2025 Global Net-Zero and Carbon Regulation Trends:

Strategies for Domestic Industries and Export-Oriented Supply Chains

I. Introduction: Global Geopolitical Shifts and New Challenges in Carbon Regulation

In 2025, U.S. President Donald Trump announced that the United States would once again withdraw from the Paris Agreement, a move that has significantly disrupted the global trajectory of climate policy and raised concerns regarding the pace of global decarbonization efforts.

Nevertheless, despite the policy reversal by the U.S. federal government, major economies such as the European Union (EU), China, Japan, and South Korea continue to advance their net-zero commitments. These economies are strengthening carbon-related regulatory instruments, including Emissions Trading Systems (ETS), the Carbon Border Adjustment Mechanism (CBAM), and various forms of carbon taxation.

The withdrawal of the United States may weaken international climate cooperation frameworks and force countries to recalibrate their carbon policy responses. In contrast, the EU has further tightened carbon footprint requirements for imported products, China is implementing stricter emissions allowance systems, and emerging Asian markets such as India and Indonesia have begun introducing carbon pricing mechanisms.

These policy developments are expected to have a substantial impact on Taiwan’s export-oriented industries, particularly sectors such as steel, electronics, petrochemicals, and textiles. Firms that fail to proactively adapt to these evolving regulatory environments may face increased compliance costs, reduced competitiveness, and heightened trade risks.

II. Overview of Global Carbon Regulation Trends

1. The European Union Carbon Border Adjustment Mechanism (CBAM) Enters into Force

• Starting in 2026, the European Union will formally impose carbon border adjustment charges on imports of high-carbon-intensity products, including steel, cement, aluminum, fertilizers, electricity, and hydrogen.

• Companies exporting to the EU will be required to submit comprehensive carbon emissions reports and pay corresponding carbon compliance costs in line with EU carbon pricing standards.

• Taiwanese industries exporting to the EU must establish carbon accounting and disclosure mechanisms in advance to ensure regulatory compliance and mitigate future trade risks.

2. Expansion of Emissions Trading Systems (ETS) in China and Asia

• China’s national carbon market (National ETS) is expanding its coverage to include high-emission sectors such as steel, aluminum, and petrochemicals, while introducing stricter allowance allocation and control mechanisms.

• South Korea’s ETS is further increasing carbon prices, expanding corporate mitigation obligations, and tightening restrictions on carbon credit trading and offset usage.

• Japan and Southeast Asian countries have begun planning or piloting regional or sector-based ETS frameworks, which may raise carbon disclosure and compliance requirements across supply chains and affect the competitiveness of Taiwanese exporters.

3. Divergence Between U.S. Federal and State-Level Carbon Policies

• The U.S. federal government’s withdrawal from the Paris Agreement may lead to a relaxation of environmental regulations at the federal level.

• However, California and the Regional Greenhouse Gas Initiative (RGGI) states in the northeastern U.S. continue to implement stringent emissions trading systems and carbon pricing mechanisms.

• As a result, many U.S. companies will still face decarbonization pressure from investors and capital markets, which in turn influences their supply chain strategies and procurement requirements.

4. Global Advancement of Carbon Taxation and Carbon Pricing Mechanisms

• Canada has raised its carbon tax benchmark, with carbon costs projected to increase to CAD 170 per tonne of CO₂ emissions.

• Singapore plans to raise its carbon tax to SGD 50–80 per tonne by 2026, significantly affecting corporate operating costs.

• Taiwan plans to introduce a carbon fee starting in 2025, targeting large emitters. This is expected to result in higher cost pressures for energy-intensive industries.

III. Response Strategies for Domestic Industries and Supply Chains

1. Corporate Carbon Management and Internal Carbon Pricing (ICP)

• Establish internal carbon prices to evaluate the return on decarbonization investments and ensure alignment with international market trends.

• Anticipate future costs arising from carbon taxes and emissions trading systems, enabling early deployment of low-carbon technologies and avoiding unexpected cost increases.

2. Supply Chain Decarbonization and Green Procurement

• Ensure suppliers conduct GHG inventories and implement mitigation plans to reduce supply chain risks.

• Collaborate with low-carbon material suppliers to reduce CBAM-related costs for imported products and maintain export competitiveness.

3. Energy Transition and Renewable Energy Procurement

• Invest in renewable power generation assets and participate in Taiwan’s green electricity trading market to meet global market expectations.

• Enhance energy efficiency and adopt low-carbon technologies—such as energy-saving equipment and smart energy management systems—to reduce carbon footprints.

4. Carbon Disclosure and Enhanced ESG Transparency

• Align with IFRS S2 and TCFD climate-related disclosure standards to provide investors with comprehensive decarbonization strategies and progress reporting.

• Strengthen corporate decarbonization performance disclosures to meet the requirements of international markets and global supply chain partners.

5. Participation in International Carbon Markets and Carbon Credit Trading

• Assess opportunities to purchase international carbon credits to offset a portion of emissions and reduce operational and compliance risks.

• Explore the development of Taiwan’s carbon market, including establishing cooperation mechanisms with Southeast Asian countries, to enhance market adaptability and regional integration.

IV. Strategic Foresight: Preparing for Shifts in Global Carbon Policies

In 2025, changes in global carbon policies will bring both challenges and opportunities. Taiwanese companies and their supply chains must proactively respond to policy trends such as CBAM, emissions trading systems (ETS), carbon taxes, and mandatory carbon pricing mechanisms. By establishing internal carbon pricing, strengthening supply chain carbon management, accelerating the energy transition, and enhancing the transparency of carbon disclosures, companies can maintain a competitive advantage in the global market.

Bu-Jhen Low Carbon Strategy Co., Ltd. will continue to monitor international policy developments and support enterprises in formulating optimal carbon management strategies. Our services include GHG inventories, decarbonization planning, and carbon credit trading, helping companies remain competitive on their pathway toward carbon neutrality.