Policy measures to respond to carbon fee impacts on industry in Taiwan

In 2020, the government of Taiwan commissioned a study to evaluate various factors for selecting the right carbon pricing mechanism. This involved analyzing Taiwan's economic, energy, and greenhouse gas profile and establishing general principles for adopting carbon pricing instruments. Following this initial work, Taiwan's Environmental Protection Administration (EPA) commissioned adelphi and the Grantham Research Institute on Climate Change and the Environment for the project's second phase. The main goal of this phase was to assess the potential impacts of implementing a carbon fee in Taiwan on industries and develop effective strategies to manage these impacts. The project prioritized maximizing the acceptability, effectiveness, and durability of the carbon fee.

To provide informed recommendations, the project team conducted a comprehensive review of experiences with carbon pricing instruments, such as taxes or emissions trading systems (ETS), implemented in jurisdictions with similar economic profiles to Taiwan. The analysis focused on how these jurisdictions addressed any negative impacts on industries. Additionally, the project aimed to evaluate the pros and cons of different measures. Ultimately, the team created tailored recommendations specifically suited to the Taiwanese context.