Taiwan's government has approved a greenhouse gas emission reduction and management act with the goal of reducing emissions to half of the 2005 levels by 2050. This will lead to the implementation of a cap and trade-style carbon emissions trading scheme, setting binding CO2 targets until 2050. Similar to the EU ETS, the aim is to achieve emission reduction goals in a cost-efficient manner.
The establishment of another carbon emissions trading scheme in Taiwan increases the pressure on global politicians ahead of the United Nations Framework Convention on Climate Change (UNFCCC) Conference of the Parties in Paris (COP 21) in December 2015. COP 21 seeks to finalize post-2020 emissions reduction targets and has already seen countries submit their emissions reduction commitments through Intended Nationally Determined Contributions (INDCs).
As more nations consider implementing carbon emissions trading schemes, there is a growing consensus that they provide a cost-effective approach to emissions reductions and engage industries with financial incentives. The proliferation of emissions trading schemes around the world allows for greater ambition in coverage and reduces concerns about carbon leakage, where economies become uncompetitive due to accounting for the cost of carbon while other countries do not. These schemes also encourage other nations to make greater commitments to address climate change, as costs no longer distort their competitiveness. While the ultimate goal is to create a level playing field through a single or linked system, the failure of the Kyoto Protocol has led to the bottom-up approach of INDCs. Over time, it will become evident that combining a patchwork of emissions trading schemes is more efficient.
Taiwan, like many Asian economies, heavily relies on coal, and there has been a pushback against nuclear power following the Japanese nuclear disaster. Due to its reliance on coal, Taiwan's total emissions are substantial relative to its population size, reaching 333 million tonnes last year compared to the UK's total of 471Mt.
The start date of Taiwan's trading scheme is eagerly awaited, with review periods and targets expected to be set every five years. It is likely that the trading scheme will be gradually phased in over the next decade. With major economies such as Europe, China, the US, and South Korea already covered by emissions trading schemes, or in the process of implementing national schemes, carbon trading is experiencing unprecedented popularity.
