What was said, and what was not

At a reception on 2 November 2026 for the winners of the 8th National Corporate Environmental Protection Awards, President Lai Ching-te said that with Taiwan's carbon fee system now in force, the government is "prudently planning" a Taiwan-version CBAM and a carbon emissions trading system, to help industry align with international rules and turn transition pressure into competitive advantage, according to the state Central News Agency (CNA).

That is the entire substantive content. No draft regulation, no legislative timetable, no coverage design, no price path. The trade press headline — "Taiwan plans to introduce CBAM and ETS" — is a fair rendering of intent, but readers should not mistake it for a programme. The original phrasing (審慎規劃, "prudently planning") is deliberately cautious.

What matters for metals professionals is not the announcement itself but three things the announcement implies: that Taipei intends to use its existing statute rather than new primary legislation; that a domestic CBAM is being framed as an export competitiveness tool rather than a revenue or protection instrument; and that the real clock being watched in Taipei is Brussels', not Taipei's own.

The legal machinery already exists

The Climate Change Response Act (氣候變遷因應法), whose amendment package passed the Executive Yuan in April 2022, already contains the enabling provisions. Its Articles 28–33 establish the carbon fee as an economic instrument and explicitly provide for a carbon border adjustment mechanism on imported products "in response to international trends"; Articles 34–35 cover total quantity control (a cap), allowance allocation and the use of allowances to stabilise a carbon market.

Analysis: a "Taiwan CBAM" and an ETS would therefore not require new primary legislation. They can be built out through subordinate regulations under the existing Act. That shortens the theoretical path to implementation considerably — but it also means the pace is a purely administrative and political decision, and one that has not been made.

The Environment Ministry's Climate Change Administration (CCA) has been explicit about sequencing: Taiwan adopted a "carbon fee first" (碳費先行) approach and will "refer to international experience and gradually develop an emissions trading system under cap-and-trade". "Gradually" is doing a lot of work in that sentence.

The carbon fee is the baseline everything else is measured against

Any domestic CBAM or ETS will be layered on top of a carbon fee that has now completed one full cycle. The numbers matter because they set the reference price against which a future border mechanism would be calibrated.

ParameterCurrent position
General rateNT$300/tCO2e (effective 1 Jan 2025)
Preferential rate A / BNT$50 / NT$100 per tCO2e (conditional on approved self-reduction plans)
Coverage thresholdFacilities ≥25,000 tCO2e/yr in electricity/gas supply and manufacturing
Covered population (2022 inventory basis)~500 facilities, ~281 companies, ~155 MtCO2e — roughly 54% of national emissions
Largest emitting sectorsIron & steel and basic chemicals
High-carbon-leakage adjustment coefficient0.2 initially, rising to 0.4 and 0.6 in later phases
Offset limitsDomestic credits up to 10% of chargeable emissions; foreign credits up to 5%, non-leakage sectors only
First payment cycle2025 emissions, reported and paid April–May 2026
First-year collection~NT$4.97 bn from 461 facilities / 240 companies (402 facilities with approved self-reduction plans)
Iron & steel 2030 sector reduction target25.2% against a 2021 base year

Two observations. First, NT$300/t is roughly US$9–10/t at prevailing exchange rates — an order of magnitude below EU ETS levels. Even after the leakage coefficient, the effective burden on a Taiwanese steelmaker is modest next to what a European peer faces. Second, the first-year take of about NT$4.97 bn slightly exceeded the ministry's own pre-collection estimate of around NT$4.5 bn, but remains a small revenue pool relative to the scale of transition investment required.

Why a domestic CBAM is being framed as competitiveness policy

The logic runs like this: Taiwanese exporters — steel, aluminium, cement, downstream fasteners, machine tools — will face the EU's CBAM regardless. If Taipei prices carbon domestically, and if Brussels recognises that price, Taiwanese exporters can deduct part of their home-country carbon cost from their EU CBAM liability. A domestic charge that is recognised is therefore cheaper than no domestic charge at all: the money stays in Taiwan's Greenhouse Gas Management Fund rather than flowing to EU treasuries.

