An amendment to the Greenhouse GasReduction and Management Act was passed by the Legislative Yuan on January 10,2023 and had its name changed to the “Climate Change Response Act.” It waspromulgated by the President on February 15.

There are four key points in thisamendment:

1.Include the goal of net zeroemission by 2050

2.Recognize the National Councilfor Sustainable Development as the inter-ministerial coordination platform forclimate change policies

3.Add a chapter on climate changeadaptation (just transition)

4.Emission reduction measures (emissioninventory, carbon fees, etc.)

Among them, emission reduction measures arethe focal point of the amendment.

Emission inventory, carbon fee, andcarbon fee rate

After the amendment is passed, the Environmental ProtectionAdministration (“EPA”) will continue to designate emission sources which shouldbe inventoried depending on the overall progress of carbon reduction.

In addition, after the carbon fee policies are implemented, althoughthe specific entities subject to carbon fees are to be determined by therelevant sub-laws formulated by the EPA, however, according to the EPA, thefirst group to which the carbon fees are applicable should be the first groupof industries with the highest emission listed in the “emission source enterpriseswhich should inventory and register greenhouse gas (“GHG”) emission,” includingthe steel industry, petroleum refining industry, cement industry, semiconductorindustry, liquid crystal display industry, and those industries with wholeplant (site) annual direct GHG emissions from fossil fuel combustion equivalentto 25,000 metric tons of carbon dioxide.

As for carbon fee rates, the central competent authority will set upa committee to formulate them with a periodic review mechanism.

Voluntary reduction plans, preferential rates, and voluntaryemission reduction programs.

The amendment also provides carbonreduction incentives.

Entities subject to carbon fees who implementreduction measures such as “switching to low carbon fuels,” “adopting negativeemission technologies,” “increasing energy efficiency,” “using renewable energyor taking measures to reduce GHG emissions effectively by improvingmanufacturing processes” and reaching goals designated by the central competentauthority, may propose “voluntary reduction plans” and apply for a preferentialrate.

Moreover, entities subject to carbon feesmay jointly propose “voluntary emission reduction programs” and implement GHGreduction measures, to apply for reduction credits from the central competentauthority to be used in the offsetting of its carbon emission and reduce carbonfees.

Emission reduction measures have formallybecome part of business administration. Business administrators should payclose attention to their development.

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