The manufacturing industry is responding to the implementation of the U.S. CCA Clean Act in 2024 

I. Introduction to the CCA Clean Act in the United States 

1. Origin of the bill 

The Clean Competition Act, also known as the Clean Competition Act, is one of the most representative environmental regulations in the United States, first enacted in 1970 to protect and improve air quality to ensure the health of humans and the natural environment. The bill is constantly being revised and updated, and currently contains a number of important regulations, the main contents of which will be discussed in detail below. 

2. The scope of air regulation goes beyond greenhouse gases 

First of all, the CCA has very strict control over air pollutants. The bill lists a variety of pollutants, such as sulfur dioxide, nitrogen oxides, volatile organic compounds, etc., and sets strict emission standards and limits. The standards aim to reduce the damage of these pollutants to human health and the environment, and to promote improved air quality. The CCA requires states to develop and enforce air quality standards. Based on these standards, states are required to monitor and report on local air quality and develop appropriate improvement plans based on the monitoring results. This specification ensures that states can effectively address local air pollution issues and take timely measures to improve environmental quality. 

3. Incentivize energy transition and climate neutrality 

CCA encourages technological innovation and the use of clean energy. The bill provides financial incentives to encourage businesses to invest in eco-friendly technologies and clean energy industries to reduce air pollution. These incentives include environmental tax incentives, environmental protection subsidies, etc., aiming to promote the development and application of green technologies to achieve a win-win situation between economic development and environmental protection.

 4. Promote green transportation 

In addition, the CCA also emphasizes the regulation of emissions from mobile sources. The bill calls for the development of vehicle emission standards and promotes innovation in energy-saving and environmentally friendly technologies for transportation vehicles such as cars and trucks. The implementation of this specification helps reduce the adverse effects of transportation on air quality while promoting the development and application of green transportation. The CCA Clean Act provides a comprehensive legal framework for protecting and improving air quality through the regulation of air pollutants, the development and enforcement of air quality standards, the encouragement of clean energy, and the control of emissions from mobile sources. The implementation of these regulations is of great significance for promoting environmental protection, ensuring people's health, and sustainable development, while also providing useful reference for other countries to formulate and improve similar environmental regulations. 

II. Strategies for Responding to the CCA Clean Act for Exports to the United States 

1. Adjustment of U.S. Market Strategy 

With the gradual implementation of the EU Carbon Border Adjustment Mechanism (CBAM) and the preparation of the U.S. version of the Carbon Tariff-Clean Competition Act (CCA), Taiwan's related industries are facing challenges that cannot be ignored. In this scenario, Taiwan's focus should be on how to respond to possible impacts and make corresponding strategies and adjustments.

 2. Impact level and industry 

As far as affected industries are concerned, both CBAM and CCA will have a direct impact on energy-intensive industries. For example, sectors such as manufacturing, energy production, and high-emission industries may face tariffs on imported products, increasing their cost pressures. Taiwan's semiconductor industry, a key pillar of the country, may also be affected, especially for production processes that require significant energy consumption. In addition, industries such as chemicals, steel, and plastics may also face pressure to impose carbon taxes on imported products.

 3. Differences between CBAM and CCA

There are some key differences between CBAM and CCA. First of all, in terms of implementation time, CBAM has been piloted since October this year, while CCA is expected to be launched in 2024, giving Taiwanese companies more time to prepare for response. Secondly, CBAM focuses on the taxation and monitoring of carbon emissions, while CCA is broader and includes requirements for other environmental standards and regulations beyond greenhouse gases. CBAM gives importers enough adaptation period to adapt to the transition period of nearly 3 years, and after the official implementation of the fourth year, there is a phased tax increase period to gradually reduce the free quota, while the CCA adopts a phased increase in carbon tax every year at the beginning of the implementation period. 

In the face of these challenges, relevant companies in Taiwan should strengthen carbon emission supervision and research and development of carbon reduction technologies to comply with CBAM and CCA requirements. At the same time, cooperation with international environmental protection organizations and international advocacy organizations should be strengthened, and international environmental cooperation and agreements should be actively participated in to improve the environmental protection or climate response standards of products to enhance competitiveness. In addition, the government should strengthen policy guidance, encourage enterprises to undergo green transformation, and provide corresponding green subsidies and tax reduction measures to promote the sustainable development of the industry. 

 III. The scope of the U.S. CCA Clean Competition Act and CBAM EU Carbon Border Adjustment Mechanism 

1. CCA covers a wide range of industries and is also broader than CBAM, 

and the Clean Competition Act (CCA) in the United States and the Carbon Border Adjustment Mechanism (CBAM) in the European Union are significantly different in many aspects. First of all, in terms of industry coverage, CCA covers 25 industries, involving oil, natural gas, coal, pulp, papermaking, steel and aluminum, chemicals, cement, glass and other fields. 

