With years of preparation towards its climate goals, the Taiwanese government has decided to take a step further to reach net-zero emissions by 2050, with the Climate Change Response Act (CCRA, 氣候變遷因應法) established in 2023. The CCRA has a relatively stronger focus on the reduction side of the issue, setting regulations and boundaries related to the carbon topic. Meanwhile, this article explores the aspect of removal, specifically focusing on nature-based solutions, and the potential of a new conversation between the two parties across the Taiwan Strait on this matter. However, in order to delve into topics such as the companies’ agricultural value chain (scope 3) and others’ beyond value chain mitigation (see below) and to uncover less discussed aspects of the issue, a comparison between carbon neutrality and net zero, as well as offsets and BVCM, will be necessary.
Comparing Terms
The term “carbon neutral,” according to the European Parliament, is defined as: “having a balance between emitting carbon and absorbing carbon from the atmosphere in carbon sinks. Removing carbon dioxide from the atmosphere and then storing it is known as carbon sequestration.” Carbon neutrality is often criticized as “greenwashing” because corporations appear to conduct business as usual on one side, while purchasing carbon credits to achieve the “carbon neutral” status. Carbon sequestration is often achieved through either technological or natural means.
Technology-based projects aim to eliminate carbon directly from the atmosphere via air capture, while nature-based solution projects aim to reduce or avoid emissions through nature restoration projects. These include regenerative agriculture, agroforestry, conservation, marine restoration, and reforestation, among others. The term “net zero” is defined by the Science Based Targets initiative (SBTi) as reducing at least 90 percent of emissions, after which removals are allowed to balance the remaining emissions. Thus, unlike carbon neutrality, net zero requires companies to take action on the reduction side, minimizing their carbon footprint to the lowest possible level first. A relevant example would be Apple, which unveiled its first carbon-neutral watch in 2023. However, this move was soon scrutinized by the media and criticized by the EU as misleading, and an example of greenwashing. The Taiwanese Climate Change Response Act aligns with the reduction perspective by setting limitations for larger emitters, compelling them to reduce their carbon footprint.
Carbon offsetting is commonly utilized by companies as an investment in carbon removal initiatives to make “compensation” claims, rather than prioritizing the decarbonization of their own business. This approach differs from what the SBTi now encourages, which is for companies to take actions outside of their value chain, known as “beyond value chain mitigation” (BVCM). BVCM refers to “mitigation action or investments that fall outside a company’s value chain, including activities that avoid or reduce GHG emissions, or remove and store GHGs from the atmosphere.” BVCM considers those leading companies, perceived as sustainability leaders in their industry, not only actively working towards decarbonization of their own operations, but also choosing to invest in activities beyond their value chain to contribute to the global goal of addressing the climate crisis, making “contribution” claims. As it is widely recognized that the SDGs are set for 2030, and SBTi net-zero targets are established for either 2030 or 2050 for most companies, delaying removal actions until the completion of reduction is not feasible, particularly given our proximity to 2030. Achieving a 90 percent reduction may require considerable time for companies, whereas removal actions such as Nature-based Solutions entail decades-long processes, due to the time it takes for trees to mature. Therefore, the SBTi has emphasized the importance of companies taking immediate action to ensure that we are on schedule and following the correct path to stay within 1.5-2 degrees of global warming. Companies would benefit from BVCM projects for many reasons, such as talent acquisition and retention, securing access to finance, and brand differentiation (see image below). [1]
Image: BVCM (Image source: Science Based Targets)
Taiwan’s Ministry of Environment (MOE) has announced that entities can produce carbon credits or offset their emissions in the voluntary carbon market with high-quality credits (both reduction or removal) as part of Taiwan’s Net-Zero transition strategy. The National Climate Change Adaptation Action Plan has also emphasized that nature-based solutions for both land use, and oceans and coasts are promoted to strengthen the adaptability of the environment and maintain a dynamic ecological equilibrium. Even though the atmosphere seems positive and nature-related actions are encouraged, relevant regulations on the use of the credits and the project details still lack clarity. In Article 24, “Entities with newly installed or modified Emission Sources that reach a certain scale shall offset their increased GHG emissions based on a certain percentage of increased emissions,” it also mentions that the central competent authority retains the right to determine specific regulations, without further clarification. This would certainly leave a question mark for companies about taking action to implement long-term nature projects.
Image: Taiwan’s 2050 Net-Zero Transition 12 Key Strategies (Image source: Climate Change Administration, Ministry of Environment)
The Concept of Insetting and Value Chains
The concept of insetting may be less widely known to the public, but it does provide a more impactful and sustainable approach for many companies with agricultural value chains. As mentioned earlier, companies are encouraged to implement nature-based solution projects beyond their value chain (outside of their scope 1, 2, and 3 emissions). However, the complexity has increased for companies that source largely from nature as part of their scope 3 emissions (such as Nespresso, Hershey, Vans, Burberry, et al). The concept of insetting involves implementing nature-based projects within one’s agricultural value chain, and these companies’ on-farm emissions can sometimes constitute a significant portion of their scope 3 emissions. For example, Hershey’s 2022 ESG Report has indicated that: “66% of Hershey’s Scope 3 emissions come from agriculture.” If these companies already source from farms, it would represent a best practice for them to implement projects on their farms (within their value chain) rather than at the community level, landscape level, or further afield. As the International Platform for Insetting (IPI) mentions: “Insetting is a way for companies to harmonize their operations with the ecosystems they depend upon and transition to a more sustainable business model.”
