New Chapter in Asia: Taiwan Plans Its Own CBAM Starting in 2027

An Ambitious Step in Climate Policy

Taiwan is one of the strongest economies in the Asia-Pacific region – and since the introduction of the EU CBAM, the island state has come under increasing international pressure to establish its own carbon pricing measures. Now, Taiwan's Ministry of Environment has announced plans to introduce its own Carbon Border Adjustment Mechanism starting in 2027. Initially, the mechanism will apply to cement and steel – two of the most emission-intensive sectors that are highly exposed to international competition. The foundation for the new system is already being laid this year. A pilot phase is planned, during which emissions data will be reported, default values will be developed, and a reporting process will be established. In close coordination with industry associations, the government is working on defining reporting obligations, calculation methods, and administrative procedures. The goal is a full-fledged CBAM that prices imports based on their carbon footprint – modeled closely on the EU’s system.

A Complex System – with International Models

Taiwan’s Ministry of Environment emphasizes that the new CBAM is designed for international compatibility. The country is not only taking cues from the EU CBAM but is also closely monitoring developments in the United Kingdom, the United States, and Japan. Given the complexity of the system – particularly with regard to WTO compatibility and industrial competitiveness – the ministry stresses the importance of a phased introduction supported by pilot projects. In parallel with the CBAM, Taiwan is also developing a national emissions trading system. This is scheduled to enter a pilot phase in 2026, with a mandatory cap-and-trade system planned for the long term. Additionally, the government is pursuing the creation of a voluntary carbon credit market, including standardized methodologies and transparent trading platforms.

Carbon Levy as a Foundational Instrument

As of January 1, 2025, Taiwan will introduce a mandatory carbon pricing instrument in the form of a carbon levy. The levy is based on the previous year's emissions and applies to companies emitting more than 25,000 metric tons of CO₂ equivalent annually. Depending on the level of ambition and adherence to voluntary reduction plans, companies will pay between 50 and 300 New Taiwan dollars per ton – equivalent to around 1.50 to 9 euros. For particularly emission-intensive industries – such as cement, energy, and heavy industry – adjustment factors are in place to reduce the burden. The aim is to avoid a sudden financial shock and enable a gradual transition toward decarbonization – similar to the EU’s approach with free EU ETS allowances and the CBAM factor. The government expects to raise up to 6 billion New Taiwan dollars in the first year, which will be used to finance green technologies.

Why a Taiwanese CBAM?

The introduction of a national CBAM also carries a strategic dimension. Currently, Taiwan imports around 30 percent of its cement from countries such as Vietnam, where the carbon intensity is 10 to 20 percent higher than that of domestic products. Without a balancing measure, local manufacturers face a competitive disadvantage – and ultimately, there is a risk of carbon leakage. A CBAM could establish a fair carbon price while supporting the domestic industry in its transformation journey. From a foreign trade perspective, the move is also significant. The government fears that without a credible carbon pricing system, Taiwanese exporters – especially in the steel and cement sectors – could be subject to double carbon costs under the EU CBAM. By implementing a system that meets international standards, Taiwan could not only protect its industry but also secure exemptions or recognition within the EU CBAM framework.

Conclusion

Taiwan is emerging as a key player in the global landscape of carbon pricing. With an ambitious carbon levy, the planned introduction of a national ETS, and the development of its own CBAM, the government is pursuing an integrated approach – balancing environmental responsibility, industrial policy, and international trade alignment. For European companies with business in Asia, for importers, and for policy observers, one thing is clear: the dynamics around CBAM are becoming increasingly global. Those who want to navigate this new regulatory architecture successfully should integrate global developments into their strategy early on.

Support for Strategic Alignment

If you would like to understand how Taiwan’s CBAM might affect your supply chains or trade flows, feel free to contact us directly at helge@kolum.earth.