In response to increasing climate risks and adhering to international trends to achieve carbon emission reduction targets by 2030 and a net-zero emission goal by 2050, Taiwan adopted the new “Climate Responsive Act” on January 10, 2023. The “Climate Responsive Act” is a comprehensive legislation that explicitly incorporates the net-zero target and adopts innovative climate governance instruments based on updated climate science. This article aims to explore the legal development background of the “Climate Responsive Act” and further explore the main features of the newly passed legislation. The observations and suggestions for policymakers concerning the legal development aims at reaching net-zero emission goals will also be discussed.
Keywords: climate change, net-zero emission, climate responsive act, climate governance, carbon pricing
Taiwan’s President Tsai In-Wen officially announced in April 2021 about the government’s pledge to reduce its carbon emissions by 2030 and reach the “net-zero” goal by 2050 as an essential response to net-zero emission trends which has been already announced by the governments of 136 other countries. To meet this goal, Taiwan has revised climate change legislation to incorporate net-zero emissions targets by 2050. In response to increasing climate risks and adhering to international trends to achieve carbon emission reduction targets by 2030 and net-zero emission goal by 2050, Taiwan has adopted the new “Climate Responsive Act” on January 10, 2023, as the revision of the “ Greenhouse Gas Management Act” that has been the leading framework legislation of climate governance since 2015. The Climate Responsive Act” adopts cooperative institutional arrangements and innovative climate governance instruments based on updated climate science. This article aims to explore the legal development background of the “Climate Responsive Act” and further explore the main features of the newly passed legislation. The observations and suggestions for policymakers concerning the legal development aims at reaching net-zero emission goals will also be discussed.
THE LEGAL DEVELOPMENT BACKGROUND OF THE CLIMATE CHANGE RESPONSE ACT
In response to the Paris Agreement requiring contracting parties to submit the National Determined Contributions (GHG emission reduction goals and implementation schedule) by 2030, Taiwan has adopted the “Greenhouse Gas Management Act” to provide the legal basis for setting GHG emission reduction goals and incorporating appropriate institutional mechanisms and climate change mitigation measures aiming to achieve the target. Taiwan's Legislative Yuan passed the Greenhouse Gas Emission Reduction and Management Act (GHG Management Act) in 2015 in response to establishing Taiwan’s Nationally Determined Contributions (NDCs) required by the Paris Agreement. The GHG Management Act is the first legislation that specifically sets Taiwan’s GHG emission reduction goal and implementation schedule and provides the legal basis for domestic measures in reducing GHG emissions. The GHG Management Act aims to reduce 50% of GHGs emissions below the 2005 level by 2050 (TEPA, Law and Regulation Data, 2022).
The GHG Management Act designates Environmental Protection Administration as the central competent authority to coordinate and promulgate implementation rules for the National Climate Change Action Guideline and GHG Reduction Action Plans. The Act also mandates various government authorities categorized in transportation, housing and commercial, energy, manufacturing, and agriculture sectors in consultation with the Environmental Protection Administration to establish sector-based GHG emission reduction goals, relevant policy frameworks, and action plans (TEPA, Law and Regulation Data, 2023).
The main feature of the GHG Management Act is the establishment of a mandatory carbon emission cap-and-trade scheme. Implementing the mandatory GHG Management Act requires the Environmental Protection Administration to establish the National GHG Emission Inventory System first. (TEPA, GHG Inventory Report, 2022) In doing so, the Act requires emission sources designated by the central competent authority, mostly with significant GHG emissions, to conduct annual accounting, verification, and registration to their holding accounts in the Registry. GHG inventory and relevant information shall be verified by an internationally recognized verification body every three years (TEPA, Law and Regulation Data, 2023). The Act allows an entity to procure emissions allowances from the Early Action, Offset Project, Energy Performance Standards, carbon trading, or other approaches to register in its holding account to offset the amount of GHG emissions over the emissions allowances for an entity. The Act also mandates the establishment of GHG Management Funds. The financial sources are derived from cap-and-trade, auctions, donations, and government budgets. The GHG Management Fund provides funding for GHG emissions reduction measures, subsidies and grants for voluntary GHG emissions reduction, implementing the cap-and-trade scheme, and related research and education programs (TEPA, Law and Regulation Data, 2023). It is also notable that the Act provides a compliance mechanism that imposes penalties for a non-compliance entity to pay three times the carbon market price for the excess amount of carbon emissions emitted for the year or to pay a fine ranging approximately from US$3,300 to US$66,000. The mandatory cap-and-trade scheme and economically feasible instruments adopted by the GHG Management Act have been deemed a practical regulatory approach to reaching GHG reduction goals. However, implementing the GHG Management Act takes much work. It remains at the stage of accounting, verification, and reporting of the amount of carbon emission from certain GHG emission entities.