2. CCA includes Scope 2 electricity and energy use calculations 

Secondly, in terms of carbon emission calculation methods, CCA is more stringent in calculating export products. In addition to considering the carbon emissions of the product itself, the carbon emissions generated by the raw materials used in the production process of the product will also be considered. This means that the carbon emissions of energy, electricity, and raw materials used in the production process will also be included in the calculation scope (see Figure 1.4: List of industries regulated by the US CCA Act), which will pose greater challenges to manufacturers' production and supply chain management. 

3. The carbon tax pressure of the CCA bill carbon tax is greater than that of CBAM , 

and the carbon tax calculation method of CCA is also different from CBAM. The CCA will set the tax rate based on the carbon content of the product, and the portion above the baseline will be affected by the carbon tax. This baseline will be lowered annually from 2.5% to 5% in the early stages of implementation, which will force companies to continuously reduce carbon emissions to cope with increasing tax pressures. In addition, the initial price of carbon taxes will be adjusted with the inflation rate, which means that carbon taxes are likely to increase every year, which will increase cost pressures for companies. In the face of these challenges, companies need to strengthen the monitoring and management of carbon emissions and actively seek more environmentally friendly production methods and energy sources. The government should promote corresponding green subsidies and tax reduction policies to encourage enterprises to undergo green transformation and improve energy efficiency to cope with future carbon tax pressures. At the same time, we actively participate in international cooperation and seek cooperation opportunities and solutions under global carbon emission reduction goals. 

4. The Impact of Taiwan's Exports to the United States 

In Taiwan, many industries will face the impact of the implementation of the U.S. Clean Competition Act (CCA). Among them, the steel industry is one of the most directly affected. Taiwan, as the fifth largest steel importer in the United States, will face cost pressures from carbon tariffs, which may affect its competitiveness in the US market. As the industrial supply chain extends, other industries involved in the production of energy-intensive raw materials, such as machine tools, automotive components, plastics, bicycles, and textiles, will also be affected.

 5. Manufacturing process requires intensive energy industry 

As one of Taiwan's main export forces, machines exported to the United States may be affected by steel carbon standards, resulting in additional export carbon tariffs. In addition, the automotive components, plastics, bicycle, and textile industries will also face the pressure of rising import costs due to the use of energy-intensive raw materials in their production. Faced with this situation, relevant enterprises in Taiwan should actively adjust their industrial structure, seek more environmentally friendly and low-carbon production methods, and strengthen the monitoring and management of carbon emissions. At the same time, the government should strengthen cooperation with enterprises, provide corresponding green subsidies and tax reduction measures, and encourage enterprises to carry out green transformation and innovation. Further strengthen trade communication and cooperation with the United States, and jointly seek solutions to mitigate the impact of carbon tariffs. 

IV. Prepare for response and identify profit opportunities as soon as possible 

1. Introduce green innovation and decision-making planning 

With the implementation of export carbon tariffs, foreign trade-oriented exporters should take a series of measures to respond. First, organizational carbon inventory and product-based carbon footprint inventory for greenhouse gas management are essential steps. This includes assessing carbon emissions in the production process, setting emission benchmarks, corporate greenhouse gases, climate policies, ESG sustainability strategies, etc., as well as ensuring that all relevant data is accurately recorded and tracked. For example, transformation and upgrading and investment in digital technology production to obtain various reduction measures and data faster, and incorporating carbon information into the system for automatic conversion and calculation, and internalizing corresponding greenhouse gas policies into enterprises. 

2. Actively establish dedicated personnel and carbon management systems 

Enterprises should actively study relevant international standards and systems, such as the U.S. CCA and the EU CBAM, and incorporate them into their own green transition plans, climate response policies, and clean procurement decisions. This includes introducing corresponding standards and implementing them in production practices, such as electrifying equipment, using energy-saving equipment and digitally monitoring energy consumption improvements, investing in solar power generation facilities, and buying and selling renewable energy. Through cooperation with upstream and downstream supply chains and stakeholders, we will implement a more comprehensive carbon emission reduction plan to respond to the company's own "Scope 1 and Scope 2" and strengthen "Scope 3" greenhouse gas reduction policies. It is worth mentioning that enterprises should look for opportunities from green transformation. By reducing carbon emissions, climate neutrality programs, or joining international initiatives, improving energy efficiency, and promoting environmental sustainability, companies can enhance their green image and product competitiveness. Therefore, in this era of carbon tariffs, small and medium-sized enterprises should accelerate the pace of sustainable actions and actively promote environmental reform and innovation to ensure competitiveness and sustainable development in the global market. 

The U.S. CCA Clean Act (U.S. CARBON BORDER TAX) small and medium-sized enterprises face and respond