The Zero-Carbon Era of “Carbon Rights Exchange”

The Republic of China Carbon Rights Exchange was officially inaugurated on August 7, President Tsai Ing-wen said that the policy promotion of net-zero carbon emissions is expected to drive more than 4 trillion yuan of private investment within seven years, providing more than 500,000 related jobs and nearly 6 trillion yuan of output value, which also means that a zero-carbon era has officially arrived.

The National Development Research Association announced the 2050 net-zero carbon emission path and strategy general description, in addition to voluntary reduction quota trading, but also through incremental offset carbon rights trading, including New York in the United States, London in the United Kingdom, Tokyo in Japan have successively established carbon rights trading platforms, Taiwan at this time can not only deepen international cooperation with other countries in the carbon exchange, but also urge its own industrial transformation to achieve low-carbon goals.

Lee Anda Ping and Ng Ming-yee, accountant of United Accounting Firm, pointed out that the carbon rights exchange is jointly established by the Taiwan Stock Exchange and the China National Development Foundation, and is currently responsible for the projects including carbon consulting and education and training, domestic carbon rights trading, and foreign carbon rights trading.

One. The past and present of carbon rights

Carbon rights refer to the legal emission of greenhouse gas emission rights, which are controlled by the total amount of government units, and enterprises can reduce carbon emissions and transfer carbon rights from each other (the carbon reduction balance of enterprise A is sold to enterprise B to facilitate carbon emissions), which is a mandatory market that requires enterprises to set carbon emission caps, and they trade carbon balance and deficiency by themselves.

Two. Uses, pricing, and charging of carbon rights

After the establishment of the Taiwan Carbon Rights Exchange, the foreign carbon rights traded in the initial stage will help enterprises to operate ESG sustainability, and after the carbon fee is “levied”, greenhouse gases will be regulated, and carbon rights will be used for enterprises to “offset” statutory matters to comply with government policies and meet the global carbon reduction trend of enterprises.

Ginseng. Carbon rights, carbon taxes and carbon fees

Carbon rights refer to a government-led “mandatory market” in which companies purchase carbon rights in order to comply with the emission not exceeding their assigned amount; The other is that enterprises take the initiative to purchase carbon rights to achieve their own environmental protection goals.

A carbon tax is a carbon tax levied by the government on a lump sum basis, based on the carbon content of various fossil fuels (once carbon-containing fuels are used).

Carbon fee refers to the government’s management fund for greenhouse gases, which is levied on enterprises with annual greenhouse gas emissions of more than 25,000 tons.

Accountant Wu Mingyi believes that the establishment of the carbon rights exchange means the advent of the zero-carbon era, and the government can deepen international cooperation with other countries on carbon issues in addition to the industrial transformation required to achieve its own low-carbon goals, and once the climate change responds to the statutory bill, it must carry out tax planning for domestic and foreign carbon rights trading. In view of this, the basic understanding of carbon rights must enlighten the people from the government’s call, so as to lay the foundation for sustainable ESG operation of enterprises, balance the profit and loss after the levy in pricing, and facilitate the deduction of carbon rights norms by enterprises in terms of fees.

Taiwan’s carbon rights development tends to be dominated by the government, and carbon taxes are collected through unified revenue and expenditure, and carbon fees are used as a special management fund to require companies to lead by example, but the most critical carbon rights trading still needs to be recognized by the EPD and international justice agencies to truly lead Taiwan towards a zero-carbon era.