Major Emitters to Begin Paying Taiwan Carbon Fee in May; International Carbon Credits Not Eligible for Offsetting in 2026
Taiwan will begin collecting its first carbon fee in May 2026, when companies report and settle their 2025 emissions. However, an interesting policy timing issue has emerged. The regulatory framework that would allow companies to use international carbon credits to offset the carbon fee is expected to be announced for consultation in April and only take effect in July. In other words, foreign carbon credits will not be usable for this year’s carbon fee payment simply because the regulation will not be in place in time.
From a carbon market perspective, several observations stand out.
1. The economics of Taiwan’s carbon fee are very different from most carbon pricing systems.
Taiwan’s carbon fee is set at TWD 300/t (~USD 9), but companies that commit to approved reduction pathways can reduce the effective rate to TWD 100 or even TWD 50/t (~USD 1.5–3).
For comparison:
• Singapore carbon tax: USD 25/t (rising to USD 50–80)
• EU ETS: ~EUR 60–80/t
• Even many voluntary carbon credits trade above USD 5–20/t
At USD 1–3/t, the price signal for purchasing offsets is extremely weak.
2. This makes it unlikely that companies will buy carbon credits purely to reduce the carbon fee.
From a rational cost perspective, purchasing either international or domestic credits would rarely make economic sense.
3. Ironically, domestic credits may still be used—but not through active trading.
Some high-emitting companies in Taiwan already hold domestic credits issued by the regulator from past mitigation projects. Meanwhile, credits generated from relatively simple energy efficiency projects (such as LED upgrades or chiller replacements) are currently listed on local trading platforms at around TWD 3,000–4,500/t (~USD 93–140)—far above the carbon fee level and with limited liquidity. Under such conditions, companies may simply use their existing domestic credit inventories rather than purchasing credits in the market.
4. International credit eligibility remains uncertain.
If Taiwan follows approaches adopted in other jurisdictions—such as Singapore—it is highly likely that eligible credits would need Host Country Corresponding Adjustments (CA) to avoid double counting under the host country’s NDC. This would significantly narrow the pool of eligible international credits.
Welhunt View
At current carbon fee levels (TWD 50–100/t effective cost), the carbon fee is unlikely to generate meaningful demand for carbon credits in the near term. Instead, Taiwan’s carbon pricing system may initially function more as a regulatory signal and data-building mechanism, rather than a strong market driver for carbon credit demand.
The real test for Taiwan’s carbon market will likely come in future phases—when carbon prices rise, international credit rules are finalized, and companies begin aligning with global standards such as SBTi and Scope 3 supply chain pressure. It will be fascinating to see how Taiwan balances carbon pricing, industrial competitiveness, and carbon market development in the coming years.