張子敬), then-head of the Environmental Protection Administration (EPA), which was upgraded to the MOENV in August, said about 289 big emitters collectively emitted 233.873 million tCO2e in 2021, accounting for about 82 percent of the country's emissions.

The electricity utility companies accounted for most emmisions at about 54.3 percent of the 233.873 million tCO2e, Chang said.

A report publicized by the Risk Society and Policy Research Center in June and based on information provided by the EPA, found that the top 30 enterprise-emitters, excluding electricity suppliers, emitted a total of 132.292 million tCO2e (including indirect emissions of electricity using) in 2021.

This included 10 from the petrochemical industry (49.06%), seven from the electronic components manufacturing sector (14.91%, five from the semiconductor industry and two LCD firms), five iron and steel companies (25.99%), four paper making enterprises (2.8%), two cement firms (6.11%), one textile company, and one glass enterprise.