Recognizing the growing concerns of increasing climate risks due to ineffective global climate mitigation efforts, Taiwan has pledged to participate in international trends for reaching net-zero emissions in April 2021. Taiwan’s government has also initiated the “2050 National Action Plan for Reaching Net-zero Emission” (2050 national net-zero plan) in March 2023. The 2050 National Net-zero Plan provides four main features for meeting transition goals in reaching a net-zero emission society: energy transition; industrial transition; lifestyle transition; and social transition. The 2050 National Net-zero Plan is coordinated by inter-ministries efforts, serving as a comprehensive national net-zero pathway and policy framework that proposes 12 strategic implementation measures to achieve energy and industrial transition to a net-zero emission society. In reaching Taiwan’s ambitious net-zero emission goal by 2050, it is critical to incorporate the national goals and initiate innovative instruments and institutional arrangements into the climate-related legal framework. After a series of public-private consultations and expert meetings, Taiwan made a significant amendment to the GHG Management Act to incorporate net-zero commitment and significantly expand the horizon of climate governance into the new climate change law. The modification of the GHG Management Act and further renaming the legislation to the “Climate Change Response Act” was passed by the Legislative Yuan in January, 2003. The main features of the Climate Change Responsive Act will be discussed in the following paragraph (Nikkei Asia, 2023).
MAIN FEATURES OF THE CLIMATE CHANGE RESPONSE ACT
The Climate Change Response Act (CCRA) comprises seven chapters and 63 articles. It is divided into seven chapters: general principles, responsibilities of government-agencies, climate change adaptation, GHG reduction measures, education and rewards, penalties for non-compliance and implementation and finally, supplementary provisions of the Act. The CCRA sets the millstone for Taiwan in establishing a comprehensive climate governance legal framework that addresses climate mitigation, climate risk resilience, and climate justice issues (Taipei Times, 2023). The key features of the CCRA are as follows:
Incorporating net-zero emission as legally binding objective and institutional reform
The CCRA explicitly incorporates the goal of reaching GHG net-zero emissions by 2050. In the short-term GHG reduction goal, CCRA stipulates that the sector-based, scientific-based, periodic regulatory purposes will be developed based on a five-year basis. The Act imposed a legal obligation for the government, enterprises, NGOs, and all citizens to achieve the Net-zero Emission goal via GHG reduction measures, the development of decarbonization technology, and integration into international trends and cooperation (TEPA, Law and Regulation Data, 2023). Recognizing the institutional framework adopted by the GHG Management Law faces practical challenges that EPA is in a difficult position to conduct coordinated inter-ministries tasks. CCRA thus designates the Executive Yuan's National Council for Sustainable Development (NCSD) as the primary authority to coordinate and integrate fundamental national policy in achieving the 2050 Net-zero Emission goals and tackling other climate governance issues. Since the Prime Minister is the NCSD’s chairperson, the CCRA also mandates NCSD to coordinate inter-ministerial decisions. The CCRA specifies the implementation authorities and associated legal tasks and designates the organizing and co-organizing agencies in various sectors, including GHG reduction plans implemented in the context of transportation, energy, agriculture, housing, and industry (TEPA, Law and Regulation Data, 2023). The Ministry of Economic Affairs is responsible for renewable energy development and industrial GHG reduction measures, and the Ministry of Transportation deals with green transportation policy. At the same time, the Council of Agriculture, Executive Yuan tackles natural-based solutions and GHG reduction plans in the agriculture sector.
The CCRA establishes a comprehensive institutional framework coordinated by the NCSD to develop national climate change policies and sector-based GHG reduction and adaptation action plans and measures. The CCRA requires the government to establish a 2050 Net-zero Emission National Plan and to set periodic regulatory emissions reduction targets for different sectors of the economy (TEPA, Law and Regulation Data, 2023). In doing so, the CCRA requires Environmental Protection Administration to invite relevant central and local agencies, scholars, experts, and NGO groups to participate in public hearing processes. The authority should establish periodic regulatory goals implemented on a five-year basis taking into account public hearing outcomes, and make it officially announced after the approval by the Executive Yuan. The CCRA also requires the government to regularly report on its progress towards meeting these targets to ensure the effectiveness of action plans and seek more sensible approaches considering the up-to-date international practice.
Establishment of carbon pricing system and diversified economic instruments
As discussed earlier, the GHG Management Act provides the legal basis for establishing the National GHG Inventory System, a cap-and-trade system, and a GHG Management Fund. In implementing the mandatory cap-and-trade system, the CCRA thus establishes a carbon pricing mechanism to provide more feasible solutions and economic incentives to achieve the ambitious Net-zero Emission goal by 2050. The carbon pricing system's core is collecting carbon fees from GHG emission sources, and the development of carbon fees is based on the polluter-pay principle. Thus, the levied revenues shall be dedicated to the following purposes: GHG reduction work; development of low-carbon and negative emissions technology and industries; and subsidies and incentives for investment in GHG reduction technology.
