Evolution of carbon pricing in Taiwan: carbon fee revenue use options

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.