Taiwan issues regulation to manage transaction, auction and transfer of GHG reduction credits

On July 1, 2024, the Ministry of Environment of Taiwan issued the “Administrative measures for the transaction, auction and transfer of greenhouse gas reduction credits”. The Measures is issued based on the “Climate Change Response Act” enacted in 2023 and will come into effect on August 15, 2024. According to the Article 25 of the “Climate Change Response Act”, entities who implement GHG Offset Projects and Early Action Projects, and the voluntary emission reduction project shall apply to the central competent authority to set up an account, where they can publish their reduction credits on a platform assigned by the central competent authority for transfer, trade or auction.

The Measures was issued to specify the entities that can participate in transactions and auctions, the procedures for setting up transaction accounts and conducting transactions, auction and transfer.

Entities eligible to participate

Only entities that meet the following qualifications can apply for transaction, auction and transfer of GHG reduction credits.

• Sellers: Enterprises that have implemented voluntary reduction projects, offset projects or early action projects and obtained reduction quotas.
• Buyers: Entities that use the reduction quotas for the purposes listed up in the Article 26 of “Climate Change Response Act” as follows.

1. 1. Offset the increased GHG emissions pursuant to Article 24 (1).
   2. Deduct the amount of each type of emissions pursuant to Article 28 (1).
   3. Deduct the amount of differences in carbon emissions pursuant to Article 31 (1).
   4. Offset the amount of excess GHG emissions pursuant to Article 36 (2).
   5. Other purposes approved by the central competent authorities.

Preparations to participate in transactions/auctions

Before participating in transactions/auctions for the first time, entities must obtain the approval from the central competent authority to open a quota account and a trading account. To create the account, entities should upload the required documents, including the business license and the user agreement, to the designated platform, and then submit an application to the central competent authority.

It should be noted that different entities under the same unified number can only use the same quota account and trading account, repeated applications are not allowed.

The original text of the above-mentioned Measures and “Climate Change Response Act” can be viewed from the following URL.

• Administrative measures for the transaction, auction and transfer of greenhouse gas reduction credits (in Traditional Chinese)
  https://gazette2.nat.gov.tw/EG_FileManager/eguploadpub/eg030122/ch07/type1/gov60/num25/Eg.htm
• Climate Change Response Act (in English)
  https://law.moj.gov.tw/ENG/LawClass/LawAll.aspx?pcode=O0020098