On July 14, 2021, the European Union announced the draft of the ‘Carbon Border Adjustment Mechanism’ (CBAM) to prevent the relocation of high-carbon industries or the significant import of products from abroad that have not borne the cost of carbon pollution, resulting in ‘carbon leakage.’ Starting in 2027, carbon taxes will be officially levied on industries such as cement, electricity, fertilizers, steel, aluminum, chemical plastics, hydrogen, ammonia, and others based on their product carbon footprints. The scope of emissions covered includes both Category 1 (direct emissions) and Category 2 (energy indirect emissions).

In April 2022, the Executive Yuan approved the draft amendment of the ‘Greenhouse Gas Reduction and Management Act,’ officially renaming it the ‘Climate Change Response Act.’ It is expected that the carbon tax will be imposed as early as 2024. In the first phase, it will be levied on 287 major carbon emitters emitting over 25,000 tons of carbon annually. The industries covered include cement, petrochemicals, steel, semiconductors, and others.

Key points of the draft are as follows:

(1) Incorporating the 2050 net-zero emissions target into the law.

(2) Enhancing carbon reduction governance levels.

(3) Prudently implementing carbon pricing.

(4) Establishing carbon inventory regulations and systems.

(5) Setting efficiency standards and promoting product carbon footprints and green living labels.

Amid increasing global concerns about the impacts of climate change and sustainability issues, the government aims to assist Taiwanese businesses in aligning with international efforts to address climate change. On January 13, 2022, the Financial Supervisory Commission (referred to as the FSC) held a press conference to announce the phased implementation of the ‘Sustainable Development Roadmap for Listed Companies.’ This initiative requires all listed companies to complete a greenhouse gas inventory by 2027 and have the inventory verified by 2029.