Taiwan Carbon Fee Rollout in 2025: Key Insights for Companies Seeking Carbon Fee Discounts Through SBTi

In 2023, Taiwan’s Legislative Body passed the “Climate Change Response Act,” confirming the imposition of a carbon fee on businesses. The calculation will be based on emissions in 2024, and major emitters are expected to start paying the carbon fee from 2025 onwards. The Ministry of Environment has established the Carbon Fee Rate Review Committee. Minister Fuh-Sheng Shieu mentioned in a February media interview that entities subject to the carbon fee who adopt Science-Based Targets initiative (SBTi) for emission reduction might receive “very significant” carbon fee discounts.

Adoption of SBTi emission reduction targets: Where do Taiwan’s major emitters stand?

According to data from the Ministry of Environment, in 2022 there were over 500 factories with direct and indirect emissions from electricity consumption totalling over 25,000 tons of CO2e. Predominantly stemming from sectors like electronics, chemical materials, textiles, electricity, and steel, these emissions signal their potential eligibility for future carbon fee collection. This data reflects around 282 enterprises, with over 70 related to electronics manufacturing, nearly 40 in chemical materials, and over 20 in the textile industry. Despite this, the SBTi website shows that only 9 companies have committed to SBTi, and just 13 have been verified for SBTi emission reduction goals. The message is clear; other major emitters wishing to qualify for this preferential tax rate should promptly commit to SBTi goals.

What should companies note when applying for SBTi?

To apply for SBTi, companies must complete a carbon inventory, set emission reduction targets, and devise emission reduction measures. SBTi follows the GHG Protocol, which differs from the ISO 14064 standard familiar to most Taiwanese companies. The key difference between the two lies in the calculation of Scope 3 emissions in the value chain; GHG Protocol provides a more comprehensive inventory framework, detailed categorization, and clearer calculation criteria.

Since 2019, RESET Carbon has been guiding clients across various industries to meet SBTi requirements, establish carbon emission reduction targets and roadmaps, and obtain SBTi certification. During our guidance process, we found that even clients certified under ISO 14064 still face certain difficulties when collecting Scope 3 data according to GHG Protocol.

Over the past year, a noticeable trend has emerged with SBTi, international brand customers, and government bodies placing greater importance on Scope 3 considerations. In December 2023, SBTi released updated SBTi Criteria Assessment Indicators (CAI) specifically addressing its review requirements, providing clearer guidelines. The guidance mentions that even if companies face challenges in calculating Scope 3 emissions, they “shall demonstrate [their] best efforts to calculate these emissions.”

Before and after the release of the CAI, we had seven clients entering the SBTi review stage and successfully obtaining SBTi verification. Consequently, we immediately observed a significant increase in SBTi requirements for Scope 3. In light of this, we suggest that those companies anticipating future carbon fees, carbon policies, or customer emission reductions should plan early, enhance communication and collaboration with supplier partners, start collecting higher-quality Scope 3 data, and set emission reduction targets in line with SBTi guidelines to achieve SBTi certification. Aside from being aware of potential additional costs and risks brought about by future government regulations, this approach aligns with international industry decarbonization trends, meeting the expectations of customers and other stakeholders, whilst enhancing a company’s competitiveness in the international supply chain.

Is your company facing the potential impacts of the carbon fee system? Get in touch with Principal Consultant, Selina Cheng, to see how we can support you in mitigating this risk by committing to SBTi goals.