Voluntary Greenhouse Gas Reduction Project of the Ministry of Environment: How do companies apply for registration and obtain carbon credits? 

1.1 Background and Importance 

In the context of intensifying climate change and increasing international pressure to reduce carbon emissions, the global carbon market has become an important issue that companies must pay attention to. Countries have successively established carbon pricing mechanisms, such as the European Union's implementation of mandatory carbon markets such as the Carbon Emissions Trading System (EU ETS), requiring companies to comply with emission caps and purchase additional allowances to offset excess emissions. At the same time, the international voluntary carbon market is also developing rapidly, with companies voluntarily investing funds to support carbon reduction projects to obtain "carbon credits" to offset their own carbon footprint or achieve net-zero commitments. Carbon credit (carbon credit) trading internalizes the environmental cost of greenhouse gas emissions as part of corporate economic activities, incentivizing companies to take more active actions to reduce emissions through market mechanisms. Therefore, more and more companies are setting science-based carbon reduction targets, participating in international initiatives such as RE100 and SBTi, and reducing net emissions by improving energy efficiency, using renewable energy, and purchasing or developing carbon credits to meet the global net-zero transition trend. 

Overall, the global carbon market is booming, carbon trading plays a key role in policy and markets, and corporate carbon reduction actions have shifted from reactive compliance to proactive strategies to enhance competitiveness. Under the global trend of climate change, governments and companies around the world have taken active actions to reduce greenhouse gas emissions and enhance environmental sustainability. In response to the Paris Agreement and the Climate Change Response Act, the Climate Change Agency of the Ministry of the Environment has established the "Corporate Greenhouse Gas Emissions and Voluntary Reduction Information Platform" and promoted the "Measures for the Management of Voluntary Greenhouse Gas Reduction Projects" to provide enterprises with a formal channel to register and obtain carbon reduction credits.

 The Voluntary Emission Reduction (VER) mechanism allows companies to obtain tradable carbon credits through certified emission reduction actions (such as energy efficiency improvement, renewable energy applications, carbon capture and storage, etc.). This not only helps companies achieve carbon neutrality goals but also serves as a basis for future participation in the carbon trading market. With the development of the international carbon trading market, the value and demand for domestic carbon credits will increase significantly, and if companies can participate in this mechanism early, they can not only reduce the impact of carbon fees and carbon taxes in the future, but also create additional income through carbon trading. 

1.2 Why do companies need to apply for voluntary greenhouse gas reduction projects?

 As countries implement the concept of "carbon emissions are valuable", the cost of carbon emissions is becoming increasingly obvious, and enterprises actively reducing carbon emissions is not only an environmental responsibility, but also related to business risks and business opportunities. Starting in 2026, the Taiwanese government will impose a carbon fee on large-scale emission sources (the general rate is NT$300 per ton of carbon dioxide). This means that corporate greenhouse gas emissions will directly lead to expenses or liability reserves, compressing profit margins. However, if companies can implement carbon reduction measures, apply for voluntary reduction projects, and obtain carbon credits, the reduced emissions can not only be used to offset carbon fees payable, but may also have a surplus of credit for selling for profit. The Ministry of Environment pointed out that with the introduction of carbon fees, companies will have the opportunity to obtain carbon credits for sale if they take the initiative to reduce emissions, which will be converted into a new source of revenue. 

In addition, international supply chains have increasingly stringent requirements for carbon reduction. Policies such as the EU Carbon Border Adjustment Mechanism (CBAM) will impose additional fees on the carbon emissions embodied in products, forcing Taiwanese export companies to reduce the carbon intensity of their products. Carbon credits obtained through voluntary reduction projects can be used by companies to offset residual emissions from products or operations, achieving reduction strategies and meeting the carbon footprint requirements of international buyers. At the same time, applying for voluntary reduction projects and successfully obtaining reduction credits (carbon credits) also demonstrates the company's commitment to sustainability, helping to enhance brand image and investor confidence. In short, companies applying for voluntary reduction projects are actively aligning with policies and market trends: reducing future carbon costs and compliance risks on the one hand, while creating potential benefits and consolidating sustainable competitiveness. 

1.3 Purpose and Structure of this paper 

This study aims to clarify the relevant systems and regulations of Taiwan's "Ministry of Environment Voluntary Greenhouse Gas Reduction Project" and how companies can participate, explain how companies apply for registration projects to obtain carbon credits, and the benefits that carbon credits bring to enterprises.

 Chapter 1 Introduction explains global carbon market trends and corporate carbon reduction pressures, and explains the necessity and motivation for companies to invest in voluntary reduction projects. 

Chapter 2 outlines the institutional background and purpose of the Ministry of Environment's voluntary reduction projects, distinguishing between voluntary and mandatory reductions, and the role of companies in the carbon market. 

Chapter 3 Explains the qualifications and preliminary preparations that enterprises need to meet when applying for voluntary reduction projects, including the information and procedures required for application.

 Chapter 4 elaborates on the project review and certification mechanism, introduces the review standards, third-party inspection (verification) bodies, review processes and timelines, and discusses how to ensure that the project meets carbon reduction standards. 

Chapter 5 focuses on the process of enterprises obtaining carbon credits (reduction credits), from how reduction projects are converted into carbon credits, carbon credit issuance mechanisms and procedures, to the operation of the domestic carbon credit trading market.

 Chapter 6 Analyzes the advantages of companies prioritizing applications for domestic carbon credits, including compliance use, integration with international markets, and ESG reporting value. 

Chapter 7 explores how carbon credits can bring tangible benefits to companies, such as participating in business opportunities in the carbon trading market, reducing operational costs, and enhancing brand competitiveness.

 Chapter 8 Analyzes the experiences of Taiwanese and international companies in using carbon credits to create competitive advantages through successful corporate cases, and organizes practical suggestions for applying for projects.

 Chapter 9 Conclusions and Future Prospects discusses the strategies of companies to respond to future changes in carbon market policies, the development of the domestic carbon credit trading market, and how companies can incorporate carbon credits into their long-term sustainable development strategies. Finally, 

Chapter 10 provides data sources, including the official information platform of the Climate Change Agency of the Ministry of Environment and relevant regulatory documents, to support the evidence. 

Chapter 2 Overview of Voluntary Greenhouse Gas Reduction Projects 

2.1 Background and Purpose of the Ministry of Environment's Voluntary Greenhouse Gas Reduction Project (VER) 

 Voluntary Greenhouse Gas Reduction Project (VER)  refers to the specific emission reduction actions of enterprises, institutions, or individuals, such as 

• energy efficiency improvement and 

• renewable energy generation 

• Industrial Process Improvement, 

• Carbon Capture and Storage (CCS), 

• Sustainable Forestry and Afforestation, 

to achieve quantifiable, monitorable, and verifiable emission reduction effects, and obtain "reduction credits" through government certification. (Carbon Credits), which can be traded in the future carbon market or offset their own emissions. To achieve the 2050 net-zero emission goal, the Taiwanese government has made significant adjustments in regulations and systems to encourage voluntary carbon reduction actions in the country. As early as 2015, Taiwan promulgated the "Greenhouse Gas Reduction and Management Act" (referred to as the Greenhouse Gas Reduction and Management Act), establishing a "offset project" system to allow companies to implement carbon reduction projects and obtain offset credits (carbon credits) as one of the supporting measures of the Greenhouse Gas Control Act. However, with the evolution of international carbon reduction trends and the implementation of the Paris Agreement, countries have updated their carbon reduction targets and mechanisms, and Taiwan has also initiated the revision of the Temperature Control Law. In February 2023, the government amended the Climate Control Act to the Climate Change Response Act, specifying the 2050 net-zero goal and introducing a carbon fee system, while revising the original carbon credit mechanism. Among them, the "Greenhouse Gas Offset Project" was renamed and optimized as the "Greenhouse Gas Voluntary Reduction Project", and the Ministry of Environment issued the "Greenhouse Gas Voluntary Reduction Project Management Measures" (hereinafter referred to as the "Voluntary Reduction Measures") on October 12, 2023, as the basis for implementation. The purpose of the new system is to provide greater incentives for companies to participate in carbon reduction actions by simplifying review procedures and clarifying management regulations, thereby improving the domestic carbon trading environment. The Ministry of Environment emphasizes that the voluntary reduction mechanism is an important supporting part of the climate law, allowing public institutions and governments at all levels to independently propose carbon reduction projects, register and implement them after being reviewed and approved by the competent authority, and apply for the issuance of reduction credits (carbon credits) accordingly. The carbon credits obtained can be used to offset carbon fees or traded on carbon credit exchanges, helping to achieve Taiwan's carbon reduction goals and alleviating the pressure on companies to deal with carbon pricing. In short, the Ministry of Environment's promotion of voluntary greenhouse gas reduction projects aims to encourage companies to reduce carbon emissions ahead of time and accumulate carbon credit assets through market incentives, while contributing to the country's overall carbon reduction goals. 

2.2 Difference between Voluntary and Mandatory Reductions Voluntary reduction

 refers to the mechanism by which enterprises or government agencies at all levels voluntarily implement greenhouse gas reduction projects under non-mandatory obligations and verify their reduction results to obtain carbon credits. In contrast, mandatory reductions occur when the government sets statutory emission reduction requirements or imposes carbon fees on specific emission sources, and companies must comply with regulations to reduce emissions but usually cannot obtain tradable carbon credits. The main differences between the two are participation motivation and market attributes: mandatory reductions are mandatory by regulations and must be implemented by companies to avoid penalties or additional costs; voluntary reductions are voluntary actions, where companies voluntarily participate for the purpose of fulfilling corporate social responsibility, enhancing brand image, or obtaining economic benefits. Additionally, mandatory carbon markets (such as the government-led ETS/EU ETS) are usually larger and participate in regulated high-emitting industries, aiming to meet the country's overall emission reduction goals. Voluntary carbon markets have more diverse participants, with a wide range of projects, including afforestation, renewable energy, energy efficiency improvement, and other carbon reduction projects. Under the mandatory reduction system, carbon credits mostly exist in the form of allowances, issued by the government and controlled by the total. In voluntary reductions, carbon credits are generally generated in the form of carbon credits, with every unit representing one metric ton of carbon dioxide equivalent reduction. It is worth noting that the purposes of the two types of carbon credits are also different: mandatory market quotas are mainly used to meet regulatory requirements, and unused quotas may be tradable but are usually limited to circulation between regulated parties; carbon credits in the voluntary market are used by companies to offset voluntarily committed emissions or sell to those in need, and are not directly applicable to mandatory regulations. In Taiwan's case, mandatory reductions are reflected in the obligations of the Climate Change Response Act to inventory, report, and pay carbon fees for large emission sources, while voluntary reductions provide an additional way for companies to obtain carbon credits and flexibly respond to carbon constraints. 

