Taiwan Plans Carbon Border Levy and Emissions Trading as Exporters Face Climate Costs

A new carbon cost at Taiwan's borders

Taiwan is preparing its own carbon border adjustment mechanism and an emissions trading system, President Lai Ching-te said, extending a climate policy that already charges large industrial emitters. The plans could change costs for imported materials and help Taiwanese exporters manage increasingly demanding climate rules overseas.

The immediate stakes are substantial. Taiwan's Climate Change Administration estimates that about 2,600 local companies fall under the European Union's Carbon Border Adjustment Mechanism, known as CBAM. Taiwan exports approximately 2.8 million tonnes of steel products to the EU each year, making steel a central concern for businesses preparing to account for the emissions generated during production.

Lai outlined the government's direction while receiving winners of the eighth National Corporate Environmental Award at the Presidential Office. His comments, reported on November 2, connected the proposed trading and border systems with Taiwan's existing carbon fee and its target of reaching net zero emissions by 2050.

Lai, Taiwan's president, described the purpose of the preparations:

With the carbon fee system now officially in place, we are carefully planning a Taiwan version of CBAM and a carbon emissions trading system. We hope to help industries connect with international standards and turn the pressure of transition into a driving force for competitiveness.

The announcement places Taiwan's domestic climate policy alongside a practical trade problem: manufacturers face carbon costs at home while their customers abroad face requirements to account for pollution embedded in imported goods. A Taiwanese border mechanism would bring imported materials into that calculation too.

What companies already pay

Taiwan's carbon fee rules took effect in January 2025. They apply to large industrial enterprises and energy companies whose annual emissions exceed 25,000 tonnes of carbon dioxide equivalent. This unit combines different greenhouse gases into a common measure based on their warming effect.

The standard fee is NT$300 per tonne. Companies with approved plans to reduce emissions can qualify for preferential rates of NT$50 or NT$100 per tonne. First payments covering emissions produced during 2025 are scheduled for May 2026.

Those rates create a financial reason to secure approval for a reduction plan. The standard NT$300 rate is six times the NT$50 rate and three times the NT$100 rate. A company's applicable rate therefore matters both to its own costs and to the paperwork its overseas customers may need.

A carbon fee puts a price on emissions. The intended incentive is straightforward: reducing pollution can reduce the amount a company owes. For manufacturers, the calculation may involve spending on equipment, energy management and cleaner production alongside the future cost of continuing to emit.

How a border levy would affect steel

A Taiwanese CBAM could charge for emissions associated with imported materials. Its economic purpose would be to reduce the price advantage that foreign materials might gain when domestic producers pay a carbon fee and overseas competitors face lower carbon costs.

Steel shows how that pressure can travel through an economy. A mill can include its carbon fee in the price of its steel. A processor buying that steel may then face a higher materials bill even when the processor's own emissions are below the threshold for paying the fee directly.

If Taiwan's proposed border mechanism covers steel, imported steel would also face a carbon charge. That could narrow the price gap between domestic and foreign products. The effect on any purchase would depend on the emissions involved and the final rules.

Carbon leakage is the problem these border measures seek to address. It occurs when production, or demand for goods, shifts toward places with weaker carbon constraints, moving pollution elsewhere. Charging for the emissions in imports is intended to keep a domestic carbon policy from simply encouraging buyers to switch suppliers across a border.

Why exporters need proof of payment

The EU's CBAM requires importers of certain goods with substantial production emissions to account for those emissions. For Taiwanese suppliers, that makes reliable emissions records and evidence of carbon payments part of maintaining access to European customers.

EU rules allow eligible carbon payments made in the country of origin to reduce the number of CBAM certificates an importer must buy. Those certificates represent emissions associated with the imported goods. The overseas payment must be supported by clear documentation.

A Taiwanese company paying the preferential NT$50 rate would therefore need evidence of that actual payment, rather than relying on Taiwan's headline NT$300 rate. The amount paid is what matters to the calculation.

A European buyer may encounter carbon costs in two places: within the Taiwanese supplier's material price and through the remaining CBAM certificate obligation. Proper documentation helps connect those payments so the eligible amount paid in Taiwan can be credited.

Britain is also preparing a CBAM scheduled to begin in 2027. Indicative British calculations have been described as producing lower costs for steel importers than the EU approach. Exporters serving both markets will need to prepare for the requirements of each system rather than assume that one carbon calculation will cover every destination.

A fee and a trading system work differently

Taiwan's planned emissions trading system would introduce a different way of pricing pollution. Under a carbon fee, the government sets a charge. In a typical emissions trading system, regulated companies surrender allowances covering their emissions, and those allowances can be bought and sold.

A cap sets the total quantity of emissions allowed within the system. Companies that cut emissions can reduce their need for allowances, while companies requiring more allowances must acquire them. Trading creates a market price rather than relying solely on a fixed fee.

Lai's announcement left the starting dates, coverage and detailed design of both the trading system and Taiwan's CBAM unspecified, including how trading would work alongside the existing fee. For businesses, the concrete payment milestone remains May 2026, when the first fees for 2025 emissions are scheduled to be paid.

