The Design and Implementation of Greenhouse Gases Voluntary Reduction Project Review Mechanism and Development Project Emission Offset Program


Author:Je-Liang Liou




There are five main work items in this project; the results achieved for each item are summarized as follows. Work item 1: improvement of voluntary reduction mechanism and supporting works of offset project review 1. Summarize the status of international voluntary reduction mechanism, including the Clean Development Mechanism (CDM), Verified Carbon Standard (VCS), Gold Standard (GS), and some similar mechanism implemented on countries or region. 2. Compare the review process of domestic and international reduction projects and make recommendations on the current review process in Taiwan. 3. Summarize the application of reduction credit on the international GHGs management related voluntary initiatives. 4. In terms of “supporting works of offset project review”, the results this year include: (1) a total of 4 greenhouse gas reduction outcomes approval review meetings; (2) 56 offset projects / reduction methodology review, and 29 review meetings of technical experts are completed; (3) the results of the project review and expert meeting are compiled and submitted to the Taiwan EPA for record every week; (4) Held two briefings for the Taiwan Offset Project. Work item 2: GHGs management of development projects 1. Institutionalize the review and support of environmental impact assessment greenhouse gas projects related to greenhouse gas management. As a result, the review guidelines for 5 major types and 14 sub-types of development activities were summarized and documented to support further review work. 2. Project review: a total of 127 cases were reviewed and analyzed, and 3 environmental impact assessment monitoring cases were tracked. 3. Performance measurement: according to statistics, so far, the incremental emissions from development projects that have passed the environmental impact assessment are 121.51 million tons, a reduction of 63.58 million tons, and a net increase of 57.93 million tons. 4. Approximately 80 million tons of emission reduction credits have been issued, of which 14.12 million credits are no limitation on usage. It is estimated that the future issuance of credit lines will reach 57 million tons, but considering the potential demand, there is still a possibility of over demand. Work item 3: The design and implementation of Development Project Emission Offset Program 1. Establish a review procedure for the Emission Offset Program of greenhouse gas emissions for development projects. 2. Complete the statistics of cases applying Emission Offset Program. It is estimated that there will be about 612,000 tons of emission offset credit demand every year from 2026. 3. Study the reduction methodology and related technical parameters for afforestation and reforestation. 4. Maintain and update the content of the information platform for offset credit. Work item 4: Economic Analysis for response measures 1. Calculate the abatement cost of the reduction technologies included in the GACMO database and adjust the reduction technology cost in accordance with the Taiwan localized parameters. 2. Evaluate the performance of the implementation of Taiwan Offset Project this year. It is estimated that it can bring about 171.75 million to 888.38 million NTD in carbon reduction environmental benefits and drive the overall industry output value of 5,920.57 million NTD. 3. Conduct GHGs emission reduction investment assessment on selected cases undertaking environmental impact assessment emission reduction commitments. It is expected to bring about 71.91 million to 371.94 million NTD in environmental protection benefits and drive the industry's overall output value to 3.187.8 billion NTD. 4. Use Taiwan localized financial data to update the investment benchmark value to support the analysis of investment additionality on Taiwan Offset Project. 5. Update the IO model to reflect the industrial structure in 2021 and estimate the production, GDP, and job multipliers based on the updated model for further applications. Work item 5: The design and economic impact analysis of Taiwan Carbon Levy Carry out the economic impact analysis at the industry level and the macroeconomic level for the carbon levy design rate of 100 NTD/ton and 300 NTD/ton. In the analysis of the industry level, the “risk matrix approach" is used to analyze the risk location of each industry facing the carbon levy design. The results can be used to identify the types of industries that potentially need to introduce supporting measures under different carbon levy design to reduce the impact they may suffer. At the macroeconomic level, "advanced input-output model" and "computable general equilibrium model (CGE)" are used to stimulate the economic impacts on short-term and long-term time scales. According to the simulation results, no matter under the fee rate of 100 NTD/ton or NTD yuan/ton, the impact on the overall economy is not significant; and after a long-term time scale adjustment, the impact on GDP and CPI under different fee rate design, it can be reduced by nearly 30% and 50%. This result also reflects the current overall economy’s ability to adapt carbon levy in Taiwan.