2.3 The Role of Enterprises in the Carbon Market 

Companies play the dual roles of emitters and reducers in the carbon trading market, i.e., as potential buyers and potential sellers. On the one hand, companies that are emitters may not be able to completely eliminate their carbon footprint due to their high carbon reduction costs or technical limitations, so they need to purchase carbon credits from the market to offset remaining emissions to comply with regulations or achieve net-zero commitments. For example, high-emitting industries that cannot significantly reduce emissions in the short term can neutralize some of their emissions by purchasing carbon credits generated by other companies. On the other hand, many companies are also actively becoming reducers, actively reducing emissions by improving processes, introducing energy-saving equipment, or investing in carbon reduction projects. These additional emission reductions beyond their own reduction obligations can be converted into carbon credits for sale in the market, bringing benefits to the company or retaining it for future compliance needs. Therefore, a company may be both a supplier and a demander of carbon credits: when its carbon reduction results are ahead of schedule, it can become a seller to provide high-quality carbon credits; when its own carbon reduction is insufficient, it can become a buyer to obtain the required carbon credits. In addition, companies can participate in the carbon market as investors or partners, such as investing in external carbon reduction projects or jointly developing carbon sink projects with other companies, sharing the generated carbon credits. The role of a company depends on its emission reduction strategy and goals: active leaders often profit by selling carbon credits, while companies in transition meet the target by purchasing carbon credits. In the emerging stage of Taiwan's carbon market, companies pay close attention to how to obtain carbon credits, viewing them as assets with both environmental responsibility and economic value. In summary, companies play both the role of carbon reduction actors and trading participants in the carbon market, allowing them to flexibly use market mechanisms to optimize carbon reduction costs and create favorable conditions for sustainable transformation. Participating in voluntary reduction projects not only lowers their own carbon footprint but also offers several advantages:

1.Reduce future carbon fees or carbon tax burdens

•  Obtain carbon credits in advance through emission reduction projects, which can be used to offset carbon fees or trade profits in the future. 

2.Enhancing Competitiveness in the International Market 

• Supply chain partners and international investors are increasingly concerned about the carbon management performance of companies, and actively participating in reduction projects can help enhance brand image. 

3.Generate carbon trading income

•  Certified carbon credits can be bought and sold on the Taiwan carbon trading market, becoming a potential source of income for companies.

4. Meeting ESG (Environmental, Social, Governance) disclosure requirements 

• allows companies to showcase their carbon reduction performance in ESG reports to comply with international standards (e.g., CDP, TCFD, IFRS S2). 

5.Establish low-carbon technology and supply chain advantages

•  through carbon reduction technology innovation and green supply chain management to enhance corporate operational efficiency and market competitiveness. 

Chapter 3  Conditions and preparations for enterprises to apply for voluntary reduction projects 

 3.1 Qualifications and Necessary Conditions for Enterprises 

According to the Regulations for the Management of Voluntary Greenhouse Gas Reduction Projects, all public institutions or government agencies at all levels that have been legally established and registered in Taiwan are eligible to apply for registration of voluntary greenhouse gas reduction projects from the central competent authority (Climate Change Agency, Ministry of Environment). In other words, general companies, legal entities, and even government departments can serve as the proposers and executors of reduction projects. However, the applied project must meet specific conditions to ensure the environmental integrity and additivity of the reduction credit. First, the scope of the project must not include emission sources that have been included in statutory management (management) or enjoy the benefits of other carbon reduction mechanisms to avoid double calculation or killing two birds with one stone. For example, renewable energy power generation equipment that has applied for a renewable energy certificate (T-REC) is no longer allowed to use its power generation emission reductions to apply for carbon credits. Furthermore, emission sources that are legally required to pay carbon fees (announced in accordance with Article 28 of the Climate Act) shall not be included in the project. In other words, if a large fixed emission source is already within the scope of carbon fee levy, the reduction should be applied to reduce carbon fee payment, rather than applying for voluntary carbon credits, so as to avoid the dual benefits of carbon fee reduction and carbon credit income at the same time. Similarly, the Climate Law stipulates that the first and second batch of announced enterprises (emission sources of large enterprises) that must inventory and register and verify greenhouse gas emissions, as well as emission sources that are included in the total control in the future, are also prohibited from applying for voluntary reduction projects for emissions within the scope of their control. This move ensures that voluntary reduction projects focus on additional carbon reduction contributions beyond regulatory requirements. In addition, avoiding retrospective of existing achievements is also a major principle: for projects that fall under the category of "reduce or avoid emissions", their carbon reduction measures must be implemented within three years before the registration date, and older projects older than three years are not allowed to apply. In other words, if a company has completed a carbon reduction project three years ago, it will not be able to apply for carbon credits for the project to ensure the incentive effect of carbon credits on recent carbon reduction actions. Finally, the proposed project itself must meet the "additionality" requirement, that is, the carbon reduction measure is not mandatory by regulations or an activity that would be carried out naturally under general business investment. When applying, an additive analysis of regulations, finances, and other aspects is required to prove the additional carbon reduction benefits of the project. To sum up, the conditions for enterprises to apply for voluntary reduction projects can be summarized as follows: "The qualification must be a legally established enterprise or government; The scope of the project must avoid emission sources that are already covered by laws and regulations or other mechanisms; The project must be implemented in the near future and have additional carbon reduction measures." Companies that meet the above conditions can start preparing application documents to transform carbon reduction actions into valuable carbon credit assets. 

3.2 Information and Procedures to Prepare 

After confirming that the application qualifications are met and the project meets the basic conditions, the enterprise needs to make thorough preparations to ensure a smooth application. In the first step, companies should conduct sufficient data collection and feasibility assessment of the proposed carbon reduction measures. For example, inventory of the types and quantities of greenhouse gases expected to be reduced by the project, relevant activity data (such as energy usage, production, etc.), applicable reduction methodologies, and possible impacts of project execution. At the same time, companies should review the list of voluntary reduction methodologies officially announced in China and choose the methodology suitable for their project type as the basis for calculation. The Ministry of Environment has announced the first batch of 143 methodologies, covering 13 types of carbon reduction measures in energy, manufacturing, transportation, and forestry. Among them, 10 methodologies with mature technology and simple calculations are exempt from third-party verification (confirmation) and can be directly applied by enterprises. If the company's carbon reduction measures are special and there is no applicable ready-made methodology, it is necessary to develop a new methodology and submit it to the competent authority for approval, which will increase preparation time and professional investment. 

In the second step, after the data is complete and the methodology is selected, the company needs to prepare a "Voluntary Reduction Project Plan" (Project Design Document PDD). The content of the plan includes: introduction to the background of the project, explanation of the applied greenhouse gas reduction methods and their applicability, calculation methods for baseline scenarios, calculation methods for reductions under project scenarios, detailed additive analysis (to prove additionality from the perspectives of regulations, finance, technology penetration, and barriers), monitoring plan (how to measure and report emission reduction results in the future), project activity schedule, and possible environmental impact assessment and stakeholder (public) comment processing, etc. At this stage, enterprises usually need to collaborate across departments, such as environmental or energy management departments providing emission data, engineering or production units providing details of technological transformation plans, and financial units evaluating economic feasibility. 

Third, if the methodology used is designated by the competent authority to be verified by a third party (usually for complex or first-time methodologies), the company must engage an accredited greenhouse gas testing agency to conduct an independent review (validation/validation) of the project plan. Such organizations must have relevant international standard qualifications (such as ISO 14064 verification bodies) and be recognized by the Ministry of Environment's management regulations before they can perform inspection services. The verifier will review the assumptions, data, and calculations in the project plan, and visit the company's site to confirm the reasonableness and reliability of the expected reductions. For cases where the simple reduction method can be exempted from confirmation, this step can be skipped to speed up the application process. Finally, enterprises should familiarize themselves with the operation of the Ministry of Environment's designated information platform (Greenhouse Gas Voluntary Reduction and Offset Information Platform) in advance, as all application materials need to be uploaded to the online system. Before officially submitting the document, you can make good use of the relevant counseling resources of the Environmental Protection Agency or the Ministry of Economic Affairs for pre-review. The Business Development Agency of the Ministry of Economic Affairs and other units also provide demonstration counseling programs to assist enterprises in completing plan writing and matching third-party verification, lowering the threshold for enterprises to explore on their own. In summary, sufficient preliminary preparations include data collection, methodology selection, plan writing, and third-party verification, which will greatly increase the probability of project application approval and lay the foundation for companies to successfully obtain carbon credits. 

3.3 Documents and Report Content to be Submitted When Applying After completing the above preparations, the enterprise can prepare various application documents in the prescribed format and submit the application form to the central competent authority for review through the online platform. According to Article 4 of the Voluntary Emission Reduction Measures, the following relevant information must be uploaded when applying for registration of a voluntary emission reduction project:

 (1) Project plan: Detail the project content, including the application description of the reduction methodology (explaining the methodology used and its applicability), baseline scenario calculation method (emission estimation method when the project is not implemented), project scenario reduction calculation (calculation process of expected emission reduction), additive analysis (proving that the reduction is an additional contribution from the aspects of regulations, finance, market penetration, etc.), There are eight parts: monitoring methods (how to monitor and record project emissions in the future), project activity schedule (start and end time, annual reduction plan), environmental impact analysis (environmental impact assessment that may be caused by the project), and public opinion (collection and response of stakeholder opinions). The project plan is the focus of the review, and it must be complete, with detailed data and strong arguments.

 (2) Verification summary report: If the reduction methodology used is designated by the competent authority to be verified by a third party (verified), the project verification summary report issued by the inspection agency must be attached. The report is provided by an independent inspection agency to confirm the reasonableness of the projections and methodologies of future reduction outcomes described in the project plan. 

(3) Reduction Effectiveness Calculation Table: Contains the detailed calculation process, formula, and parameter value source of the project's expected emission reductions. This form helps reviewers quickly understand the quantification results of reductions and verify them against the content of the plan. 

(4) No duplicate registration or relevant certificates: An affidavit stating that the application project has not been registered with a foreign mechanism at the same time, or if the application has been approved by a foreign agency, relevant supporting documents must be attached. This move is to avoid repeated applications for carbon credits at home and abroad. 

(5) Other designated documents: Other information that may be required by the competent authority on a case-by-case basis. For example, if the project involves specific sensitive areas or new technologies, additional explanations, technical reports, or supporting documents may be required. After the above documents are complete, the company needs to fill out the application form in the official format and attach all attachments, and submit it through the information platform designated by the Ministry of Environment. After submission, the system will generate a case number for subsequent inquiry and tracking. It should be reminded that the content of the application documents must be true and complete, otherwise it will affect the progress of the review and even cause the case to be returned for correction. According to the regulations, if the formal review finds incomplete information or missing content, the competent authority will notify the items that need to be supplemented at once, and the enterprise must make corrections within the time limit; If the application is not made within the time limit or still does not meet the requirements after the correction, the application will be rejected. Therefore, companies should repeatedly check the completeness and correctness of documents before submitting them, and seek assistance from professional consultants or relevant counseling programs if necessary to increase the probability of passing the first time.  