The policy timetable behind the announcement

Taiwan's carbon pricing preparations sit within a broader legal and administrative framework. A July 16, 2025, Global Taiwan Institute analysis by independent scholar Maytapat Pararaman describes the Climate Change Response Act and the government's work with businesses on technology and emissions reduction.

The analysis identifies Article 17, paragraph 6, of the act as requiring government support for developing climate adaptation technologies and promoting related products and business opportunities. Adaptation means preparing for climate effects, while emissions reduction seeks to limit the pollution driving warming. Taiwan's policies address both tasks.

The main milestones show how the current plans developed:

• 2022: Eight technology companies established the Taiwan Climate Partnership to pursue climate action across supply chains.
• 2023: The Climate Change Response Act became Taiwan's revised climate law. On October 4, the Executive Yuan approved the National Climate Change Adaptation Action Plan for 2023 to 2026.
• December 2024: The Taiwan Climate Partnership signed a memorandum of understanding with the Japan Climate Leaders Partnership.
• January 2025: Taiwan's carbon fee rules took effect.
• April 2025: Lai stressed the green transition at a National Climate Change Committee meeting. The committee had held four meetings by June.
• May 2026: First carbon fee payments for emissions generated during 2025 are scheduled.
• 2027: Britain's CBAM is scheduled to begin.

The National Climate Change Committee brings together government officials, scholars, industry representatives and civil society groups. Lai said it would continue supporting companies and helping Taiwan's supply chains move toward greener practices.

What the award winners achieved

The awards ceremony supplied concrete examples of the changes Lai wants more businesses to make. It recognised 65 companies and 11 environmental protection specialists and technicians for work including pollution prevention, equipment improvements and energy management.

Lai said the winning companies collectively saved 1.613 billion kilowatt-hours of electricity during the previous year. Their renewable energy consumption increased by 131% compared with the year before, meaning it reached 2.31 times its earlier level.

The two figures measure different kinds of progress. Electricity savings reduce the energy needed to operate, while greater renewable energy use changes where some of that power comes from. Businesses may pursue both approaches as they work to reduce emissions and manage energy costs.

Chi Mei Medical Center and Far Eastern SOGO's Tianmu store were recognised for using artificial intelligence to improve energy efficiency and automate facility management. Their inclusion showed that the practical work extends beyond factories to hospitals and retail buildings, where daily operations also consume electricity.

Smaller suppliers and banks are part of the shift

Yamaha Motor Taiwan adopted steel shipping crates that can be reused and recycled, and mentored 85 suppliers on reducing carbon output. Packaging offers a tangible example of how a manufacturer's decisions can change the work of businesses supplying it.

The 85 suppliers also illustrate why the reach of carbon policy is wider than the list of companies directly paying a fee. Large manufacturers can ask smaller partners to change materials, measure emissions or improve production as they work toward their own targets and customer requirements.

E.SUN Bank established an internal carbon pricing mechanism, while Chang Hwa Bank provided carbon assessments for small and medium sized enterprises. An internal carbon price gives emissions a monetary value within an organisation's decisions. A carbon assessment helps a business identify and measure the emissions associated with its activities.

Ecotour Taiwan was recognised for combining tourism with lower emissions, ecological conservation and local development. Alongside the hospital, retailer, banks and manufacturer, its example showed the range of businesses participating in the awards.

Lai encouraged recipients to share their experience with suppliers and business partners. For smaller companies, that support can make the transition more practical by connecting measurement and operational changes with the requirements of larger customers.

Business cooperation meets a difficult national task

Taiwan's technology sector has already created a channel for collective action. Acer, ASUSTeK Computer, AUO, Delta Electronics, LITEON, Microsoft Taiwan, Pegatron and Taiwan Semiconductor Manufacturing Company founded the Taiwan Climate Partnership in 2022.

The partnership's December 2024 agreement with the Japan Climate Leaders Partnership extended that cooperation across borders. The Taipei Computer Association, which has more than 4,000 member companies, has also pursued cooperation with Thailand on policies for net zero emissions and green technology.

Taiwan's broader climate performance remains a challenge. The Global Taiwan Institute analysis records a ranking of 60th in the 2025 Climate Change Performance Index, with very poor ratings for energy use and greenhouse gas emissions, alongside weak scores for renewable energy and climate policy.

The next steps connect those national weaknesses with everyday business decisions. Carbon fees put a cost on emissions, border adjustments seek to address differences between trading partners, and a trading market would create another incentive to cut pollution. Companies will need both lower emissions and dependable records as Taiwan develops the rules for its next phase of carbon pricing.

Key Points

• Taiwan is preparing a domestic carbon border adjustment mechanism and an emissions trading system.
• The existing carbon fee has a standard rate of NT$300 per tonne, with approved preferential rates of NT$50 or NT$100.
• First payments for 2025 emissions are scheduled for May 2026.
• About 2,600 Taiwanese companies fall under the EU's CBAM, according to Taiwan's Climate Change Administration.
• EU importers need evidence of eligible carbon payments made in Taiwan to claim credit against their CBAM obligations.
• Award winners saved 1.613 billion kilowatt-hours of electricity and increased renewable energy consumption by 131% from the previous year.