Carbon Fees to Be Officially Charged in 2026, Industry Urges Government to Negotiate Deductions for EU CBAM

The Environmental Ministry announced that large carbon emitters will trial carbon fee reporting next year, with official carbon fee collection starting in 2026. The industry is urging the government to carefully assess the impact of carbon fee rates to minimize harm to industries. The European Union's Carbon Border Adjustment Mechanism (CBAM) is also set to take effect in 2026, and industry representatives are calling for active negotiations with the EU to establish deduction methods, preventing export industries from facing double taxation.

On the 29th, the Ministry unveiled three sub-laws related to carbon fees. About 500 major carbon emitters will begin trial reporting next year, while the official fee collection will start in 2026. Additionally, the 5th Carbon Fee Rate Review Committee is scheduled to convene on September 9th to conduct more detailed assessments of the impact on individual industries.

As discussions on carbon fee rates deepen, industry representatives are urging the committee to carefully consider the contents of the three sub-laws and assess the impact of fee rates on industries. They hope the fee setting will not affect consumer prices or undermine industrial competitiveness.

Although carbon fees will be applied domestically, the industry is concerned that high-carbon products such as cement from abroad may enter Taiwan, putting local industries at a competitive disadvantage and potentially leading to carbon leakage, which could undermine Taiwan's carbon reduction efforts. The industry is calling on the government to swiftly establish a carbon border adjustment mechanism to levy carbon taxes on imported products.

Industry representatives also noted that after the announcement of the three sub-laws, companies will need to invest significant amounts of capital to upgrade equipment and develop carbon reduction technologies to meet self-reduction targets. They are urging the government to refer to international practices and introduce supportive policies to assist industries in transitioning to low-carbon operations.

The official start of domestic carbon fee collection coincides with the EU's implementation of CBAM. Industry representatives are calling for proactive negotiations with the EU to ensure that carbon fees paid domestically can be deducted from CBAM certificates. "No one knows how this deduction will work."

Industry insiders also pointed out that the two mechanisms are different—while the EU calculates fees based on the carbon content of products, Taiwan bases its fees on organizational greenhouse gas inventories. The government is encouraged to negotiate with the EU to prevent companies exporting to Europe from facing double taxation, especially in the metals and fasteners industries, which will be particularly affected.

Source: CNA News