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Taiwan’s Ongoing Efforts to Establish a Domestic GHG Scheme

Taiwan’s Ongoing Efforts

to Establish a Domestic GHG Scheme

In order to proactively participate in the global efforts to mitigate climate change, Taiwan EPA has drafted the Greenhouse Gas Reduction Act in 2006 to establish a domestic legal framework to manage GHG emissions in Taiwan. The Act would delegate authorities to relevant government agencies to establish emissions reduction plans, and considering ongoing developments in the international negotiation process, would authorize Taiwan EPA to establish a domestic cap-and-trade system in the future. The bill was approved by the Executive Yuan in September 2006 and submitted to the Legislative Yuan for review. However, the bill only passed the first reading in 2007, and now is resubmitted to the Sanitation, Environment, and Social Welfare Committee for further deliberation in the 2008 legislative session.

In order to promote voluntary reduction by industries, Taiwan EPA has set up the National GHG Registry in July 2007 to allow organizations to voluntarily report their emissions inventories, using credible, accurate, and consistent GHG reporting standards and tools for organizations to measure, monitor, and reduce their GHG emissions with third-party verification (see Attachment 2).

Currently, efforts are underway to develop rules for industries to develop project-based reduction credits, consistent with international standards such as the CDM and VCS. Furthermore, on January 10, 2008, Taiwan EPA established the GHG Reduction and Management Office in order to coordinate GHG mitigation strategies among government agencies, enhance the effort of local governments on GHG reduction issues, and to improve partnership between the government and the private sector. Given the ongoing regulatory developments in Taiwan to possibly pursue mandatory cap and trade system in the future, we wish to work with the international community to share best practices and exchange experiences in the emerging global carbon market.

Outline of the Draft Greenhouse Gas Reduction Act

(preliminary translation)

In order to mitigate global climate change caused by human activities, the United Nations Framework Convention on Climate Change (UNFCCC) was adopted by the United Nations in 1992 as an international agreement to control anthropogenic greenhouse gas (GHG) emissions. Furthermore, in the Third Conference of the Parties to UNFCCC (COP-3) in 1997, the Kyoto Protocol was adopted by the Parties as a legally binding agreement to limit the GHG emissions of industrialized countries. The Kyoto Protocol commits 38 industrialized countries and European Union to reduce their GHG emissions to 5.2% below the 1990 level during the 2008-2012 period, and has entered into force on February 16, 2005. The legally binding emission targets only apply to industrialized countries which have ratified the Kyoto Protocol. However, in the post-Kyoto period (after 2012), Taiwan and other newly industrialized countries may become the next targets for reduction commitments. As the emission reduction methods, targets and time schedules are still under discussion, the outcome is still highly uncertain.

Due to unique political status, Taiwan is unable to become a Party to either the UNFCCC or the Kyoto Protocol. Nonetheless, as a member of the international community and in the spirit of “common but differentiated responsibilities” of the UNFCCC, Taiwan is willing to adopt cost-effective measures to mitigate climate change and pursue sustainable development. It is for the above rationale that the Greenhouse Gas Reduction Act was drafted, and the key elements in the Act (6 chapters with 28 articles) are outlined as follows:

1. If the GHG reduction measures involve relevant responsibilities of government agencies, the Executive Yuan shall convene relevant central agencies to develop and review the task assignment, integration, and promotion of emission reduction measures. The central competent authority shall develop GHG emission reduction plan and implement it after approval by the Executive Yuan; the central industry competent authorities shall develop and implement the reduction targets and action plans based on the plan. (Articles 5 & 6)

2. The central industry competent authority shall conduct investigation of GHG emissions and development of climate change adaptation strategy; the central competent authority shall conduct assessment of climate change impacts, obtain periodic statistics of national emissions, and establish national emission inventory. (Article 7)

3. The central industry competent authorities responsible for energy, industry, transportation and residential/commercial policies shall review and revise their respective GHG reduction policies periodically; industry competent authorities shall advise enterprises on conducting emissions inventory, registration, verification, and voluntary reduction, as well as their participation in international emission reduction projects, and may provide enterprises with incentives or subsidies. (Articles 8 & 9)

4. Competent authorities at the municipality and county/city level shall develop, revise and implement their respective GHG reduction implementation plans, in accordance with the national GHG reduction policy and action plans. (Article 10)

5. After the central competent authority has established the GHG inventory, registration and verification scheme, as well as the emission trading system, enterprises with emission sources as declared by the central competent authority shall conduct annual inventory of emissions, and periodic registration of emission data which have been verified by verification/certification entities; the average annual GHG emissions of the enterprises shall meet the GHG emission standards. (Article 11 & 12)

6. In accordance with the decisions of the UNFCCC, the Kyoto Protocol and related meetings, the central competent authority shall publish the national GHG emissions cap periodically. The emission reduction goals shall be implemented in stages, and the reduction quotas shall be assigned to industry competent authorities, which shall develop the reduction plans accordingly. (Article 13)

7. Based on the assigned GHG emission quota, central industry competent authorities shall publish the emissions allocated to the enterprises with declared emissions source, and shall reserve part of the allocation for new or modified emission sources of designated level, and shall require the new or modified enterprises to adopt the best available technologies. (Article 14)

8. Enterprises with allocated emissions shall implement emission reduction measures or conduct trading in the trading platform designated by the central competent authority; enterprises’ actual emissions may not exceed the allocated amount or emissions quota; the central competent authority shall publish the designated level for new or modified emission sources, and after implementation of the emissions cap scheme, new or modified emission sources shall obtain offsets for any emissions exceeding the allocation by the central industry competent authorities. (Article 15)

9. In order to encourage enterprises to implement voluntary emissions reduction, enterprises may voluntarily submit GHG reduction plan, target and timeline prior to the allocation of emission quota. After being verified by the verification/certification entity, the enterprises may apply to the central competent authority for certification of reduction credits, which may be used for offsets or trading in the GHG cap and trade scheme. (Article 16).

10. Competent authorities or industry competent authorities may inspect the premises of the enterprises with emission sources or may request them to provide relevant information. (Article 17)

11. All levels of government agencies shall strengthen education of schools, enterprises and the public on GHG reduction; government agencies, public schools and state-owned enterprises shall promote energy conservation and adoption of high energy efficiency products or services. (Article 18 & 19)

12. Enterprises or verification/certification entity shall be penalized for noncompliance with the Act. (Articles 21-26).

Attachment 2

Voluntary GHG Registry

The Taiwan National Registry (Registry) was officially launched in July 2007 by the Taiwan EPA to serve as a national GHG registry to maintain voluntary reporting of GHG inventories by organizations. The Registry provides leadership on climate change by developing and promoting credible, accurate, and consistent GHG reporting standards and tools for organizations to measure, monitor, and reduce their GHG emissions with third-party verification, consistently across industry sectors. As of May 1, 2008, a total of 62 organizations voluntarily reported their GHG emissions to the Registry. These organizations are leaders in their respective industry sectors which include power, cement, steel and iron, paper, petrochemical, and semiconductor. Furthermore, the Taiwan EPA is targeting the top 100 industrial GHG emitters that contribute up to 58% of total GHG emissions in Taiwan. The Taiwan EPA will do its best to ensure that all the Registry members are well prepared for market-based solutions and upcoming regulatory requirements (e.g., emissions offset and/or trading scheme). A diagram of the Registry’s voluntary reporting scheme is presented below.