4.1 Review Standards and Certification Bodies for Voluntary Reduction Projects 

In order to ensure the environmental integrity and reliability of the issued reduction credits (carbon credits), the Ministry of Environment has set clear review standards for voluntary reduction projects and introduced a third-party inspection (verification) mechanism for professional control. First, the project must comply with the internationally accepted "three plus five principles". The so-called "three" refers to measurable, reportable, and verifiable, which means that emission reductions must be quantified by scientific methods, and the process and results must be documented and verifiable, and can be verified by independent institutions. "five" refers to addition, conservatism, permanence, avoidance of double counting, and avoidance of environmental hazards. Additivity means that the carbon reduction results are generated by the carbon credit mechanism, rather than the emission reductions that would have occurred. Conservatism requires careful assumptions when estimating emission reductions and not overestimating results. Permanence, on the other hand, requires carbon sink projects to maintain their carbon reduction benefits for a long time and will not be reversed when the project ends. Avoiding double counting is to prevent the same reduction from being applied for multiple carbon credits or overlapping with other mechanisms; Avoiding environmental hazards ensures that the project does not bring other negative environmental impacts, such as afforestation carbon sink projects must avoid introducing alien species that damage the ecology. During the review, the competent authority will evaluate whether the project design meets the threshold of high-quality carbon credits. 

On the other hand, the participation of certification bodies (inspection bodies) is another guarantee of project quality. According to regulations, the Ministry of Environment will approve qualified third-party inspection agencies to authorize them to carry out verification/verification work for voluntary reduction projects. These organizations are usually professional and impartial certification companies (such as SGS, BSI, etc.) or units with ISO 14064 greenhouse gas verification qualifications, and are regulated by the "Administrative Measures for Greenhouse Gas Certification Bodies and Inspection Bodies". During the registration application stage, if the methodology used is specified to be verified, the inspection agency will issue a confirmation report to review whether the estimated reductions in the project plan are reasonable and credible. When applying for the issuance of emission reduction allowances, the inspection agency is also required to issue a verification report on the actual implementation results of the project to confirm the authenticity of the actual emission reductions. It is worth mentioning that in order to speed up the application timeline of enterprises, the Ministry of Environment has pre-approved and released 143 "official version" reduction methods for enterprises to choose from. Among them, 10 simple methods (such as replacing high-energy-consuming lighting, improving refrigeration and air conditioning efficiency, etc.) can be applied directly without third-party verification due to mature and clear technology. This lowers the threshold and cost of small-scale carbon reduction projects. However, for the remaining items that need to be verified, companies still need to cooperate with the certification body to complete the necessary review procedures. Overall, the Ministry of Environment uses strict standards (3+5 principles) and independent inspection agencies to ensure that each carbon credit issued represents real, additional, and continuous emission reduction results, avoiding false carbon reduction or "greenwashing" incidents, and maintaining the credibility and market value of domestic carbon credits. 

4.1.1 The "Three Plus Five" Principle is applied

 In Taiwan, and the "3+5 Principle" mainly refers to the "Administrative Measures for Voluntary Greenhouse Gas Reduction Projects" and the "Climate Change Response Act" to ensure that the carbon reduction projects companies participate in comply with international standards and can obtain government-issued reduction credits (carbon credits). The Ministry of Environment requires companies to follow these principles when applying for voluntary reduction projects to ensure the authenticity and credibility of carbon credits and avoid "greenwashing" issues. These standards also make Taiwan's carbon credits more acceptable to the international market and can be integrated with international carbon trading markets (such as VCS and Gold Standard). The core goal of the 3+5 principle is to ensure the environmental integrity of carbon credits and comply with the norms of international carbon reduction mechanisms. Through these standards, companies' voluntary reduction projects can be trusted and exert economic value in future domestic and international carbon markets. The following table clearly distinguishes between the "Three Basic Standards" and the "Five Supplementary Principles" to ensure that companies can comply with government and international standards when applying for voluntary greenhouse gas reduction projects, ensuring the authenticity and credibility of carbon credits.  

4.2 Registration Review Process and Timeline 

After the company submits the application for a voluntary reduction project, the central competent authority (Climate Agency, Ministry of Environment) will initiate a phased review. According to Article 9 of the Regulations, the competent authority shall complete the review and make a decision on approval or rejection within 6 months. If there are special circumstances that cannot be completed within 6 months, it may be extended for up to 6 months, that is, the overall review time limit shall not exceed 12 months. The review includes two parts: formal review and substantive review:

 l Formal review: First, the organizer conducts a completeness and compliance check on the application form and attached materials. Confirm whether the company has submitted all necessary documents (such as plans, corroboration reports, calculation tables, etc.) in accordance with Articles 4 to 8, whether the format is correct and whether there are any obvious omissions in the content. If the formal review finds that the information is incomplete or does not conform to the format, the applicant will be notified to make corrections within a time limit. The number of days within the correction period (which shall not exceed 6 months in total) is not included in the review time limit. Enterprises must submit supplementary information within the deadline, otherwise the case will be returned or dismissed.

 l Substantive review: After the formal requirements are correct, the competent authority will enter the substantive review. This stage focuses on verifying the technical credibility and environmental contribution of the project itself, including: the baseline and project scenario set in the project plan, whether the cited reduction methods are appropriate, whether the reduction calculation complies with the principles (MRV and conservatism, etc.), whether the additive demonstration is sufficient, and whether the environmental impact assessment is thorough. At the same time, the verification report submitted by the inspection agency or the content of the verification report will be reviewed to confirm that the third-party opinion is consistent with the company's application information. If the substantive review deems that some content needs further clarification or adjustment, the company will also be notified to make corrections. For example, if the reduction calculation is incorrect and needs to be recalculated, additional documents are required due to insufficient additive evidence. After the enterprise corrects the substantive review opinions, the competent authority will continue the review until it can make a decision to agree to the registration or reject it. 

When the project passes the review, the Ministry of Environment will officially approve the registration of the voluntary reduction project and issue a registration approval document. After that, the company can implement carbon reduction measures according to the approved project content and enter the subsequent monitoring and quota application stage. It is worth mentioning that in order to improve the professionalism and fairness of the review, the competent authority may invite scholars and experts to establish a review committee as necessary to conduct collective deliberations on matters such as project registration applications or the issuance of reduction quotas. This is often true for projects of very large scale or technological innovation, where multiple experts provide input to ensure robust review results. In general, it usually takes several months from application to registration approval, and companies should be mentally prepared to wait patiently and actively cooperate with possible supplementary requirements. Preparing complete information in advance and actively communicating with the review unit will help shorten the review time and obtain project registration qualifications as soon as possible.  

 4.3 How to ensure that the project meets carbon reduction standards? 

Ensuring the authenticity and quality of project carbon reduction is at the core of the carbon credit mechanism. At all stages of project development and review, multiple measures are used to strictly control quality. First, during the project design stage, companies need to follow the 3+5 principle mentioned above to conceive the project plan. This means setting clear project boundaries and baseline emissions from the start, conservatively estimating reductions, and not counting any statutory required emissions reductions into outcomes. At the same time, it is necessary to develop a proper monitoring plan to ensure that actual emission reductions can be quantified and reported in the future. Companies should also proactively conduct additive analysis to self-examine whether the project is established due to carbon credit incentives, and avoid selecting measures that already have sufficient economic incentives or routinely implemented as projects to ensure the additionality of emission reduction. During the project review stage, the competent authority will focus on reviewing the above elements, such as whether the additive demonstration is sufficient, whether there is moisture in the reduction estimate, and whether the project has potential negative environmental impacts. In particular, for possible double-counting risks, such as whether a company has obtained a renewable energy certificate or included in the statutory emission reduction target for the same carbon reduction action, it will be checked in detail, and carbon credit applications will not be allowed once discovered. In addition, in order to avoid "falsification of carbon reduction data" or "failure of carbon reduction effects", the Regulations also have a cancellation mechanism: if a project fails to implement carbon reduction measures after registration (it has not been implemented for more than a year without justifiable reasons), or if major problems are found during the implementation of the project that do not match the plan, the competent authority may revoke its registration qualifications. Similarly, if the issued reduction credits are later proven not to have actually occurred, or if the project violates relevant laws and regulations, the competent authority has the right to cancel the issued carbon credits or even abolish the entire project. These regulations form a strong binding force on companies, forcing them to ensure that carbon reduction actions are implemented and achieve the desired results, otherwise they will lose their carbon credit qualifications. Finally, in the verification stage of reduction results, an independent third-party inspection agency verifies the monitoring reports submitted by the company to confirm the authenticity and reliability of the actual emission reductions. The monitoring report must present detailed activity data and reduction calculations during the project period, and analyze the regulatory additionalities again to prove that the emission reduction during the period did not occur due to policy or external factors. Verifiers review raw data and measurement methods to ensure that there is no double counting, and that the emission reduction effect is sustainable and there is no risk of carbon leakage. For example, for alternative power projects, it is required to use the national announced grid carbon emission factor to calculate emission reductions, so as to prevent enterprises from using high coefficients to exaggerate reductions. Another example is a afforestation carbon sink project, which needs to prove that the growth of carbon sinks has not been offset by increased deforestation in neighboring areas (to avoid "carbon leakage"). If the verification finds that the monitoring report is inconsistent with the actual situation or that the reduction results are higher than the original plan estimate but cannot be reasonably explained, the company will be required to provide additional explanations or even adjust the amount of carbon credit applications.

 Only after a third-party verification confirms that the emission reduction is correct will the competent authority issue the corresponding quota. Therefore, companies must execute and document projects with honesty and a scientific attitude from the beginning to the end, and provide the necessary evidence in accordance with the inspection process. In summary, through strict principle requirements, government review, independent verification, and post-monitoring mechanisms, the quality and carbon reduction standards of voluntary reduction projects are fully guaranteed, and only by truly reducing carbon emissions can companies obtain and maintain the so-called "high-quality carbon credits" reduction quotas.  

 5.1 How do corporate reduction projects convert to carbon credits?

 When a company's voluntary reduction project is reviewed and approved by the competent authority and registered, the company can implement carbon reduction measures according to the plan and accumulate greenhouse gas reduction results during the project's inclusion period. The crediting period refers to the validity period during which reduction credits can be obtained after project registration, which is divided into fixed or extended types according to the project type: for example, the fixed type of emission reduction/avoidance type project can be extended for up to 10 years, and the extended type can be extended twice per 5 years, for a total of up to 15 years. During the crediting period, companies can regularly convert the actual emission reductions of their projects into carbon credits. The calculation principle of carbon credits (reduction credits) is to compare the actual emissions after project implementation with the emissions under the baseline scenario, and the difference is the reduced emissions. After independent verification and confirmation, every 1 metric ton of carbon dioxide equivalent (CO2e) reduced can be converted into a reduction allowance of 1 unit. It is worth noting that in order to maintain conservatism, if the actual monitoring results show that the emission reduction is higher than the original plan's estimate, the company must provide a reasonable explanation and may only issue the quota according to the original estimate to avoid overestimation. 

