Taiwan launches carbon exchange to start trading in 1H24

Chloe Liao, Kaohsiung; Vyra Wu, DIGITIMES Asia 0


Taiwan Carbon Solution Exchangee (TCSE) officially commences operations at Kaohsiung Software Park, southern Taiwan on August 7th, focusing on three key directions: voluntary offsetting, incremental offsetting, and international carbon credit trading. In its initial phase, the exchange will primarily prioritize carbon consultation and auditing functions. The eagerly anticipated carbon credit trading, however, awaits validation through subsidiary laws, with potential commencement in the first half of 2024.

The decision to initiate operations in Kaohsiung stems from the fact that the cuty accounts for 20% of Taiwan's carbon emissions, with the industrial energy sector alone accounting for 23% of Kaohsiung's emission. Historically, Kaohsiung has been a hub for heavy industries and sectors with high carbon emissions. Local businesses in the area confront significant challenges due to the EU's Carbon Border Adjustment Mechanism (CBAM) and its associated carbon tariffs.

The upcoming structure of the carbon exchange will be segmented into three key areas, influenced by the distinctive nature and subjects of carbon credits. Within the Taiwan carbon credit trading sector, it will be further classified into voluntary emission reduction and carbon offset trading. This division primarily serves the purpose of meeting carbon reduction obligations for corporates or aligning with criteria for environmental impact assessments. In the former category, sellers will generate carbon credits through projects submitted to the Environmental Protection Administration (EPA), adhering to measurable and reportable criteria.

Once approved, these credits can be listed on the platform. Conversely, the latter encompasses a broader range of activities beyond afforestation, including transitions from internal combustion vehicles to electric vehicles and emission reductions in agriculture and fisheries. For example, replacing old fossil fuel vehicles with electric ones or implementing emission-cutting measures in farming and fisheries can warrant carbon credit applications, which can subsequently be sold to environmental assessment organizations.

In the domain of international carbon credit trading, the carbon exchange will collaborate with reputable international certification bodies to provide robust support for global carbon credit transactions. In its initial phase, the carbon exchange will prioritize carbon consultation and educational training. The official launch of carbon pricing and the commencement of carbon credit trading will hinge on the formulation of subsidiary laws related to carbon fees and climate change response.

Regarding the timeline, the current roadmap entails the announcement of management regulations for greenhouse gas reduction quota transfer, trading, or auction in November 2023. These regulations will define trading subjects, transaction fees, and more, with the expectation of finalization by the end of 2023. It is anticipated that by the first half of 2024, pertinent subsidiary laws will be enacted, establishing carbon market standards as a foundation for carbon pricing. The objective for Taiwan's carbon trading is to commence in the first half of 2024, potentially even as early as the first quarter.