March 2024
Domestic Carbon Credit Trading in Taiwan: Everything You Need to Know
March 2024
Elva Chuang and Angel Li
In 2023, Taiwan announced the draft Management Regulation for Greenhouse Gas Reduction Credit Trading (hereinafter referred to as the “Regulation”), which governs domestic carbon credit trading.
What Can Be Traded? Who Can Buy and Sell Them?
Sellers are the entities that have obtained reduction credits by implementing GHG Early Action Project (“Early Action Project”), GHG Offset Project (“Offset Project”), and Voluntary Emissions Reduction Project. Buyers include entities obligated to pay carbon fees and those engaged in greenhouse gas incremental offset, etc., as defined in Article 26 of the Climate Change Response Act. (Article 5 of the Regulation)
Reduction credits are traded in units of a metric ton of carbon dioxide equivalent, with each unit assigned a unique code. Once traded and transferred, reduction credits cannot be re-traded or re-auctioned. (Articles 2, Paragraphs 2 and 3, Article 27, Subsection 2, of the Regulation)
How to Trade Domestic Reduction Credits? 3 Trading Models
There are three trading models: negotiated trading, fixed-price trading, and auction. Negotiated trading occurs through private agreements between parties on quantity and price. The latter two models must be conducted on the Taiwan Carbon Solution Exchange (TCX). (Article 2, Paragraphs 4 and 5, of the Regulation)
Reduction credits earned through Offset Project and Voluntary Emissions Reduction Project can be traded through any of the three models. Yet, reduction credits obtained from implementing Early Action Project are only tradable through negotiated trading. (Article 10 of the Regulation)
What Should Be Mindful for Buyers and Sellers?
Transaction fees will be charged. For auctions, both buyers and sellers are required to pay the fees separately. In fixed-price and negotiated trading, buyers are responsible for covering the fees. (Article 12 of the Regulation)
Additionally, there are preliminary measures for sellers before trading. For auctions and fixed-price trading, sellers are required to disclose certain details of the reduction credits on the TCX platform, including quantity, code and price, project details, greenhouse gas reduction measures and implementation status, duration and purpose of reduction credits, etc. For negotiated trading, sellers are required to submit the notarized agreement and seek approval from the Ministry of Environment. (Articles 13, 17 and 19 of the Regulation)
The Regulation is expected to take effect as early as August 2024 according to list of regulations proposed to be enacted, amended, or abolished in 2024 by the Ministry of Environment. Sellers providing false information may face fines. Failure to rectify the situation within the specified period may result in trading restrictions or suspension. (Article 37, Paragraph 3, of the Regulation)
Elva Chuang and Angel Li
In 2023, Taiwan announced the draft Management Regulation for Greenhouse Gas Reduction Credit Trading (hereinafter referred to as the “Regulation”), which governs domestic carbon credit trading.
What Can Be Traded? Who Can Buy and Sell Them?
Sellers are the entities that have obtained reduction credits by implementing GHG Early Action Project (“Early Action Project”), GHG Offset Project (“Offset Project”), and Voluntary Emissions Reduction Project. Buyers include entities obligated to pay carbon fees and those engaged in greenhouse gas incremental offset, etc., as defined in Article 26 of the Climate Change Response Act. (Article 5 of the Regulation)
Reduction credits are traded in units of a metric ton of carbon dioxide equivalent, with each unit assigned a unique code. Once traded and transferred, reduction credits cannot be re-traded or re-auctioned. (Articles 2, Paragraphs 2 and 3, Article 27, Subsection 2, of the Regulation)
How to Trade Domestic Reduction Credits? 3 Trading Models
There are three trading models: negotiated trading, fixed-price trading, and auction. Negotiated trading occurs through private agreements between parties on quantity and price. The latter two models must be conducted on the Taiwan Carbon Solution Exchange (TCX). (Article 2, Paragraphs 4 and 5, of the Regulation)
Reduction credits earned through Offset Project and Voluntary Emissions Reduction Project can be traded through any of the three models. Yet, reduction credits obtained from implementing Early Action Project are only tradable through negotiated trading. (Article 10 of the Regulation)
What Should Be Mindful for Buyers and Sellers?
Transaction fees will be charged. For auctions, both buyers and sellers are required to pay the fees separately. In fixed-price and negotiated trading, buyers are responsible for covering the fees. (Article 12 of the Regulation)
Additionally, there are preliminary measures for sellers before trading. For auctions and fixed-price trading, sellers are required to disclose certain details of the reduction credits on the TCX platform, including quantity, code and price, project details, greenhouse gas reduction measures and implementation status, duration and purpose of reduction credits, etc. For negotiated trading, sellers are required to submit the notarized agreement and seek approval from the Ministry of Environment. (Articles 13, 17 and 19 of the Regulation)
The Regulation is expected to take effect as early as August 2024 according to list of regulations proposed to be enacted, amended, or abolished in 2024 by the Ministry of Environment. Sellers providing false information may face fines. Failure to rectify the situation within the specified period may result in trading restrictions or suspension. (Article 37, Paragraph 3, of the Regulation)