Generally, companies choose the appropriate reduction issuance frequency based on the nature and scale of the project: large-scale or continuous emission reduction projects may apply for the credit once a year, while one-time measures or short-term projects apply for the full reduction credit at once after completion. For example, if a factory's energy efficiency improvement project is counted for 5 years, the company can monitor and convert the reduction of electricity every year, and submit an application for carbon credit issuance at the end of the year. Another example is the afforestation carbon sink project, which may choose to increase the carbon sink volume every few years before applying for a centralized quota. Through this process of "planning-> implementation-> monitoring-> issuance", companies can transform actual carbon reduction results into valuable carbon credit assets. After obtaining carbon credits, companies can decide how to use them: they can retain these carbon credits to offset their own future emissions (such as offsetting carbon fees or declaring carbon neutrality), or they can sell them to other companies in need to realize them as additional income. The reduction credits obtained by companies through voluntary reduction projects, commonly known as "carbon credits", have become important certificates in response to the era of carbon pricing, linking corporate carbon reduction actions with economic value. The Ministry of Environment has also made it clear that in the future, whether companies pay carbon fees or trade on carbon exchanges, the carbon credits used must come from voluntary reduction quotas issued by the country. Therefore, companies investing in projects early and obtaining carbon credits will gain a head start when carbon fees are introduced and the carbon market matures. According to Article 7 of the "Measures for the Management of Voluntary Greenhouse Gas Reduction Projects", the inclusion period of voluntary reduction projects is divided into "Removal Projects" and "Reduction or Avoidance Projects" according to the type of project, and companies can choose "Renewable Period" or "Fixed Period" when applying .

5.1.1 Crediting Period and Project Type 

Selection Importance of Crediting Period: In Voluntary Emission Reduction (VER), the "Crediting Period" refers to the validity period during which a project is allowed to accumulate and apply for carbon credits after it is registered. The length of the crediting period affects the timing of a company's carbon credit earnings and determines the tradable value of the project in the market. Therefore, when applying for a project, companies should choose the appropriate type of crediting period based on their own emission reduction technology, return on investment cycle, and long-term sustainability strategy.

 (1) Removal Projects

 Removal projects refer to the capture and storage of carbon dioxide (CO₂) in the atmosphere through carbon sequestration or carbon absorption technology, reducing overall emissions. Such projects are usually long-term, with long accumulation and verification cycles for carbon credits. 

Inclusion Rules for Removal Type Projects: 

Applicable Technologies and Project Types Voluntary reduction projects cover a variety of carbon sequestration and reduction technologies, including 

1.Afforestation & Reforestation (A/R)

•  through afforestation or restoration of virgin forests, increasing carbon absorption capacity and converting carbon dioxide into biological carbon storage. 

2.Forest Conservation (REDD+, Reducing Emissions from Deforestation and Forest Degradation) 

• prevents deforestation and degradation to protect the carbon sink function of existing forests and enhance community participation to ensure sustainable forest management. 

3.Soil Carbon Sequestration 

• uses sustainable agriculture, rotational farming, organic fertilizers, and biochar technologies to increase carbon storage in the soil and reduce soil carbon release. 

4.Carbon capture and storage (CCS) technology 

• uses technology to capture carbon dioxide from industrial emissions or air and permanently store it in underground geological structures or other stable storage media. 

5.Blue carbon 

• absorbs and sequesters carbon dioxide through ecosystems such as mangroves, seagrass beds, and coastal wetlands, forming a stable source of carbon sinks and protecting the coastal ecological environment. 

Considering the Choice of Extended or Fixed Type 

Different carbon sequestration technologies have different operating modes and carbon sink formation cycles, and companies should choose the appropriate crediting period model based on technical characteristics: 

1.The extended type is suitable for long-term carbon sequestration projects ,

•  such as afforestation carbon sinks, mangrove carbon sinks, etc.

•  Reason: It takes decades for trees to grow to reach their maximum carbon sequestration capacity, and through the extension mechanism, companies can gradually apply for carbon credits at different stages to meet the actual carbon sink accumulation. 

• Inclusion period specification: Initial 20 years, can be extended up to two times for 10 years each time, for a total of up to 40 years. 

2.The stationary type is suitable for single-use storage technologies , 

• such as CCS (Carbon Capture and Storage) or soil carbon storage.

•  Reason: Carbon sequestration of this type of technology occurs in a single stage and has high storage stability, so it can be fixed to ensure long-term carbon credit returns. 

• Inclusion period specification: fixed 30 years, non-extendable.  

(2) Emission reduction or avoidance projects: 

Emission reduction or avoidance projects refer to reducing carbon dioxide (CO₂) emissions from existing emission sources through technological improvements, energy transition, or efficiency improvements, rather than reducing carbon content in the atmosphere through carbon sequestration. Such projects usually have rapid technological development and shorter inclusion periods to ensure the market competitiveness of carbon reduction technologies. Voluntary reduction projects are suitable for a variety of carbon reduction technologies and application scenarios, mainly including: 

1.Renewable energy: such as solar, wind, and geothermal power generation, to replace high-carbon energy sources and increase the proportion of low-carbon electricity supply. 

2.Energy Efficiency Improvement: Such as efficient lighting, intelligent energy management systems, and process energy-saving technologies to reduce energy consumption per unit of production. 

3.Industrial Process Optimization: Reducing emissions by improving manufacturing processes, recovering waste heat, and using low-carbon raw materials. 

4.Low-carbon transportation: such as electric vehicles, hydrogen vehicles, and electrification of public transportation, to reduce dependence on fossil fuels. 

5.Waste-to-Energy: Such as biogas power generation, waste combustion energy recovery, biomass energy utilization, etc., to improve resource reuse rate. 

6.Fuel Switching: For example, changing coal-fired equipment to natural gas, biofuel, or hydrogen energy to reduce carbon emission intensity. 

Selection Considerations for Extended and Fixed Models 

When selecting suitable reduction projects, companies need to consider the technical characteristics, economics, and long-term stability of the project before deciding to adopt the "Extended Type" or "Fixed" model: 

1.Renewable 

•  suitable for projects that may rapidly upgrade technology in the short term, such as high-performance equipment replacement, energy-saving lighting, etc. 

• The crediting period is usually 5 years and can be extended up to two times for 5 years each time to ensure the applicability of the technology and the update of carbon reduction benefits. 

• It is suitable for carbon reduction measures that require continuous technological updates and iterative upgrades. 

2.Fixed Term 

•  suitable for long-term stable projects, such as solar photovoltaics and wind power generation, ensuring stable long-term carbon credit returns. 

• The crediting period is typically 10 years (for types of reduction or avoidance of emissions) or 30 years (for types of removal) without the need for frequent reassessment.

•  It is suitable for infrastructure-based projects with a long payback cycle but sustainable carbon credit income. 

 Crediting period rules for emission reduction or avoidance type items 

5.1.2 Key Considerations for Inclusion Period Enterprises should consider the following factors when selecting the inclusion period: 

1.Technological maturity: New technology projects often choose a scalable type to adapt to technological changes and market demands. 

2.Return on Investment (ROI): Short-term return projects are suitable for fixed types, ensuring one-time carbon credit gains, while long-term projects are suitable for extended types.

3. Price fluctuations in the carbon credit market: If the price of carbon credit market is expected to rise, choosing the extended type can flexibly adjust the strategy. 

4.Risk of regulatory changes: The fixed type ensures policy stability, while the extended type can adapt to future policy changes. 

5.1.3 How do enterprises apply for the crediting period?

 When applying for voluntary reduction project registration, enterprises should clearly state the selected inclusion period model in the Project Design Document (PDD) and provide the following information: 

1.Reasons for selecting the inclusion period (extended or fixed) 

2.Expected carbon reduction effectiveness and calculation method 

3.If the extended type is chosen, it is necessary to explain the technical feasibility and 

4.economic benefit analysis of the future reduction monitoring plan during the inclusion period

 Instructions for applying for extension of the crediting period:

1. If the project during the crediting period needs to be extended, the company must submit an application to the competent authority within 6 months before the end of the crediting period, and after passing the review, it can continue to obtain carbon credits. 

2.If the company does not apply for an extension within the time limit, it will be deemed to be the end of the crediting period and cannot apply for the reduction quota. 

5.1.4 Impact of the Crediting Period and Strategic Choice

The choice of crediting period will affect: 

1.the earning time and transaction value of the company's carbon credits

2.Corporate carbon reduction goals and market competitiveness

3.The acceptability of the project in the international carbon market 

Enterprises should determine the appropriate crediting period based on their own industry characteristics, investment plans, and market trends to ensure that the project can maximize carbon reduction benefits while meeting policy requirements. Especially in the face of carbon market fluctuations, companies should maintain flexible response mechanisms to maximize the economic benefits of carbon credits. 

5.2 Carbon Credit Issuance Mechanism and Procedures

 5.2.1 Issuance Process:

 When the project is implemented for a period of time and certain reduction results have been accumulated, the company can submit an application to the competent authority for the issuance of reduction credits. According to Article 16 of the Regulations, the following documents must be submitted when applying for the issuance of carbon credits: 

1.Monitoring report: Prepared by the enterprise based on the project monitoring plan, the content includes a description of various activities implemented during the project period, monitoring data and situation descriptions, reduction calculation results, and regulatory additional analysis. The monitoring report details the actual emission data (or carbon sink increment) and calculated emission reductions from the start of the project to the time of application, as the main basis for issuing carbon credits.

2. Verification summary report: The verification certificate of the monitoring report issued by a third-party inspection agency. The verifier will review the original records, data calculations, and additions during the monitoring period to confirm that the report is authentic and credible, and then provide a verification report. This is equivalent to endorsing the emission reductions claimed by the company. 

3.Proof of avoiding double calculation: If there is equipment within the project boundary that participates in the feed-in tariff subsidy for renewable energy (such as selling electricity to Taipower to receive a fixed rate for renewable energy), documents proving that the carbon reduction benefits have not been double-calculated must be attached. This is usually done by the project developer stating that their carbon reduction is not sold at the same time as green electricity attributes, or by a third party verified that it has not been double-accounted.

 Other Designated Documents: Other information required by the competent authority, such as environmental monitoring data, social consensus survey results, etc., may be required for large-scale projects for careful evaluation. 

5.2.2 Coding and Issuance: 

After the company uploads the above information through the online system and submits the issuance application, the competent authority will initiate the review process (similar to the form + substantive review during project registration). The key is to confirm that the monitoring report and verification report are correct and that the reduction quantification meets the requirements of the regulations (such as using the correct emission factor, no double counting, continuous reduction without leakage, etc.). After passing the review, the competent authority will approve the number of reduction credits and their codes based on the approved reduction results, and transfer the quotas to the applicant's account on the designated information platform. This means that carbon credits are officially issued and registered in the national management system. To manage the holding and trading of carbon credits, the Ministry of Environment has established the "Greenhouse Gas Reduction Quota Management System (TCER Registry)," where companies must open an account to receive credits. To open an account, you need to provide a copy of the company's establishment registration documents, authorized manager certificate, electronic certificates, and other information. After completing the account opening, the reduction quota will be deposited into the company's account in the form of an electronic certificate and managed by the company itself. 

5.2.3 Serial Number and Information Records 

Each quota (carbon credit) has a unique serial number and information record, which can trace the source project, year, quantity, and other information to ensure transaction transparency. It should be emphasized that the Ministry of Environment also issued the "Administrative Measures for Trading, Auction, and Transfer of Reduction Credits" on July 1, 2024, coinciding with the launch of the reduction credit management system, establishing a complete set of regulations from issuance to trading of domestic carbon credits. Therefore, after obtaining carbon credits, if a company wants to sell or transfer them, they must submit a transaction or transfer application through the system, and the system records the quota to the buyer's account to complete the transaction process. The overall issuance mechanism and procedures are interlocked to ensure that the number of carbon credits issued is accurate, account management is secure, and the transaction process is legal and compliant. After mastering these processes, companies can smoothly convert their carbon reduction achievements into carbon credits in their accounts, which can be further used for offsets or transactions, and realize their economic value. 

