Evolution of carbon pricing in Taiwan: carbon fee revenue use options
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Report prepared for the Ministry of Environment Taiwan
Authors: Josh Burke, Baran Doda, Trevor Laroche-Theune, Victor Alejandro Ortiz Rivera and Luca Taschini
In 2024, Taiwan launched a carbon fee under the Climate Change Response Act. The fee has applied to covered emissions since January 2025, with the first payments based on 2025 emissions collected in May 2026. As revenues begin to accrue, an important policy question is how they can be used most effectively. Drawing on international experience and in accordance with the 13 use cases of carbon fee revenues set out in Article 33 of the Act, this report explores options for the use of carbon fee revenues in Taiwan.
The authors compare three fundamental approaches to using carbon pricing revenues identified in the literature: changing the tax mix, changing spending patterns and changing the fiscal balance sheet. They then analyse four international case studies that offer insights for Taiwan. Two case studies from Japan examine the Special Account for Energy Measures and GX Economic Transition Bonds, while the others review revenue use through the EU Innovation Fund and California Climate Investments.
Recommendations
Based on the analysis of the literature and case studies, the authors make 10 recommendations on the use and governance of revenues from carbon pricing in Taiwan:
- Based on the findings, the following revenue-use shares are recommended for consideration by the Fund Management Committee (FMC) of the Greenhouse Gas Management Fund (GGMF) as plausible and balanced: 65% for environmental investment and expenditure (of which 60% is allocated to mitigation and 40% to adaptation); 25% for transition support measures; 10% for administrative, capacity-building, communication and evaluation functions.
- Build on the existing GGMF structure, which already operates as a hybrid between a dedicated fund and line-ministry execution. This will help to ensure that the Ministry of Environment and FMC provide strategic direction and oversight, while the line ministries implement programmes within clearly defined funding windows.
- Establish an online public revenue-use tracker, modelled on California’s Climate Investments Dashboard, or an information portal like the EU ETS Innovation Fund’s Knowledge-Sharing Portal. The tracker should serve as a single point of access for citizens, businesses and legislators.
- The governance structure of the GGMF should be anchored in strong inter-ministerial coordination and high-level political oversight. The Ministry of Environment and FMC already play a central coordinating role and should remain the core body providing strategic direction on the use of carbon fee revenues.
- To maintain accountability and public trust, the Fund’s operations would be subject to regular independent auditing – maintaining and strengthening the existing mechanism under the Climate Change Response Act’s reporting obligations.
- The revenue allocation framework of the GGMF should be organised around four dedicated funding windows, each addressing a specific dimension of Taiwan’s climate transition while ensuring balance across economic, environmental, social and institutional priorities.
- In accordance with article 9 of the regulation establishing the GGMF, FMC members should institute a system of regular ex-post performance evaluation, conducted by designated members of FMC alongside independent experts appointed by it.
- To promote transparency and comparability, a concise set of key performance indicators should be published annually through the public tracker and the Climate Change Response Act’s reporting mechanism.
- The government should establish a public website and interactive dashboard providing frequent information on carbon-revenue inflows, allocations and project outcomes, modelled on the California Climate Investments Map.
- In addition to continuous online transparency, the Ministry of Environment should maintain and strengthen the existing reporting mechanisms by preparing an annual ‘Carbon Revenue Report’.