The exchange revealed yesterday (3rd) that the Taiwan Carbon Exchange is expected to be established in Kaohsiung on August 7. As a trading platform for voluntary carbon reduction rights, it will first conduct overseas carbon rights transactions in the future, and then conduct domestic carbon rights transactions after relevant domestic laws are enacted. Regarding the formal introduction of carbon rights trading, the outside world is also worried about causing "carbon rights greenwashing". Legislators Hong Shenhan and Lin Chuyin held a public hearing to invite industry, government and academia to discuss. Scholars pointed out that carbon rights must be "additive". If they are legal requirements or carbon reduction behaviors with considerable profits, they will not count, and companies should first reduce carbon emissions as much as possible. As a result, the second step is to purchase carbon rights.
The Carbon Rights Exchange will establish an Environmental Protection Agency to propose a draft "reduction credits can be resold"
The Taiwan Carbon Rights Exchange will conduct domestic carbon rights trading, foreign carbon rights trading and carbon consulting. The head office is expected to be located in Kaohsiung, and the information trading center will be located in Taipei, operating under a dual-center concept. Symbolizing a new milestone for net zero.
Lin Chuyin pointed out that before the Environmental Protection Agency proposed the carbon rights trading sub-law, the stock market had already seen a surge in "carbon rights concept stocks". The Financial Supervisory Commission and the stock exchange should be careful to guard against possible speculation or fraud. Chen Hongda, former director-general secretary of the Environmental Protection Agency, also reminded that carbon trading requires companies to bear the cost of carbon emissions. The initial cost of carbon reduction technology is high. If the cost of carbon rights trading is too low, companies will not invest in carbon reduction technology.
On June 29 last year, the legislator held a public hearing on "Avoid greenwashing! What should carbon rights exchanges do?" On the same day, the Environmental Protection Agency announced the draft "Management Measures for Voluntary Greenhouse Gas Reduction Projects", which is one of the three sub-laws that the Environmental Protection Agency will give priority to announcing since the "Climate Change Response Act" came into effect in February this year. Others include greenhouse gases. Check the login method and incremental exchange method.
Five principles to identify good carbon rights scholars: Additivity is the key
In the future, carbon reduction work will be carried out on two tracks. In addition to levying carbon fees on large emitters, other targets will be encouraged to voluntarily reduce emissions and engage in carbon trading. According to the voluntary reduction draft, units not subject to carbon fee control can propose voluntary reduction projects, apply for "reduction credits" (carbon rights), and resell them to companies in need through the carbon rights trading platform. The draft also emphasizes compliance with the principles of measurement, reporting, verification (MRV) and incorporating the spirit of international norms.
What are “good carbon rights”? Liu Zhongen, associate professor of the Department of Sociology at National Taiwan University, cited the guidelines of international environmental think tanks and explained that good carbon rights should have five major principles (additionality, permanence, no overestimation, exclusive ownership of reductions, and no major harm to society or the environment).
Liu Zhongen explained that additivity means that carbon rights must be "additional" carbon reduction behaviors. Carbon rights cannot be recognized if the law has mandated them or if they help companies reduce costs. For example, replacing energy-saving lighting will lack additivity. At the same time, companies must ensure that their carbon reduction behavior "will never be reversed." For example, afforestation may be destroyed by forest fires; if the amount of carbon reduction is overestimated, actual emissions are underestimated, or indirect impacts are not calculated, it will lead to excessive issuance of carbon rights; There is a strict financial supervision mechanism to ensure the exclusive ownership of the reduction and avoid double counting.
Scholars who prioritize substantial reductions suggest: Set a clear upper limit on the carbon offset ratio
Scholars participating in the public hearing unanimously agreed that companies should first exhaust substantial carbon reduction actions before exchanging carbon rights. Liu Zhongen reminded that the closer to net zero, the smaller the space for "voluntary" reduction. Zhao Jiawei, director of the Taiwan Climate Action Network Research Center, gave an example. The "Net-Zero Tracker", a core project of the international anti-greenwashing ecosystem, examined 43 companies in Taiwan and found that only Pou Cheng and Hua Nan Bank clearly stated the use of carbon rights.
Zhao Jiawei further reviewed the Environmental Protection Agency's voluntary reduction project (draft) and pointed out that some contents were not in line with the international high-quality carbon rights trend, such as the replacement of energy-saving appliances, rooftop photovoltaics, etc., which have been regulated by law but have not been removed from the draft. He suggested that carbon rights trading should have a sunrise clause, which can only be activated after the carbon fee rate reaches a certain level and strict regulations are in place to prevent companies from purchasing carbon rights in lieu of substantial reductions.
And who should determine the quality of carbon rights to avoid “greenwashing”? Shi Wenzhen, a professor at the Department of International Business and Trade at National Chengchi University, believes that it is unreasonable for the carbon rights exchange to bear all the responsibility for greenwashing. The exchange can only ensure that the carbon rights are legal, and it is up to the investing companies to determine whether they are greenwashing.
Information source: Environmental Information Center (https://e-info.org.tw/node/237091)