5.3 Operation and Trading Methods of the Domestic Carbon Credit Market 

With the issuance of the first batch of voluntary reduction credits in China, Taiwan's carbon credit market has also officially started operation. The Ministry of Environment has entrusted financial institutions to establish the Taiwan Carbon Exchange (TCX) as a carbon credit trading platform, which has been launched to provide carbon credit trading-related services. The domestic carbon credit market mainly operates through two methods: exchange platform trading and over-the-counter agreement trading. On the exchange platform, companies can list their reduction credits for sale or participate in auctions, or place orders to buy the required carbon credits. The TCX platform provides matching and settlement services for buyers and sellers, improving market information transparency and transaction efficiency. 

At the end of 2023, the Taiwan Carbon Exchange completed its first carbon credit auction, selling the first batch of carbon credits and setting a series of quality standards for listed carbon credits, such as requiring carbon credits to be issued within 5 years and certified by legal issuing agencies. This shows that the regulatory authorities attach great importance to the timeliness and quality of carbon credits, ensuring that recent and reliable carbon reduction credits are circulating in the market. For large-scale emission reduction projects, exchanges also provide an auction mechanism, where sellers submit a certain amount of carbon credits for public auction, and buyers in need bid to obtain them to discover prices. On the other hand, some companies may use over-the-counter agreement (OTC), where buyers and sellers privately agree on the quantity and price of carbon credits, and then apply for allowance transfer through the reduction allowance management system. This method is often used for strategic cooperation or block transactions, allowing for flexible negotiations based on the needs of both parties, but it still needs to register the transfer in the official system to avoid double calculations and ensure public trust. From the perspective of market operations, price discovery is currently the focus of attention from all walks of life. On the one hand, the carbon fee rate (NT$300 per ton) will constitute the ceiling of carbon credit prices - if the cost of purchasing carbon credits is higher than the carbon fee, companies would rather pay carbon fees than purchase quotas, so the price of carbon credits is not expected to exceed NT$300 per ton. On the other hand, the lower limit of carbon credit prices depends on the marginal cost of carbon reduction and the supply of carbon credits. If the initial carbon credits issued are limited and demand is strong, the price may be close to the carbon fee level; if the supply is abundant or the cost of carbon reduction is low, the price may be low.

 To prevent market speculation and maintain order, the government has also set up a public information platform, the carbon credit trading announcement system. All trading and auction results are regularly announced, including quantity, price, and other information, allowing market participants to understand price trends and transaction dynamics and avoid information asymmetry. At the same time, the Ministry of Environment also emphasized that only domestically issued voluntary reduction credits and historical offset credits can be traded in this market, and carbon credits purchased abroad are not currently allowed to enter the domestic trading system. This closed management helps ensure the uniform quality of carbon credits and compliance with Taiwan's carbon reduction goals in the early stages. Taiwan's carbon credit market is still in its infancy, but various companies are actively participating: for example, traditional manufacturers are seeking to purchase carbon credits to prepare for future carbon fee compliance, while financial companies are sniffing out carbon trading opportunities and investing in trading platforms. In the future, the carbon credit market will become more active as more carbon credits are generated by emission reduction projects, rigid demand driven by the formal introduction of carbon fees, and the government may raise carbon reduction targets to release more trading space. It is expected that within a few years, carbon credit prices will gradually reflect the market's evaluation of the difficulty of carbon reduction, becoming an important signal for companies to invest in carbon reduction. For enterprises, familiarizing themselves with and utilizing the domestic carbon credit market is a key part of adapting to the "carbon pricing" era: through market transactions, companies can fulfill their carbon reduction obligations in a more economical way or realize their excess carbon reduction performance to improve resource allocation efficiency. In conclusion, Taiwan's carbon credit market mechanism has been established, and the trading methods are flexible and diverse. Enterprises should make good use of the channels provided by exchanges and management systems to meet compliance needs at the lowest cost or seize business opportunities to create new revenue streams for enterprises. 

Is Over-the-Counter (OTC) Trading Feasible in Taiwan? 

According to the "Regulations for the Management of Voluntary Greenhouse Gas Emission Reduction Projects", over-the-counter (OTC) trading is feasible in Taiwan, but it is still necessary to register the transfer of credits through the official emission reduction management system to ensure the credibility of carbon credit trading and avoid double calculations. 

1.Article 22 of the Regulations 

• for the Reconciliation of Relevant Laws and Regulations clearly stipulates that after the competent authority approves the emission reduction quota, the quota must be "allocated to the account of the designated information platform of the enterprise or government agency," that is, all carbon credits must be managed through the official system.

• This means that even if it is an OTC agreement, transfer registration must still be done through the official platform to ensure that the reduction allowance is legally transferred within the system. 

2.Article 21 of the Regulations 

• If a company applies for carbon credit trading without registration by the competent authority or is involved in violations, the competent authority has the right to revoke or cancel the reduction credit. 

• This means that OTC transactions need to be registered in the official system, otherwise the carbon credit may be invalidated. 

3.Article 18 of the Regulations 

• requires enterprises or institutions to open an official account to receive, transfer, and trade reduction credits, and both parties to the OTC transaction must also transfer funds within this account, otherwise the transaction cannot be officially recognized. 

📌How does Taiwan Over-the-Counter Agreement (OTC) work? 

1.The two sides of the enterprise privately negotiate transaction conditions, 

• transaction volume (tonnage), price, payment terms, etc.

•  It may be a transaction between long-term cooperative companies or a strategic acquisition by a bulk carbon credit purchaser. 

2.Apply for quota transfer within the official system 

• Register the transfer through the Ministry of Environment's Greenhouse Gas Reduction Quota Management System to ensure legality. 

• After both parties agree on the terms and conditions of the transaction, the seller submits the transfer application, and the buyer confirms it and reviews it with the competent authority. 

3.After the official approval, after the official transfer approval of carbon credits , 

• the reduction quota will be transferred from the seller's account to the buyer's account, and the transaction will be officially completed. 

• Transaction records will be recorded in the official system to ensure transparency.

PS. Taiwan's OTC trading restrictions 

• can be carried out, but they need to be registered in the official system to ensure public trust. 

• Foreign carbon credits are not allowed to be traded, and currently only domestically issued reduction credits are allowed to enter the trading system (Article 22 of the Measures). 

• Private transfers must not be made by avoiding official systems, otherwise carbon credits may be canceled by the competent authority (Article 21 of the Regulations).  

Chapter 6  Advantages of Obtaining Domestic Carbon Credits 

6.1 Why should companies prioritize applying for domestic carbon credits? 

With many sources of carbon credits available around the world (such as VCS or GS standard carbon credits from the International Voluntary Carbon Reduction Mechanism), companies may wonder why they should prioritize applying for domestic carbon credits. The main reason is that the compliance and local applicability of domestic carbon credits are much higher than those of international carbon credits. First of all, according to the provisions of my country's Climate Change Response Act, in the future, companies can only use domestically issued reduction credits to offset carbon fees. Therefore, if the purpose of a company is to reduce the carbon fee burden, it must obtain domestic carbon credits, otherwise even if it has a large number of international carbon credits, it cannot be used when paying. Secondly, domestic carbon credits are supervised by the Ministry of Environment, and the quality standards are transparent and closely aligned with Taiwan's carbon reduction goals. Localized carbon credits are also more integrated into corporate sustainability strategies, such as emphasizing support for local carbon reduction in Taiwan through domestic carbon projects in ESG reports, which helps shape the company's image of caring for the local environment. On the contrary, the purchase of foreign carbon credits is sometimes questioned as "capital outflow" or "does not truly benefit the domestic environment". Thirdly, in terms of transaction convenience, the transaction matching and registration of domestic carbon credits are completed on domestic platforms, without exchange rate risks and uncertainty of cross-border regulations, making it more efficient and secure for enterprises to trade in the domestic market. If domestic supply is temporarily insufficient, companies can of course consider purchasing carbon credits from the international market as supplements; However, under the premise of reasonable prices and availability, giving priority to the use of domestic carbon credits can not only meet regulatory requirements, but also directly contribute to the country's carbon reduction, which can be described as killing two birds with one stone. Finally, the government also has attitude encouragement for enterprises to purchase domestic carbon credits, and does not rule out providing relevant supporting facilities in the future, such as compliance deduction preferential ratios or incentive measures, to guide carbon fee payers to prioritize purchasing domestic quotas. In summary, under Taiwan's carbon pricing system, domestic carbon credits have irreplaceable compliance value and local benefits for enterprises, and companies should list them as the first choice. 

6.2 Compliance with Domestic Carbon Credits and International Market Links

 The biggest advantage of domestic carbon credits lies in their domestic compliance: they are reviewed and issued by the government and documented, and they have legal force in China and can be used to meet the requirements of domestic climate regulations. For example, when large emitters calculate carbon fees every year, they can declare the use of voluntary reduction credits to offset part of the costs (it is expected that the competent authority will set an upper limit on the deductible ratio to ensure the rational use of voluntary reduction credits). In contrast, carbon credits in the international voluntary carbon market are not generated in accordance with Taiwan's laws and regulations, and are not legally enforceable, but more of a voluntary commitment by enterprises. Therefore, if considered from the perspective of compliant use, domestic carbon credits are obviously more valuable. On the other hand, obtaining domestic carbon credits does not mean being out of touch with the international community. In fact, when the Ministry of Environment formulates the measures for voluntary reduction projects, it benchmarks international standards to ensure that the quality of quotas issued by Taiwan is not inferior to that of international standards. For example, it requires MRV and the principles of additionality and permanence, and adopts a methodological framework similar to that of the international one. This means that my country's emission reduction quota is essentially equivalent to international carbon credits, and it has the potential to connect with the international market in the future. According to the development of the mechanism under Article 6 of the Paris Agreement, in the future, countries can mutually recognize carbon credits through bilateral or multilateral agreements and use them for cross-border transfer to achieve their own NDC goals. Although Taiwan is not a party to the agreement, the guiding principles adopted by COP29 allow non-parties to participate in the global carbon market to promote broader international cooperation on carbon reduction. Therefore, if China negotiates cooperation with friendly countries, it can also transfer part of its domestic carbon credits abroad to support other countries' emission reduction commitments in accordance with Article 6.2, or vice versa, introduce foreign carbon credits to help Taiwan meet the standards. In other words, high-quality domestic carbon credits have the opportunity to become one of the trading commodities in the international carbon market in the future. Especially when there is an imbalance between supply and demand, the domestic carbon credits held by companies may even be exported to other markets, creating business opportunities. At the same time, with the expansion of the CORSIA mechanism and voluntary market in the international aviation industry, Taiwan's carbon credits may also flow into these markets after certification, increasing liquidity. Of course, at this stage, domestic carbon credits are mainly focused on domestic use, but in the long run, companies can pay attention to how the government plans to align with international standards, such as whether to establish dual registration controls for carbon credits and negotiate international mutual recognition. In general, domestic carbon credits not only meet national compliance, but also are ready for international connection in terms of quality. Companies give priority to obtaining domestic carbon credits, which not only allows them to establish themselves in local compliance but also preserves the possibility of entering the international carbon market in the future. Once international connectivity channels are opened, domestic carbon credits may be bullish, and companies will not only hold regional certificates, but also part of global carbon assets. 

