The United Nations' Intergovernmental Panel on Climate Change (IPCC) has issued a stark warning: unless we limit global temperature rise to below 1.5°C within the next 20 years, we will face an increase in extreme climate events.
These events will jeopardize global energy, water resources, food security, and housing. As a result, nations have come to a consensus with the goal of achieving "Net Zero Emissions by 2050" to curb the worsening effects of global warming.
Global Net Zero Policy in Full Swing
To achieve "Net Zero Emissions by 2050," the UN initiated the Paris Agreement in 2015. Over 130 countries have committed to achieving net-zero emissions by 2050 or later in this century.
In January of this year, Taiwan formally incorporated the "Net Zero Emissions by 2050" goal into law through The Climate Change Response Act.
Additionally, the government mandates Carbon Footprint Verification (CFV) for companies with different levels of capitalization, and all listed companies are expected to complete the CFV process by 2027.
In addition, the EU is poised to launch the trial phase of the Carbon Border Adjustment Mechanism (CBAM) in October of this year. CBAM will be formally implemented in 2026, necessitating carbon tax payments from importers in high-carbon emissions industries.
By 2034, CBAM will be fully enforced and expanded to include other sectors. Moreover, starting in 2035, all newly sold cars in the EU must comply with zero-carbon emission standards.
Having CFV Is a Necessary Market Entry Strategy
In response to upcoming import regulations, Carbon Footprint Verification (CFV) has gained significant importance.
This process uses methods and data collection to calculate the greenhouse gas (GHG) emissions from products, companies, or countries.
Its goal is to provide a more precise assessment of GHG emissions, reduce emissions in the future, and help mitigate the impacts of climate change.
Tesla Carbon Credit Sales Reach Record $1.78 Billion in 2022
A comprehensive CFV helps businesses gain a clearer understanding of their emissions and effectively manage carbon credits.
By reducing greenhouse gas emissions, companies not only reduce the cost of purchasing carbon offset credits, but also have the opportunity to sell excess allowances on the carbon market, thereby increasing revenue.
In August, the Taiwan Carbon Credit Exchange was established,
and it is expected to commence domestic and international carbon credit transactions in 2024.
This means Taiwan joins the global carbon market, introducing new dynamics to businesses' net-zero strategies.
Through CFV, businesses can ensure compliance with ESG (Environmental, Social, Governance) standards and actively implement emission reduction measures to address the challenges of climate change.
Simultaneously, investors can utilize this information to evaluate the sustainability of their investments and support companies engaged in net-zero, achieving dual financial and environmental returns.
Hence, CFV is not only a key to achieve climate goals but also an indispensable part of fulfilling ESG objectives.
Acquiring an understanding of how to conduct CFV can contribute significantly to safeguarding our planet.