Taiwan to Pilot ETS in 2026, Dual Carbon Pricing System with Carbon Fee Expected by 2027
Minister of Environment, Dr. Lee Ying-yuan, announced that Taiwan’s carbon fee system officially launched in 2025. The greenhouse gas emissions of entities subject to the carbon fee will be factored into the pricing system starting this year. Unlike the fixed-rate carbon fee, the Emissions Trading System (ETS) can reflect the real cost of emission reduction through market mechanisms.
The European Union Emissions Trading System (EU ETS), launched in 2005, is a pioneering global carbon pricing mechanism. The European Energy Exchange (EEX) has played a key role in operating its trading market. Germany has now entered the second phase of ETS, covering 85% of emission sources, integrating carbon reduction into electricity, transportation, industry, and other sectors.
The EU ETS has already linked with the Swiss ETS and plans to connect with the UK ETS, aiming to gradually expand into a global carbon trading network through international cooperation. Countries surrounding Taiwan, including Japan and South Korea, have also either established or are actively developing ETS frameworks.
“ETS is not only a tool for reducing emissions but also a driver for industrial transformation and green growth,” said Minister Lee. By converting carbon emissions into a market-based pricing signal, businesses can better understand the value of emission reduction and be encouraged to invest in innovation and upgrading.
Taiwan is set to establish its own market-based Emissions Trading System (TW ETS), with a pilot program scheduled to begin in the second half of 2026. Full implementation is expected between 2027 and 2028, running in parallel with the existing carbon fee system.
Taiwan Carbon Exchange Signs MOU with EEX to Align with International Carbon Markets
The EU ETS, a global leader in carbon pricing since its inception in 2005, has been largely implemented through the European Energy Exchange (EEX), which serves as its key trading platform. This year, Germany entered the second phase of the system, covering 85% of emission sources and integrating carbon reduction into power, transport, and industry sectors.
Taiwan’s ETS framework will be developed by the Ministry of Environment, which will be responsible for legislation and system design, while the Taiwan Carbon Exchange (TCX) will oversee the trading of emission allowances. During its recent visit to Germany, TCX signed a Memorandum of Understanding (MOU) with EEX.
According to TCX, the MOU marks the beginning of a new chapter in cooperation between TCX and EEX and lays the groundwork for future international linkages between Taiwan and other carbon markets. TCX CEO Chien-Chung Tien stated that Taiwan hopes to learn from EEX’s extensive experience in market operations to assist in building the TW ETS.
Minister Lee emphasized that following the adoption of Article 6 of the Paris Agreement, a global unified carbon market has become a growing trend. The cooperation between TCX and EEX is both significant and timely. The Ministry of Environment will continue to advance the ETS system and improve relevant legal frameworks.
Source: Environmental Information Center
Website: https://esg.businesstoday.com.tw/article/category/190807/post/202507010010
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