Government still without a consensus on a carbon fee rate

Taipei, July 5 (CNA) Taiwan's government has once again failed to set carbon fees for high-emissions companies after a meeting Friday that looked at various fee scenarios, with one official expecting one or two more meetings to be needed to reach a consensus.

The government had originally planned to set a carbon fee rate no later than in the first quarter of 2024, when it began to calculate fee-liable carbon emissions to pave the way for the collection of carbon fees in 2025.

At Friday's meeting of the carbon fee review committee, its fourth, committee members looked at simulations of how different fees would affect the economy.

The simulations were based on six different carbon fees, ranging from NT$100 (US$3) to NT$1,000 per metric ton of carbon dioxide equivalent.

The lowest fee of NT$100 per metric ton would lead to a 0.04 percentage point fall in gross domestic product (GDP) compared to the scenario without carbon fee implementation, while a NT$300 fee would lead to a 0.12 percentage point fall, and a NT$500 fee, a 0.2 percentage point fall, according to the ministry.

Under the highest fee scenario, GDP would fall 0.4 percentage point compared to no carbon fee. Every 0.1 percentage point fall is equal to around NT$23.5 billion, based on GDP in 2023.

These effects could end up lower if a carbon leakage risk adjustment mechanism were applied to lower the chargeable emissions of certain industries at risk of moving production to places with laxer emission restrictions to avoid carbon fees or taxes.

In a statement issued following the meeting, the ministry said the committee members agreed that the macroeconomic impact of fees might be limited, but they still called for further industry-specific assessments.

Environment Minister Peng Chi-ming (彭啟明) said on the sidelines of a seminar earlier Friday that levying carbon fees was expected to only have a small impact on Taiwan's economy, "lower than an electricity rate hike."

Peng said it was not uncommon, as seen in other countries, to have the carbon fee increase incrementally to help enterprises gradually acclimate themselves with the reporting and planning needed for decarbonization.

He expected that it would take another one or two meetings before the rate is set.

According to data compiled by the ministry based on 2022 emissions, a total of 550 emitters meet the 25,000-metric ton threshold and will be paying a fee for emissions exceeding the threshold.