Business leaders urge government to scale back carbon fee rate plans

Taipei, Sept. 9 (CNA) Business leaders in Taiwan criticized the proposed carbon fee rate range issued by a government committee on Monday, saying the plan would increase costs for companies and ultimately pass the buck onto consumers.

The responses came after a review committee under the Ministry of the Environment proposed a basic carbon fee rate in the range of NT$300 to NT$500 (US$9.34-US$15.58) per metric ton of carbon emissions, to be paid by the roughly 550 entities with annual emissions above 25,000tCO2 starting in 2026.

The committee is expected to decide on an exact figure within the proposed range at a meeting in the coming weeks, which must then be approved by the government.

Sept. 9: Gov't committee recommends carbon fee in NT$300-500/tCO2 range

Lin Por-fong (林伯豐), chairman of the Third Wednesday Club business association, said the proposed carbon fee rate, combined with a planned minimum wage hike, would increase costs by "at least 10 percent" for some companies.

The initial carbon fee rate should not exceed NT$100 per metric ton of emissions, above which it could lead to "green inflation," or the passing of such costs onto consumers, Lin said.

In addition, the imported counterparts of domestic products subject to a carbon fee should also be taxed, Lin said, adding that the government should consider exempting them from the commodity tax.

Another figure in the business community, who declined to be named, told CNA that the carbon fee would increase the burden of many Taiwanese firms which, with the exception of the semiconductor industry, are already struggling.

As an example, the individual cited the fee's possible impact on the petrochemical industry, which is still recovering from China's December 2023 decision to suspend preferential tax rates on 12 Taiwanese petrochemical products.

In order to protect the competitiveness of Taiwanese enterprises, the government should take care not to set its carbon fee rate higher than that of Japan, the individual said.

In Japan, the person said, the government has set a carbon fee equivalent to around NT$60 per metric ton of emissions, but there are also various exemptions, such as for coking coal used in steel production, or limestone-related emissions in cement production.

Under South Korea's carbon emissions trading scheme, the price of carbon is equivalent to around NT$200 per metric ton of emissions, the person said.

However, due to the widespread free allocation of emission allowances to sectors with a significant risk of carbon leakage, the actual price of carbon emissions for Korean enterprises is closer to NT$20 per metric ton, the individual claimed.

Carbon leakage refers to a situation where a company decides to move their production from a country with stringent climate policies to a country that is more lenient, resulting in an increase in carbon emissions.

Among other responses to the proposal, the Petrochemical Industry Association of Taiwan said that while it recognized the importance of cutting carbon emissions, it also hoped the government would take into consideration the competitiveness of Taiwanese companies.

Meanwhile, contract chipmaker United Microelectronics Corp. said it would wait for the final carbon fee rate to be set before assessing its impact. Taiwan Semiconductor Manufacturing Co., the world's largest contract chipmaker, said it did not expect the carbon fee to have a significant financial impact.