6.3 The Integrated Value of Carbon Credits and Corporate ESG Sustainability Reporting In corporate sustainability reporting and ESG information disclosure, greenhouse gas emissions and carbon reduction measures have always been key disclosure items. As a document proving carbon reduction achievements, carbon credits can add a lot of color to a company's ESG report. First, when companies explain their greenhouse gas management performance in their annual reports or sustainability reports, if they can cite the obtained reduction quotas to support the emission reduction results, the data will be more credible. For example, companies can indicate next to the carbon emission table: "This year, X tons of CO2e emissions were offset through the reduction quota issued by the Ministry of Environment", emphasizing that their carbon reduction actions have been recognized by authoritative organizations. This is more convincing than just claiming how much carbon reduction measures are invested. Secondly, obtaining carbon credits means that the company's carbon reduction efforts have exceeded the general level and reached the level of tradability, which highlights the company's environmental management capabilities. In the eyes of ESG rating agencies, companies with certified carbon credits demonstrate a transparent and credible carbon reduction path, contributing to higher climate performance scores. At the same time, many international investors are concerned about the progress of companies towards net zero, and the use of carbon credits can be used as one of the important strategies in the transition period. Companies can elaborate on how to "reduce emissions first, carbon credits offset second" strategies in the report and incorporate carbon credits into the climate change risk management framework. For example, first list how much the company's emission reduction measures have been reduced, and then explain how the remaining part can be offset through the purchase or self-production of carbon credits to achieve the carbon neutrality goal. This clear logic will receive positive reviews from regulators and stakeholders. In addition, if companies participate in international initiatives (such as the RE100 Renewable Energy Commitment or the SBTi Net Zero Standard), they can also use carbon credits to offset their results when disclosing Scope 2 or Scope 3 emissions. However, it should be noted that international standards often emphasize the priority of reduction and strict calculation of offsets, and companies must follow the latest standards, such as the ISSB's IFRS S2 standard, which requires companies to separately disclose the use of carbon credits, and cannot directly subtract them from the emission figures to avoid misleading. Therefore, companies should be honest and transparent about the use of carbon credits in their reports, such as describing how many local carbon credits they purchased, which projects they came from, what emissions they offset, and how they plan to gradually reduce their reliance on carbon credits in the future. This information not only meets ESG disclosure requirements but also demonstrates the company's emphasis on "avoiding greenwashing." Finally, companies can obtain carbon credits through domestic voluntary reduction projects, which can also be disseminated as an ESG story. Many companies will set up a special chapter in the report to introduce innovative environmental protection projects, and if the company's project is successfully issued carbon credits, it can be shaped into a highlight case, highlighting how the company can reduce carbon emissions for society and receive feedback under the government mechanism. This kind of case can enhance employees' sense of honor and strengthen the public's awareness of the company's commitment to sustainability. In summary, carbon credits, as a quantitative evidence of corporate carbon reduction efforts, greatly enrich the connotation of ESG sustainability reporting. By properly integrating carbon credit information, companies can more comprehensively showcase their achievements and plans on the net-zero transition path to stakeholders, further solidifying their image as sustainable leaders  

Chapter 7  How do carbon credits bring profits to companies? 

7.1 Development of the Carbon Trading Market and Opportunities for Corporate Participation 

The global carbon trading market has expanded rapidly in recent years, and carbon credits have become one of the special commodities with financial value. For businesses, participating in the carbon market is not only for compliance but also contains potential profit opportunities. As countries strengthen climate policies, the demand for carbon credits is expected to continue to increase, and carbon prices will show an upward trend in the medium to long term. If companies can deploy carbon reduction projects and generate carbon credits early, they are expected to reap generous returns when carbon prices rise in the future. For example, if the market price rises to 300 yuan per ton in a few years, the difference between carbon credits and carbon credits for each unit sold will be 200 yuan. This essentially becomes a new source of income for enterprises, known as "carbon asset monetization". From the perspective of Taiwan, the launch of the carbon fee system and the establishment of the Taiwan Carbon Exchange mark the official launch of the domestic carbon market. In this initial stage, market participants are relatively limited, creating arbitrage space for first movers. For example, companies that successfully acquire carbon credits in the early stages can lead the initial transaction price setting due to the scarcity of carbon credit supply in the market, and even establish a market price benchmark through the first batch of transactions. Some forward-looking companies have publicly stated that they will actively invest in reduction projects, hoping to obtain considerable benefits from the sale of carbon credits. For example, traditional industries such as paper and cement are converting carbon emissions reduced by carbon sinks or energy-saving transformations of existing forest lands into carbon credits, and it is expected that the market demand for these carbon credits will increase significantly when carbon fees are implemented. At that time, these companies will not only reduce their own carbon fee expenses, but may also sell surplus carbon credits at high prices to peers who are lagging behind in carbon reduction. This "leader benefits" situation undoubtedly motivates more companies to invest in carbon reduction in order to share in the dividends of carbon trading. In addition, participating in the carbon market also brings new opportunities for companies to invest in mergers and acquisitions. Some companies may focus on their main business with limited carbon reduction, so they consider investing in external carbon reduction project companies or purchasing carbon credits developed by other companies to balance their carbon accounts.

 At the same time, financial institutions have also begun to launch products such as carbon funds and carbon credit trusts, through which companies can participate in indirect profits in the carbon market. From the perspective of R&D and innovation, rising carbon prices will stimulate market demand for low-carbon technologies, and companies invest in the development of innovative technologies such as carbon capture and utilization (CCUS) and direct air carbon capture (DAC), which can not only reduce emissions and obtain carbon credits, but also export technologies or license patents in the future to obtain additional benefits. In general, the participation opportunities brought by the carbon trading market to companies are diverse: as a seller, they can directly profit from the sale of carbon credits; As a buyer, you can avoid risks, save compliance costs, and make indirect profits; As an investor, you can lay out carbon assets and low-carbon technologies to share the growth benefits. As the market matures and trading volume increases, carbon credits will become an important asset or liability in the balance sheet of enterprises, and companies actively participating in the carbon market are expected to seize the opportunity in this new economic game and achieve new expansion of business territory.  

7.2 How can businesses reduce their operating costs through carbon credits? 

The most direct financial benefit of carbon credits to companies is to reduce potential carbon costs. Under policies such as carbon fees and carbon taxes, greenhouse gas emissions will become a fixed cost expense for enterprises. The existence of carbon credits provides an effective way for companies to reduce this cost. Specifically, for every unit of carbon credits held by a company, a company can offset 1 metric ton of CO2e emissions, thereby exempting them from paying carbon fees corresponding to that ton of emissions. Taking Taiwan's estimated carbon fee of NT$300/ton as an example, if a company emits 10 tons per year, it would have to pay a carbon fee of 3,000 yuan per year. Assuming that the company obtains 2 tons of carbon credits through voluntary reduction projects, it can deduct the corresponding emissions and save 600 yuan in carbon fees. In other words, these 2 tons of carbon credits directly save 600 yuan in operating costs for enterprises. If the company itself is a net seller of carbon credits, the income is even more substantial. For example, a company that actually emits 5 tons but holds 10 tons of carbon credits, after offsetting its own needs with 5 tons, the remaining 5 tons can be sold to other companies, that is, realizing income. At the same time, the carbon fee saved by self-deduction is also an invisible benefit. Taken together, selling 5 tons of carbon credits assumes that selling 250 yuan per ton can earn an income of 1250, plus saving 1500 yuan in carbon fees (300*5 yuan), which will bring a total of 2750 yuan to the company's financial improvement, which can almost offset some of the carbon reduction investment costs or even have surpluses. Carbon credits also help mitigate the risk of carbon price fluctuations. If the carbon fee rate gradually increases in the future (such as from 300 yuan to 500 yuan/ton), or if the soaring international carbon price leads to supply chain pressure, the carbon credits held by companies will become a buffer. When carbon prices are high, companies can choose to use more of their own carbon credits to offset emissions, reducing the need to purchase allowances from the market at high prices or pay expensive carbon fees. This is somewhat similar to companies holding inventory to cope with rising material prices, which can be considered a carbon storage strategy. Especially for energy-intensive industries, the cost of carbon credit reserves is much lower than passive payment in the future, which is a pre-hedging behavior. From the perspective of financial statements, although the current accounting standards for the presentation of carbon credit assets are still developing, companies can calculate the cost savings due to carbon credits on their internal management accounts to evaluate the return on investment of carbon reduction projects. Usually, if a carbon credit project can recover its initial investment within a few years with the sum of the income from selling carbon credits + carbon fee savings, it is cost-effective for the company. 

In addition, carbon credits can also be exchanged for indirect benefits such as energy conservation subsidies. Currently, some energy conservation and carbon reduction subsidy programs in Taiwan consider obtaining carbon credits as a bonus condition, which means that if companies can obtain carbon credits, it will be easier to obtain other government incentive funds, further reducing overall operating costs. In addition to the direct monetary benefits, the cost reduction of carbon credits is also reflected in reputation and business opportunity costs. For example, if a company does not take the initiative to reduce carbon emissions and obtain carbon credits, it may be deducted points or lose opportunities due to excessive carbon emissions in international bidding or customer cooperation in the future (this is a hidden cost). On the contrary, having carbon credits can show a carbon-neutral and low-emission image, which may help companies win bids or orders and avoid lost business opportunities. Although this aspect is difficult to quantify, it has far-reaching implications for long-term operations. In summary, carbon credits provide businesses with a multifaceted path to cost reduction: immediate carbon fee reduction, long-term risk hedging, and reduced opportunity costs due to improved goodwill. By making good use of carbon credits, companies can turn the pressure of carbon reduction into financial benefits, further strengthening their overall competitiveness.  

