After years of preparation, Taiwan’s carbon fee system entered the collection phase in 2026 and is expected to generate nearly NT$5 billion in its first year. This marks the gradual transition of carbon pricing from a policy concept to practical implementation. As businesses face clearer carbon reduction costs, the effective use of carbon fee revenue and its conversion into momentum for corporate low-carbon transformation have become key priorities for the next phase of policy development.
Je-Liang Liou, Deputy Director of the Center for Green Economy at the Chung-Hua Institution for Economic Research (CIER), said that how carbon fees are used is just as important as how they are collected. The Climate Change Response Act classifies the carbon fee as a “special common levy” and requires the revenue to be used for climate action. It is therefore not treated as general government revenue. All proceeds are allocated to the Greenhouse Gas Management Fund to support climate transition, net-zero initiatives, climate adaptation, and related programs.
Nearly NT$5 Billion in Carbon Fee Revenue Launches Climate Investment Focused on Emissions Reduction, Adaptation, and Technology
The Greenhouse Gas Management Fund has an expenditure budget of approximately NT$4.05 billion for 2026. About 28% is allocated to routine operations and administrative matters. The remaining 72%, or nearly NT$2.9 billion, funds subsidies related to climate transition, adaptation, and net-zero initiatives. Subsidies for corporate and local emissions reduction projects account for the largest share at 58.6%, or over NT$1.7 billion. These funds primarily help industries pursue low-carbon transformation, replace equipment, conserve energy, and reduce emissions.
Net-zero transition loans rank second at approximately NT$500 million, accounting for 17% of the funding. By providing accessible, low-interest financing, the program eases the financial burden on businesses investing in emissions reduction, green energy, and related equipment. This could further strengthen their willingness to undertake low-carbon transformation. Approximately NT$237.5 million, or 8%, is allocated to adaptation research and implementation subsidies. Another NT$90 million supports the research and development, deployment, and broader adoption of emerging emissions reduction technologies.
From Carbon Fee “Collection” to “Utilization”: Funding Allocation Is Critical to Corporate Incentives
Liou stated that the carbon fee system should not focus solely on increasing business costs. More importantly, effective fund allocation should turn carbon fee revenue into incentives for corporate emissions reduction and technological innovation. In addition to continuing to support business-led emissions reduction, policymakers could allocate an appropriate share of funding to net-zero technologies with long-term benefits. This would enable limited policy resources to deliver greater emissions reduction results.
Liou also noted that the fund currently covers eight broad categories of expenditure. Policymakers could further review resource allocation and administrative efficiency. Striking the right balance between supporting corporate transformation and investing in future technologies will be critical as the carbon fee system shifts from collecting revenue to making effective investments.
Source: Commercial Times (August 31, 2026). First-Year Carbon Fee Revenue Estimated at NT$5 Billion, to Be Allocated Across Eight Sectors. Commercial Times. https://www.chinatimes.com/newspapers/20260831000196-260202