Climate Change Response Act Article 35

The central competent authority shall announce the designated emission sources which are included in the cap-and-trade program, set the total cap emission target in stages.When implementing the cap-and-trade program, factors such as the trade intensity of various industries, reduction cost and other factors should be taken into consideration, in order to avoid carbon leakage from affecting international efforts to reduce GHG emissions and the country’s overall competitiveness. According to the aforementioned principles, the emission allowances of the emission sources corresponding to the total cap at each stage are allocated to the entities through free allocation, auction or sell by a fixed charge.The percentage of sell allowance pursuant to the foregoing paragraph may be deducted by the tax or fee mechanisms imposed on imported fossil fuels.When the central competent authority allocates the emission allowances for public utilities, the central competent authority shall deduct the amount of which is indirectly emitted from the energy consumption of emission sources.The central competent authority may reserve partial emission allowances to stabilize the carbon market price or may allocate for designated entities with specific scales of new entrants or modified emission sources.The central competent authority shall retrieve the emission allowances returned from entities upon closure, permanent shutdown or dissolution, and the ownership of emission allowance freely allocated shall not be transferred. In the case that entities cease operation, the central competent authority shall execute administrative discretion regarding the disposition, and retrieve the free emission allowances when necessary.The central competent authority in consultation with the central industry competent authorities shall determine regulations regarding the identification of the impact of carbon leakage in various industries on the overall competitiveness of the country, the eligibility, approach and processes of emission allowance allocation, the approaches of auction or sale, revocation and cancellation of emission allowances pursuant to Paragraph 1; the reserve of emission allowances, specific scales of new or modified emission sources pursuant to Paragraph 4; the retrieve of emission allowances, the processes of ceasing and resuming operation of emission sources and other binding matters pursuant to the foregoing paragraph.