The domestic carbon credit trading regulations in Taiwan are set to be implemented on August 15. According to Jian-Zhong Tian, President of Taiwan Carbon Solution Exchange, the domestic carbon credit trading platform has completed its initial framework and is currently testing detailed connection systems. The platform is expected to launch officially in early October at the earliest.
With the continuous expansion of semiconductor manufacturing, future demand for domestic carbon credits is anticipated to exceed supply, potentially creating a significant impact on Taiwanese manufacturers. Tian pointed out that if the international carbon credit platform launches in December 2023, it will signify the arrival of an era where carbon has tangible value, which could send shockwaves through industries.
The domestic carbon credit platform is expected to have a profound impact because, unlike the international platform which only allows one-way purchases, the domestic platform adopts a two-way trading model.
Opportunities for Smaller Companies and Supply-Demand Dynamics
For companies with emissions below 25,000 tons, implementing reduction measures and carbon reduction strategies will allow them to receive voluntary reduction credits from the Ministry of Environment. This enables these companies to become sellers of domestic carbon credits, significantly aiding Taiwan's overall carbon reduction efforts.
Regarding the balance between supply and demand, Tian mentioned that inquiries have been made with some companies about their willingness to buy and sell. Large companies that have already undertaken early carbon reduction offset projects and are confident in their reduction achievements are likely to put their credits up for trade.
However, some companies, despite having voluntary reduction credits, consider these credits extremely valuable and prefer to retain them for internal use rather than trading them on the market.
Market Predictions and Transaction Methods
Tian predicts that carbon reduction will become imperative for companies, leading to demand exceeding supply. While the market transaction volume cannot yet be estimated, it will depend on market mechanisms. The continuous expansion of semiconductor manufacturing will inevitably increase efforts towards carbon reduction.
The Ministry of Environment recently released the Regulations Governing Trading of Greenhouse Gas Reduction Credits, establishing three transaction methods: fixed price trading, negotiated transfer, and auction. Each method serves different purposes and market conditions.
Early Projects and Platform Roles
Concerns have been raised by environmental groups and scholars regarding the inclusion of early projects in the carbon credit market. Tian emphasized that early projects can only undergo negotiated transfer and cannot be traded on the Carbon Exchange.
Regarding the future roles of domestic and international carbon credit trading platforms, Tian stated that they serve different purposes. International trading caters to major international supply chain companies, while domestic trading serves multiple statutory purposes, including offsetting carbon fees. Both platforms are expected to complement each other, encouraging more companies to participate and ultimately benefiting Taiwan's net-zero carbon emission goals.
The international carbon credit trading platform has launched natural carbon sink sales projects. Each of the two current projects has a volume of around 10,000 tons, with technology companies being the primary buyers. Blue carbon credits are priced around $30-35, while green carbon credits are around $15-20. There is high interest in natural carbon sinks from companies, and suitable projects will continue to be sought.