7.3 How do carbon credits enhance corporate brand value and market competitiveness?

 In a highly competitive market, a company's environmental image and commitment to sustainability have become an important component of brand value. The acquisition and use of carbon credits can significantly enhance the performance of companies in this area, which in turn translates into market competitiveness. Firstly, having carbon credits means that companies are actively investing in carbon reduction and achieving results, which can strengthen the green brand image. Consumers and investors are increasingly concerned about corporate attitudes towards climate change, and when a company can claim that it has not only reduced emissions, but also obtained government-certified carbon credits, it is undoubtedly an industry-leading environmental prowess. This has a positive impact on enhancing brand loyalty and attracting ESG-oriented investments. Many international companies such as Google and Microsoft have achieved carbon neutrality through the purchase of carbon credits many years ago, creating an image of environmental pioneers and winning the recognition of the younger generation of consumers and the market. If Taiwanese companies can follow this trend, they can also establish a good reputation for sustainable brands in the international market. Secondly, carbon credits help companies stand out in supply chain competition. As multinational companies require suppliers to reduce carbon emissions or even become carbon neutral, suppliers with carbon credits undoubtedly have an advantage. Because when customers request supply chain products to come with carbon footprint data or carbon reduction plans, companies with carbon credits can propose solutions to offset the carbon footprint of their products with carbon credits, providing products or services with near-zero emissions. This will meet the requirements of international brands for a green supply chain, giving the business a priority position in the supplier list. For example, after the EU CBAM is on the road, European buyers may be more inclined to buy materials from carbon-neutral suppliers. If a steel or chemical plant can provide its export products with carbon credits to offset all emissions, achieving "carbon-neutral steel" or "carbon-neutral chemicals", it will greatly enhance the competitiveness of its products in the European market. On the contrary, those companies with high carbon emissions and no carbon credit compensation will be at a disadvantage in international competition or even eliminated by the market. Furthermore, in terms of innovative business models, carbon credits also bring new opportunities. Some companies have begun to commercialize carbon reduction results, such as launching carbon-neutral products, carbon-neutral logistics, etc., and embedding the cost of carbon credits into the price. Although consumers may pay a little more for this, they are willing to pay for it because they can get the psychological satisfaction of zero-carbon products. In this case, carbon credits actually create premium space for companies and increase the added value of products. At the same time, enterprises actively participate in carbon credit trading and carbon reduction, which can deepen their interaction with the government and society, obtain policy support or incentives, and strengthen their competitive networks. For example, local governments may give priority to cooperating with companies with carbon neutrality performance in public projects, or the media is willing to do more publicity for their carbon reduction stories, which have a multiplier effect on the corporate brand. Finally, the environmental leadership reflected by carbon credits can also enhance the talent attractiveness and cohesion of enterprises. More and more outstanding talents are looking to join meaningful and responsible enterprises. If companies can prove their sustainable actions by obtaining carbon credits and achieving carbon neutrality, it will be easier to attract young talents who agree with the concept of sustainability to join, and at the same time, increase the sense of recognition of the company's mission among existing employees. These intangible assets will eventually translate into long-term competitiveness for businesses. In summary, carbon credits bring not only direct economic benefits to companies but also comprehensive brand and competitive advantages - from market image, supply chain status, product premium to talent reputation, all of which are helpful. Companies that are the first to obtain carbon credits and make good use of them are equivalent to putting on the aura of a "low-carbon leader" and gaining a place in the global torrent of net-zero transition.   

Chapter 8 Analysis of successful enterprise cases  

8.1 Cases of Taiwanese Companies Participating in Voluntary Reduction Projects

 Since the Ministry of Environment promoted voluntary greenhouse gas reduction projects, many domestic companies and agencies have responded to the participation, successfully obtaining carbon credits and demonstrating carbon reduction benefits. For example, the Land Bank of Taiwan took the lead in applying for carbon credit projects as a company, and financial companies such as Changhua Bank and Shin Kong Life Insurance followed suit, indicating that the financial industry is not only concerned about its own indirect emissions but also actively supports carbon reduction projects. Most of these financial companies choose to cooperate with environmental groups or local governments on afforestation carbon sink projects, absorbing carbon dioxide through tree planting to obtain carbon credits as a way to achieve carbon neutrality in their operations. On the other hand, the Water Resources Administration of the Ministry of Economic Affairs, as a government agency, is not left behind in implementing tree planting plans for the land under its management. For example, the Water Resources Department has promoted large-scale afforestation in the Beiyuan Park of Shimen Reservoir and the Dongpu Mosquito Creek Wetland, both of which applied for voluntary reduction projects in 2022 and passed registration, successfully creating a reduction quota for natural carbon sinks. 

These cases highlight that even financial services industries or government entities with relatively low emissions can generate carbon credits by purchasing land and planting trees, which can be used to offset their own emissions or support national carbon reduction goals. The participation of the financial industry has also led to a new model of corporate CSR combined with carbon credits: banks and insurance companies regard afforestation carbon credits as public welfare investments while enhancing their green image, which can be described as killing two birds with one stone. In addition to the service industry and the public sector, there are also pioneers in traditional industries. In recent years, Taiwan Cement Corporation has actively invested in the circular economy and carbon capture, not only collaborating on waste treatment and carbon reduction in cement kilns, but also investing in afforestation at home and abroad, controlling a large number of carbon sink assets. Taiwan Cement Corporation and many papermaking companies (such as Zhenglong, Rongcheng, Hua Paper, and Yongfengyu) have adopted strategies such as land purchase and afforestation to lay out carbon credits in advance . Since the paper industry itself has forest land resources, they can not only supply pulp but also generate carbon sink income through sustainable management of plantations, which can be said to be a dual-purpose operation for industrial innovation. As part of the supply chain of international brands, these large-scale paper mills have invested in carbon reduction layouts first, holding carbon credits and carbon sinks, and are known as pioneers in Taiwan's carbon credit market. With the implementation of CBAM and the introduction of carbon fees in Taiwan, these companies that accumulate carbon credits early are expected to effectively offset some of the impact and even make profits when selling excess carbon credits. Looking at the electronic technology industry, although TSMC currently mainly reduces carbon emissions by purchasing international renewable energy certificates (T-REC and foreign green electricity), it has also begun to evaluate investing in domestic voluntary reduction projects, such as energy conservation projects or new energy investments from supply chain partners, to obtain carbon credits to offset indirect emissions that are difficult to reduce. Some high-tech manufacturers include energy efficiency improvement projects in the scope of voluntary reduction applications, such as replacing factory air conditioning systems and optimizing process electricity consumption, in an attempt to convert them into carbon credits. Some have already been successfully piloted, and plans are planned to expand to more plants. These cases illustrate that regardless of industry, Taiwanese companies can find suitable carbon reduction project types to participate in the carbon credit mechanism. From afforestation, waste to energy, and renewable energy generation, to process improvement and equipment upgrades, there is corresponding methodological support in each field. Companies can learn from the experience of pioneers, evaluate their own advantageous resources, and choose appropriate carbon reduction pathways to accumulate carbon credit assets for the company. At the same time, by publicly sharing project experiences (such as publishing in industry associations or media), healthy competition and cooperation can be formed among companies, jointly expanding the depth and breadth of participation in Taiwan's carbon credit market. 

8.2 How can international companies create a competitive advantage through carbon credits? 

Internationally, many leading companies have already incorporated the use of carbon credits into their competitive strategies to gain market advantages. In the technology industry, Google has achieved carbon neutrality through the purchase of carbon offsets since 2007, becoming one of the world's first "zero-carbon companies", which has established a strong environmental brand image in the minds of consumers and has also led other Silicon Valley companies to follow suit. Microsoft also announced in 2020 that it would achieve "carbon negative emissions" by 2030 and established a $1 billion climate innovation fund to invest in carbon removal technology. To this end, Microsoft purchases high-quality carbon credits in large quantities (such as permanent storage credits for direct air capture) to offset its historical emissions, which not only fulfills its commitments but also seizes the opportunity to invest in related technologies. Through carbon credits, Microsoft strengthens its voice in the carbon removal market in the future, and can enjoy a competitive advantage when the technology matures. The aviation industry is another international industry that makes extensive use of carbon credits. Aviation is a difficult area to reduce emissions, and many airlines (such as Delta and British Airways) have launched voluntary carbon offset programs for passengers, allowing passengers to purchase carbon credits to offset their flight carbon footprint for an additional fee. These companies also purchase carbon credits such as forest protection themselves to neutralize their operational emissions. 

Although some carbon credits have been questioned in recent years, airlines are still committed to screening high-quality projects to ensure offset effectiveness to uphold their brand promise of "flying with you and caring for the planet." This strategy has won favor among environmentally conscious travelers and has become a marketing selling point. After the EU is about to force the aviation industry to join the CORSIA mechanism, airlines that accumulate carbon credits early can also adapt to the regulations more smoothly, reduce the cost of purchasing additional allowances, and enhance their financial competitiveness. In the product manufacturing industry, Patagonia, a well-known outdoor clothing brand, has long called for environmental protection, not only reducing carbon in the supply chain but also investing in carbon credit projects such as ecosystem restoration and integrating carbon credits into product promotion (launching product carbon neutrality statements). This deep green image allows it to have a loyal customer base in the market and form a unique competitiveness. Automakers such as Volvo and Mercedes have also begun to offer "carbon-neutral car delivery" solutions, that is, a certain amount of carbon credits are purchased for the owner when a new car is delivered, offsetting the carbon footprint of the car being manufactured, catering to consumers' expectations for the environment, and enhancing brand added value. In terms of the energy industry, oil and gas giants such as Shell and BP, although they are high-emission industries, are also actively reshaping their image through carbon credits. They invested heavily in the development of carbon capture and storage (CCS) projects, from which they obtained a large amount of carbon credits, not only to offset their own emissions, but also to set up a carbon trading department to sell them externally. These companies are trying to transform into "integrated energy providers" and provide customers with not only oil and gas in the future, but also carbon neutral solutions and carbon offset services, so as to remain competitive in the era of low-carbon economy. BP even claims to achieve net zero by 2050, including offsetting all post-use emissions from sales products, which will require huge carbon credit support. Early layout gives them a first-mover advantage in the market and can dominate part of the future carbon trading market. Summarizing international experience, we can see that the common point is that carbon credits are regarded as strategic resources. There are many ways for companies to create competitive advantages through carbon credits: some directly improve their brand image and capture green market share; some hedge compliance costs to enhance financial flexibility; some invest in emerging technologies and markets early, and are stuck in the commanding heights of the future industry. Taiwanese companies can learn from this and think about how to use carbon credits to go beyond pure compliance and exert greater business value. For example, electronics companies can learn from technology giants and use carbon neutrality as a corporate culture and marketing selling point; Chuan Chan can learn from energy companies and include carbon credits in long-term transition portfolios. Under the global pursuit of net zero, carbon credits will increasingly become a watershed in the competition between enterprises and companies, and those who make good use of carbon credits will gain obvious international competitive advantages. 

8.3 Enterprise Experience Sharing and Application Suggestions 

Based on the above cases and domestic and international experience, the following are some suggestions for companies when applying for and using voluntary reduction projects: 

1. Early planning and early action: The accumulation of carbon credit assets is not something that can be achieved overnight, and it needs to go through processes such as project development, review, implementation, and verification. The sooner you start planning, the better you can get a head start. It is recommended that companies incorporate carbon reduction projects into their medium- and long-term strategies, identify feasible carbon reduction opportunities early, and set aside budget investments. Projects that pass early applications may also enjoy more resource guidance and less competition from the competent authorities, increasing the pass rate. 

2. Make good use of official resources: The Climate Change Agency of the Ministry of Environment has established tools such as the "Corporate Greenhouse Gas Emissions and Voluntary Reduction Information Platform" for enterprises to use. Enterprises should be familiar with the operation of the platform before applying, and can consult registered project information, learn the content of other people's projects and reduction methods. In addition, the Ministry of Economic Affairs and the Ministry of Environment both have counseling programs (such as the Demonstration Counseling Project of the Business Development Agency). These programs can help companies write plans, match inspection agencies, and subsidize part of the costs. Actively applying for government guidance not only reduces the time cost of enterprises exploring on their own, but also demonstrates their determination to invest in carbon reduction, which can be described as killing two birds with one stone. 

3. Pay attention to the quality of project documents: Project plans and monitoring reports are the key to review, and companies should invest enough professional manpower to write them, and high-quality documents can greatly reduce the time for round-trip supplementary documents. It is recommended to introduce third-party consultants or academic research units to assist to ensure that methodological selection and reduction calculations are accurate, additive arguments are well-founded, and environmental impact assessments are complete. At the same time, communicating with possible inspection agencies in advance and obtaining professional advice before the document is finalized can improve the pass rate. 