Image: The process of insetting (Image source: International Platform for Insetting)
Whether through insetting, BVCM or other methods, companies must fulfill their obligations regarding carbon-related regulations established by their governments. Conversely, governments are required to report their nationally determined contributions (NDC) to the United Nations Framework Convention on Climate Change (UNFCCC), as requested by the Paris Agreement, which mandates each country to prepare and communicate their post-2020 climate actions. Consequently, governments have begun implementing domestic regulations on companies, enabling both the government and companies to work towards the same goal.
In Taiwan, the concept of value chain and insetting projects remains a step ahead of the current discussion. While relevant regulations and details related to the purchase of carbon credits in the voluntary market, and the use of nature-based projects remain uncertain, the even more complex execution of insetting projects is not yet on the table.
Cross-Strait Connections
Questions related to carbon footprints are beginning to arise in Taiwan—an island with a population of 24 million that is not a member of the United Nations, and which heavily depends on China economically. Despite Taiwan’s exports to China falling to their lowest share in 21 years, they still accounted for 35.25 percent of the total in 2023. Many of Taiwan’s food and beverage giants, including Uni-President, Master Kong, Want-Want Group, Wei Chuan Foods Corp, Standard Food, and DaChan Food, still have substantial operations in, and largely source their agricultural ingredients from, China. However, China claims Taiwan to be a part of its territory, raising questions about whether China will include the efforts of Taiwanese companies as part of its own NDC, given that China cannot forcibly establish regulations in Taiwan. Alternatively, will Taiwan independently fulfill its NDC obligations despite not being a part of the United Nations?
In fact, China will not incorporate Taiwan’s NDC, while Taiwan has committed to communicating its intended nationally determined contribution (INDC) independently. However, concerns persist regarding the transfer of carbon and the corresponding adjustment, despite the substantial operations of Taiwanese companies in China. The entire topic still presents a significant question mark, and actions won’t likely be taken by companies until a clue is revealed. Nevertheless, the climate issue operates differently than political issues—it cannot wait. Butterflies won’t be able to tell the difference between Taiwan’s deforested land and China’s deforested land; all they know is the loss of habitat and biodiversity. Immediate conversations regarding carbon removal, value chain, and beyond value chain mitigation are strongly required due to the urgency of the climate crisis. A platform or guidance should be established for companies across the Taiwan Strait to follow so that everyone can work towards the same goal before it is too late. Failure to act swiftly and decisively risks irreversible damage to our planet’s ecosystems and future generations.
How Strait Talk Can Help
A productive and fruitful conversation requires a deep level of understanding and empathy between the two parties, especially in the context of the cross-strait relationship between Taiwan and China, given the intricate interconnection between them. Drawing from my experience at Strait Talk at George Washington University in 2023, the event could serve as a mirror for the two parties to reflect on their current conversational approach.
The 2023 GW symposium of Strait Talk was crafted in a distinctive manner. Rather than the typical cross-strait style conferences marked by debates and presentations, all the candidates were gathered in the same space for days, fostering profound mutual comprehension before engaging in discussions. Each delegate shared their backstory regarding cross-Strait issues, including personal anecdotes, emotional connections, pivotal moments, insights into the topic, and aspirations for the future. This method cultivated a distinctive and meaningful rapport among the delegates, nurturing connections through an in-depth appreciation of each other’s narratives. Even in disagreement over an event or topic, we could readily grasp the roots of disagreement, given the depth of insight we had into one another. While reaching a final agreement posed challenges, we all acknowledged that we were collectively striving toward the same objective in this endeavor. It was inspiring to realize that we could cooperate, despite differing political perspectives, as we recognized that nothing outweighed the significance of basic human needs, particularly peace and stability.
To be more precise, a specific segment of the event tasked candidates with collaborating to propose solutions aimed at improving cross-strait relations. Among these proposals, a notable suggestion emerged: the establishment of a cross-Strait cap and trade market. This system would enable companies from both sides to trade carbon credits, thereby fostering climate-conscious initiatives, bolstering business collaboration, attracting foreign investments, and providing clear operational guidelines. While facing scrutiny from other candidate groups regarding the logistical intricacies and feasibility, there is unanimous agreement on its potential as a promising avenue to initiate dialogue, particularly given the urgent need for climate action.
Conclusion
Despite the numerous challenges that remain uncertain regarding the carbon issue, and the inevitable complexity of cross-strait issues between Taiwan and China, it is crucial to recognize that the climate crisis demands urgent attention. The loss of nature will have a far greater impact than any of us can comprehend. Urgent communication between the two sides on climate matters is essential, given the ticking clock and the limited time we have to mitigate temperature rise. If we can engage in conversations with a profound understanding of each other—much like the approach of Strait Talk—perhaps nature will remain nature, and butterflies won’t have to endure the loss of nature anymore.
The main point: While Taiwan’s most recent legislation responding to climate change focuses more heavily on the reduction of carbon emissions, including other methods—such as nature-based solutions—will be necessary to mitigate the climate crisis further. Tense cross-Strait relations and Taiwan’s absence from international organizations also create complications when bringing both Taiwan and China up to date with current climate change regulations. To protect the environment, Taiwan and China need to cooperate more, starting with cross-Strait dialogue.
[1] More details about the discussion regarding environmental attribute credits can be found in this paper written by Andrew Nobrega, Chief Product Officer from PUR.
