Taiwan to start pilot program for cap and trade system: Environment minister

Taipei, Sept. 19 (CNA) Taiwan's cap and trade system, which the Ministry of Environment (MOEVN) expects to be launched in four years, will start with a pilot program that involves companies with a good record in decarbonization, Environment Minister Peng Chi-ming (彭啟明) said Thursday.

On his return from a trip to Europe, Peng told CNA that he expects Taiwan to have its own cap and trade system in four years time.

Under a cap and trade system, the sectors involved have a cap on greenhouse gas (GHG) emissions, and those that exceed the limit set by the relevant authorities have to trade "emission allowances" with others that fall under the limit.

The European Union has such a system, called an Emission Trading System (ETS), while Taiwan currently has a carbon pricing system that directly applies fees for exceeding set GHG emission levels.

In an interview with CNA Thursday, Peng said the EU is planning to implement an extended version of its system by 2027, which will be called the ETS2 and will cover 85 percent of its emissions.

Currently, the EU's ETS covers the power production and energy-intensive industries, as well as the aviation and maritime shipping sectors. The ETS2 will extend to emissions from fuel combustion in buildings, road transportation and smaller industries, according to Peng.

When Taiwan's cap and trade system first takes effect, it will not be as extensive as the ETS2, he said.

Rather, it will follow the Japan model, under which about 500 companies are involved in the trial stage, and it will start with a pilot program for those that have made good progress in decarbonization, Peng said.

In the interview, Peng also said that the government plans to assign MOEVN personnel to the EU to participate in discussions on environmental issues there, including the Global Plastic Treaty, management of PFAS chemicals, and the circular economy.

Stationed in Brussels, the MOEVN personnel will attend working meetings on the carbon border adjustment mechanism (CBAM), which will impose carbon tariffs from 2026 on products imported from non-EU countries, according to the minister.

If all goes according to plan, there is also a chance that MOEVN personnel will be assigned to other parts of the world in the future to help the ministry build long-term cooperative ties with those areas on environmental efforts, he said.

Peng mentioned in particular the United States' "Clean Competition Act" and Japan's Green Transformation (GX) policy, which are geared toward decarbonization.