It is also critical that the CCRA allows the Emission entity subject to carbon fees to propose a voluntary reduction plan to be eligible for applying preferred carbon fee rates. The CCRA provides a diversified economic incentive mechanism for businesses to adopt complementary measures to support the carbon fee scheme. These voluntary reduction initiatives include switching to low-carbon fuel, adopting GHG-negative emission technology, enhancing energy efficiency, and using renewable energy. The reduction credits obtained by voluntary measures can be transferred, traded or auctioned through the carbon trading system. As for the carbon fee rate, it shall be gradually increased over time to provide incentives for emission entities to accelerate their progress in GHG reduction and eventually meet the Net-zero Emission goal. The revenue generated from the carbon pricing mechanism will be used to support low-carbon initiatives and vulnerable communities affected by climate change. The CCRA also highlights the energy transition by providing a legal basis for promoting renewable energy and energy efficiency. The Act requires the government to establish renewable energy generation targets and to develop policies to encourage energy efficiency in buildings and transportation sectors.
Incorporating climate change adaptation and climate justice provisions
The climate change adaptation provisions in the CCRA have been enlarged into a separate chapter to express Taiwan government’s commitment to building a climate-resilient society in the face of intensified climate risks. The CCRA first mandates EPA to formulate the "Action Plan for Adaptation in Areas of Responsibility" while requiring local governments to establish the “Climate Change Adaptation Implementation Plans” coherent with the National Climate Adaptation Framework considering local demographic and climate conditions. The CCRA stipulates that all levels of government shall develop climate-resilient capacity-building programs to enhance climate-related scientific research, climate risk scenario projection, climate resilient technology development and ensure the climate-responsive capacities for vulnerable communities and indigenous people.
It is also notable that the CCRA requires EPA to cooperate with the Ministry of Science and Technology and Meteorological Agency to strengthen climate change science development and publish climate change science reports regularly. The climate science report provides a solid scientific basis for establishing climate change risk assessment, further planning climate change adaptation implementation plans, and showing climate risk early warning and monitoring response mechanisms.
Recognizing any given climate change mitigation as well as climate adaptation planning may have social and economic impacts on some vulnerable communities or economically disadvantaged groups of citizens, and the CCRA mainly addresses the climate justice issues requiring government authorities shall consult with the communities or economically disadvantaged groups of citizens affected by net-zero transition policies (TEPA, Law and Regulation Data, 2023). The underprivileged communities and citizens’ human rights and dignity shall be safeguarded. In addition, EPA shall work closely with other relevant government authorities to adopt an appropriate public participation mechanism to collect public opinions and further initiate the National Just Transition Action Plan (Plan). The amendment also added that the law should consider the rights and interests of indigenous peoples, incorporating comprehensive, community-based and indigenous-based climate change adaptation policies and measures. The CCRA is a relatively advanced climate change legislation that addresses climate justice issues through a sophisticated design of climate-related public consultation mechanisms and institutional arrangements.
The passage of the CCRA symbolizes a significant step toward addressing climate change challenges and achieving Taiwan's commitment to reaching Net-zero emissions by 2050. The enactment of the CCRA has been endorsed by many environmentalists, experts and citizen groups in Taiwan for its achievement of establishing the first comprehensive framework legislation that addresses various climate change mitigation and adaptation issues in Asia. It also demonstrates Taiwan's political will to incorporate the Net-zero Emission goal by 2050 into law regardless of not being a member of the United Nations Framework Convention on Climate Change (UNFCCC) due to Taiwan’s international status.
There are also some concerns about the implementation and enforcement of the CCRA. Some comments argue that the CCRA imposed lax penalties for companies that fail to meet emissions reduction targets and that the carbon pricing mechanism may not be effective if the carbon fee rate is set too low (Taipei Times, 2022). Despite some concerns and criticism concerning the enforcement and effectiveness, the CCRA nevertheless represents a significant step towards addressing the urgent issue of climate change. It demonstrates a strong backup legally to support Taiwan’s commitment to moving toward a Net-zero society by imposing legal obligations to all stakeholders.
The effectiveness of the CCRA, however, relies on the government's political will to implement its provisions and achieve periodical GHG reduction targets. In addition to developing a National Action Plan for a Net-zero Emission goal led by the NCSD at the cabinet level, Environmental Protection Administration plays a key role. It should work intensively to develop detailed and implementation rules for carbon pricing and trading systems while promoting voluntary offset measures such as gaining carbon allowance from enhancing carbon sinks from forest planting or conservation of soil from emission entities. Thus, EPA must work closely with experts, commodities, and joint efforts with other industrial competent authorities by learning lessons from international practices and up-to-date scientific research.
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Taiwan Environmental Protection Administration, Law and Regulation Data Base of Republic of China, Climate Change Response Act, available at, https://law.moj.gov.tw/ENG/LawClass/LawAll.aspx?pcode=O0020098
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