That is the same argument South Korea, Japan and others have made. It explains why Lai paired the CBAM announcement with the carbon fee's existence rather than presenting either as a new burden.

It also flags the central unresolved design question: recognition. The EU's CBAM framework allows deductions only for carbon prices effectively paid in the country of origin, and requires credible MRV, a carbon price that is not rebated at export, and — critically — that any free allocation or preferential rate does not neutralise the charge. Taiwan's generous preferential rates (NT$50/t under rate A) and the 0.2 leakage coefficient are precisely the features that would erode the recognisable carbon price. A domestic CBAM built to satisfy Brussels would probably have to tighten those preferences, not loosen them.

The rate review is the nearer-term signal

On the same day as the President's remarks, the second-term carbon fee review committee held its first meeting and considered three options — no change; raise the general rate only; raise both general and preferential rates — without reaching consensus. The committee asked for more work on macroeconomic, industry and consumer-price impacts, verification of self-reduction plans and the leakage coefficients. Current rates stand at NT$300 / NT$100 / NT$50.

For steel and metals readers, the domestic CBAM/ETS announcement is the less actionable of the two stories. The rate review determines the actual marginal cost of emitting in Taiwan this decade; the earlier planning discussion of NT$1,200–1,800/t by 2030, if ever realised, would change investment economics for electric arc furnaces, scrap quality and direct-reduced iron far more than the creation of a border mechanism.

Environmental groups have argued the preferential-rate bar is too low — some high-emitting firms have reportedly reached their 2030 reduction targets early enough to raise questions about baseline ambition. With the iron and steel sector's 2030 target set at only 25.2% below 2021, that critique has arithmetic force.

What a domestic CBAM would actually mean for trade flows

A Taiwan CBAM would apply to imports of carbon-intensive goods. Taiwan's steel trade is unusual: it is a large net importer of semi-finished and flat product (from Japan, Korea, China, Vietnam) and an exporter of long products, wire rod and downstream metal goods. A poorly designed border charge would tax the upstream inputs of the very export industries it is meant to protect — a classic cascading problem that CBAM designers elsewhere have struggled with.

Three design questions will determine whether the mechanism is an industrial policy or a tax on domestic manufacturers:

  • Scope and embedded-emissions methodology. Imposing a charge on imported steel based on default values penalises importers who cannot readily obtain verified data, and pushes trade toward suppliers able to document.
  • Treatment of semi-finished imports destined for re-export. Without relief, Taiwan taxes its own exporters twice.
  • Interaction with the ETS cap. A CBAM and a cap-and-trade system are substitutes at the margin: if the ETS caps emissions, the border measure's price signal is partly redundant.

None of this has been decided, and the absence of any draft makes it premature to model.

Where steel actually appears in this story

The one metals detail in the presidential remarks is a useful reality check. Yamaha Motor Taiwan was cited for switching its export packaging entirely to recyclable steel boxes and for coordinating 85 suppliers on decarbonisation — the "big leads small" (以大帶小) model Taipei wants to extend across supply chains. It is a materials-substitution and packaging-return story, not a metallurgical one. Its relevance is that Taiwan's largest exporters are already reorganising supplier networks around carbon reporting, ahead of any government mechanism. That bottom-up pressure — from customers and from the EU — is likely to move faster than either the CBAM or the ETS.

Bottom line

  • Treat 2 November as a direction-of-travel statement. There is no bill, draft, timetable or coverage design.
  • The Climate Change Response Act already authorises both instruments, so speed is an administrative choice, not a legislative constraint.
  • The recognised carbon price, not the existence of a domestic CBAM, is what determines whether Taiwanese exporters get relief at the EU border. Current preferential rates and leakage coefficients probably undercut that recognition.
  • Watch the carbon fee rate review, not the CBAM announcement, for the near-term cost signal to steel and metals producers.

References

Source & methodology +

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Article status
Published · Version 1
Source date
5 November 2026
MetalMate publication
5 November 2026
Verification
Automated evidence checks; not human reviewed

Taiwan plans to introduce CBAM and ETS to support industrial decarbonization — SteelOrbis