The Engine of the Green Economy: Taiwan's Response Strategies in Light of the Global Carbon Market Mechanism

As global efforts to combat climate change intensify, carbon market mechanisms have become one of the key strategies for countries to achieve their carbon emission reduction targets. These mechanisms create a market environment that can both promote economic growth and achieve environmental protection goals by setting carbon emission caps and allowing the buying and selling of carbon credits. Through the study of international cases, we can understand that different countries have formed diverse carbon market mechanisms based on their economic structures and environmental policies. Next, we will further explore the carbon market practices of major countries and regions, including their policy designs, implementation results, and challenges, to provide a more comprehensive understanding of carbon markets.

Indonesia: Launched its own carbon market in 2021, primarily to support its Nationally Determined Contributions (NDC) targets. Indonesia's carbon market includes three main mechanisms:

Quota-based Emissions Trading System: This system sets carbon emission caps for specific industries and allocates carbon allowances. Companies can buy or sell carbon allowances in the market to meet or reduce their carbon emissions.

Carbon Credit Trading: Allows companies to earn carbon credits by investing in carbon offset projects, such as tree planting and renewable energy projects, which can be used to offset their carbon emissions.

Performance-based Mitigation Payments: Provides financial incentives to companies that successfully reduce carbon emissions to government-set targets.

Canada: The design of carbon markets varies by province, covering both federal and provincial levels:

Alberta: Adopts a carbon emissions trading program and a carbon offset system. The province's system aims to control and reduce industrial carbon emissions through market mechanisms and encourage investment in low-carbon technologies.

Quebec: Joined with California's carbon market, adopting a cap-and-trade system that sets carbon emission caps and allows the trading of carbon allowances among companies.

British Columbia: Implements a carbon tax, levying taxes on fossil fuel consumption and using the revenue for climate action and tax reduction measures.

Australia: Issues Australian Carbon Credit Units (ACCUs) through the Emissions Reduction Fund, including:

Incentivizing Emission Reduction Actions: Companies earn carbon credits by implementing emission reduction projects such as tree planting or energy efficiency improvements.

Carbon Offset Projects: Encourages the development of renewable energy and other green projects that can generate carbon credits, which can be used to offset corporate carbon emissions.

Mexico: Launched a national carbon emissions trading system in 2023, with key features including:

Targeting Large Emitters: Covers industrial and energy production sectors, setting emission caps and trading carbon allowances.

Allowances and Trading: Companies can buy additional allowances or sell surplus allowances through the market to achieve government-set carbon emission targets.

European Union: The EU Emissions Trading System (EU ETS) is currently the world's largest carbon market, with specific practices including:

Cap-and-Trade: Sets carbon emission caps for the energy, industrial, and aviation sectors, and allocates and trades carbon allowances.