4. Establish an internal carbon management system: Successful carbon credit projects are not just one-time actions but should be integrated into the company's daily operations. Companies can implement management systems such as ISO 14064 and GHG Protocol to regularly measure emissions and identify reduction opportunities as the basis for continuously developing carbon credit projects. and a cross-departmental carbon management working group can be established to track domestic and foreign carbon policies and carbon market information, and adjust carbon reduction and carbon credit strategies on a rolling basis. 

5. Gradually expand the project portfolio: It is recommended for companies to start with projects with mature technology and moderate scale, such as energy efficiency improvement and small-scale renewable energy, to gain experience. After accumulating internal expertise, you can try larger-scale or innovative projects to form a diversified carbon credit portfolio. Diversified layouts can diversify risks, such as changes in the methodology or policies of a certain type of project, and other projects support carbon credit output.

 6. Carefully evaluate international carbon credits: If companies have additional resources, they can also consider purchasing international carbon credits as a supplement. However, be sure to choose high-quality items and be careful not to duplicate them with domestic applications. International carbon credits are currently not deductible for domestic carbon fees, but they can be used for voluntary carbon neutrality claims. Enterprises should manage them separately to avoid mixing domestic quotas to comply with regulations and disclosure requirements.

 7. Transparent communication of external results: When companies obtain carbon credits, it is recommended to actively disclose this achievement in their annual reports, official websites, and media to strengthen their positive image. At the same time, it also declares to the supply chain and customers that companies have the ability to manage carbon risks and increase confidence in cooperation. Sharing experiences externally can also demonstrate corporate leadership and enhance reputation. 

In summary, the key to successfully applying for and making good use of voluntary reduction projects for enterprises lies in early layout, leveraging strength, steady implementation, and transparent communication. Following these suggestions can help companies avoid detours on the road to carbon credits and more effectively transform carbon reduction actions into their own niches and values.  

Chapter 9  Conclusions and Future Prospects   

9.1 How should companies respond to future changes in carbon market policies?

 Looking ahead, carbon market-related policies are poised to evolve, and companies must remain agile and respond to potential changes early. Firstly, carbon fees may gradually increase or translate into stricter carbon pricing mechanisms. For example, the government may raise the carbon fee standard in the next few years or introduce a cap-and-trade system to replace the simple levy. Companies should continue to pay attention to domestic legislative developments and conduct scenario analysis: When the carbon fee rises from 300 yuan per ton to 500 yuan or even 1,000 yuan, what is the impact on the company's operating costs? Do you need to invest more in carbon reduction or purchase carbon credits to control costs? Only by rehearsing in advance can we calmly respond to the implementation of actual policies. Secondly, international policies such as the EU CBAM, possible carbon tariffs in the United States, and carbon regulations for international air shipping will indirectly affect Taiwanese companies. Companies should pay attention to global supply chain trends, especially changes in carbon regulations in major export markets, and adjust product strategies and carbon credit preparations in a timely manner. For example, we have established a dedicated carbon-neutral product line for the EU market to purchase carbon credits in advance to meet customer needs. Furthermore, enterprises need to pay attention to the development of domestic carbon credit market rules. As the market matures, the competent authority may set more regulations on the use of carbon credits, such as the upper limit on the proportion of carbon credits that can be deducted from carbon fees each year, or the validity period limits for carbon credits from different sources. In addition, the Environmental Protection Agency may successively announce new methodologies and update the calculation parameters of existing methodologies, etc., and the registered projects of enterprises may need to be adjusted accordingly. To this end, companies should designate a dedicated person or outsourced consultant to continuously track the announcements of the Ministry of Environment, including methodological revisions, detailed rules of carbon fee deduction methods, published quota prices, and transaction status, etc., to ensure that the company's carbon credit strategy complies with the latest regulations. For policy consultation occasions (such as carbon fee rate review meetings, public hearings, etc.), enterprises should also actively participate in advocating for reasonable system design and grasp the future direction from it. In the face of future uncertainties, companies should strengthen their internal carbon management mechanisms and incorporate carbon price fluctuations and policy changes into risk management. Introducing an internal carbon price is a method: companies can set an internal simulated carbon price for investment decision evaluation (shadow pricing) to let various departments feel the pressure of carbon costs in advance and promote carbon reduction investment. If there is a sudden change in policies in the future, the impact on adaptation will be less due to the existing internal carbon price mechanism. In short, "preparing for a rainy day" is the only way for companies to respond to changes in carbon market policies. Only by regularly reviewing policy trends and flexibly adjusting carbon credit holding and use strategies can we turn challenges into opportunities and maintain competitive advantages in the face of changes. 

9.2 Future Corporate Carbon Reduction Strategies and Carbon Credit Trading Market Development Outlook Under the 2030 and 2050 net-zero vision, carbon reduction and carbon credit will become the norm. In the future, companies will more deeply incorporate carbon reduction into their core strategies, setting science-based emission reduction targets (SBTs) to reduce absolute emissions year by year. At the same time, companies will also plan a supplementary carbon credit pathway to offset residual emissions that cannot be eliminated to achieve net zero by the target period. It is foreseeable that direct emission reduction will still be the main axis, such as comprehensive procurement of renewable energy, process innovation, circular economy, etc., and these measures will bring a large number of their own emission reduction effects. Carbon credits will play the role of the "last mile" for emissions that are technically or economically difficult to eliminate (such as certain industrial processes or transportation fuels). At that time, the supply of carbon credits may not meet the demand, so companies must participate in project development in advance rather than buying from the market at high prices when the time comes. Large enterprises may establish their own carbon sink bases (such as corporate forests or carbon capture equipment), while small and medium-sized enterprises may form groups to invest in carbon credit projects and share the benefits and quotas. The carbon credit trading market will become increasingly active due to more participants and higher demand, and it is expected that the size and items of transactions will grow significantly. The domestic market may introduce derivatives similar to financial markets, such as carbon futures and carbon forward contracts, allowing companies to hedge against future carbon price risks. There may also be regional or industrial carbon alliance transactions, such as an industry association creating an exclusive carbon credit platform for internal trading by members to meet industry needs more refinedly. On the international front, the gradual implementation of the mechanism of Article 6 of the Paris Agreement will usher in the era of global carbon credit trading. If Taiwan can strive to join, companies will have the opportunity to sell domestic carbon credits abroad, or purchase foreign carbon credits to return to China for offsetting, and the flow and price of carbon credits will be more flexible. For enterprises, future carbon reduction strategies need to be more comprehensive: in addition to technical emission reduction plans, there must also be a clear carbon credit management plan, including when and how many carbon credits are needed, how to obtain them, cost estimates, risk backup, etc. Companies may have new internal functions, such as "carbon asset managers," who are responsible for managing the company's carbon credit portfolio. Carbon credits will also be further integrated into corporate sustainability reporting and rating systems, and even affect financial conditions such as corporate credit and insurance (banks may require high-emission lenders to purchase certain carbon credits). Overall, the future carbon credit trading market will be more mature, multi-layered, and international. corporate carbon reduction will be expanded from "how much to reduce by itself" to "how much to reduce by combining carbon market mechanisms". For Taiwanese companies, this is both a challenge and an opportunity: the challenge lies in the need to rapidly improve carbon reduction technologies and market operation capabilities, and the opportunity lies in sharing the dividends of the global decarbonization economy through the carbon market. Only those enterprises that lay out early and actively innovate can be invincible in the future low-carbon economy.  

9.3 How can companies incorporate carbon credits into their long-term sustainability strategies?

 As an important tool for companies to move towards sustainable development, carbon credits should be included in their long-term strategic planning to ensure maximum value in the future net-zero transition process. Here are a few key points for companies to integrate carbon credits into their long-term strategies: 

First, integrate carbon credit targets into the company's net-zero roadmap. When setting 2050 net-zero or medium-range emission reduction goals, companies may wish to plan the amount of carbon credits they need to use at each stage in the future. For example, a company can develop an "emission reduction curve" that expects internal emission reductions to reach X% by a certain year, and the remaining Y% will be offset by carbon credits, gradually reducing Y% as technological advances. Treating carbon credits as part of the target system helps in early resource allocation. 

Second, establish carbon credit reserves and investment plans. Just as companies have raw material inventories and safety stocks, carbon credits can also be managed by analogy. Companies can decide to invest part of their surplus in purchasing/developing carbon credits every year to build a carbon credit inventory pool that increases year by year. This pool can come in handy when it is difficult to eliminate all emissions in the future. It is also an investment: if carbon prices rise in the future, this pool of carbon credits will also increase in value. Companies can even set up internal "carbon funds" dedicated to carbon credit-related investments and transactions. 

Third, incorporate carbon credits into corporate financial risk management. When evaluating long-term risks, consider possible future carbon cost pressures and the impact of carbon credit market price fluctuations on companies. Formulate corresponding countermeasures, such as signing long-term carbon credit procurement agreements to lock in prices, or sharing carbon credits through industrial cooperation to reduce uncertainty. 

Fourth, pay attention to carbon credit issues at the level of corporate governance. The board of directors should regularly listen to the company's carbon reduction and carbon credit strategy reports as part of the company's sustainability performance. Consider setting up a task force under the Sustainability Committee or Risk Committee to oversee carbon credit management to ensure that senior management has sufficient awareness and support for it. In addition, a transparent information disclosure mechanism has been established to explain the company's carbon credit holdings, sources, and uses to investors to enhance trust. 

Fifth, seek synergies and integrate carbon credit strategies with other ESG goals. For example, while pursuing carbon reduction, companies can choose to invest in carbon credit projects that combine biodiversity and social benefits (such as community afforestation and carbon projects related to international poverty reduction) to achieve dual climate and social goals, enriching the connotation of sustainable value. Finally, stay flexible and learn. The carbon market is still in a stage of rapid development, with new mechanisms, methods, and business opportunities emerging. The company's long-term strategy also needs to keep pace with the times and be reviewed and adjusted from time to time. Only by actively participating in domestic and international carbon market exchanges, learning from the experience of benchmark companies, and cultivating internal carbon credit professionals can we seize opportunities in the changing situation. 

In conclusion, incorporating carbon credits into long-term sustainability strategies is an inevitable choice for companies to adapt to the future low-carbon economy. This requires companies to operate carbon credit assets with a forward-looking perspective and systematic thinking, just as they value managing financial assets and human capital. Only in this way can companies move steadily and steadily on the journey towards net zero, achieving a win-win situation of economic benefits and environmental sustainability.  

Chapter 10  Source 

Companies participating in voluntary reduction projects need to comply with the following key regulations: 

• The Climate Change Response Act regulates Taiwan's legal framework for greenhouse gas reduction, establishing carbon credit trading and voluntary reduction mechanisms.

•  The "Regulations on the Management of Voluntary Greenhouse Gas Reduction Projects" clearly stipulates the application qualifications, review procedures, certification mechanisms, and carbon credit trading methods for emission reduction projects.

•  The Greenhouse Gas Emission and Voluntary Reduction Information Platform is managed by the Climate Change Agency of the Ministry of Environment and provides an official platform for companies to register their emissions and reduction data.