Taiwan's carbon market takes flight: navigating the dawn of carbon pricing

Annie Huang, Taipei; Vyra Wu, DIGITIMES Asia 0

Credit: AFP

Recently, the Taiwan Carbon Solution Exchange (TCX) initiated the first set of international carbon credit trades, kicking start Taiwan's era of carbon pricing. Tien Chien-Chung, General Manager of TCX, remarked that going forward, companies with emission reduction plans might transition from buyers to sellers, challenging the conventional buyer-centric model. The significance of international carbon credits extends beyond Taiwan's industries, playing a pivotal role in achieving global carbon reduction objectives.

During the 2023 Taiwan ESG Forum: Green Transition to a Circular Net-Zero Future, Tien highlighted that the initial carbon credits span seven countries across Asia, Africa, and South America. Developers from the UK, Taiwan, Singapore, and Switzerland engaged in diverse projects, including clean water sources, wind power, solar, and electricity generation from biogas.

A notable aspect is that among the first projects traded, involving a total of 88,520 tons of CO2e (carbon dioxide equivalent), Taiwan's lone seller is Sacurn Carbon. The company successfully traded around 6,257 tons of carbon credits from a biogas project in Kenya on TCX's international carbon credit trading platform, officially launched on December 22.

Sacurn Carbon explained that biogas power generation involves the anaerobic decomposition of organic waste, followed by purification, resulting in methane-rich biogas. This biogas can be utilized to produce thermal energy for generators, converting it into electricity.

Discussing the market demand for carbon credit trading, Tien revealed insights gathered from visits to various large enterprises. He noted diverse demands for carbon credits based on each company's unique carbon reduction objectives.

Beyond varying purposes, Tien highlighted a notable gap in the understanding of carbon credits among businesses. While many enterprises are familiar with RE100, demand for renewable energy certificates is high in Taiwan, particularly among semiconductor manufacturers allocating substantial budgets for their procurement.

Tien emphasized that international surveys indicate that businesses willing to invest in carbon credits are those actively engaged in climate action. Considering Taiwan's geographical constraints and high carbon intensity, relying solely on domestic carbon credit production poses significant challenges. Thus, international carbon credits are inevitable for Taiwan's industries.

Dr. Niven Huang, Managing Director of KPMG Sustainability Consulting, shared insights into Taiwan's 2022 commitment to a net-zero transition by 2050. Anticipating an annual investment of NT$100 billion for net-zero development, he emphasized the vast business opportunities this transition will bring. Publicly listed companies will face pressure from international capital markets to enhance their carbon management practices, requiring increased capital investment and strengthened low-carbon marketing efforts.

As Taiwan navigates its low-carbon transformation, companies must seize opportunities and translate them into enhanced competitiveness in the evolving carbon market.