President Lai’s climate committee is driving new momentum toward net-zero goals.

Taiwan has firmly positioned itself in the global race to achieve net-zero carbon emissions, elevating climate policy from the periphery to the heart of its national agenda. Under the Lai Ching-te administration, the government has reaffirmed its commitment to reaching carbon neutrality by 2050 – a target that will require sweeping structural reforms. These include a comprehensive overhaul of the energy mix, accelerated investment in green innovation, and strengthened efforts to bolster climate resilience.

To lead the charge, President Lai has created a new high-level Climate Change Committee, coordinating across ministries, aligning industrial policy with environmental targets, and ensuring that Taiwan’s energy transition supports economic growth.

Cabinet ministers, industry leaders, scientists, and civil society representatives all sit on the Committee, which is tasked with synthesizing Taiwan’s numerous climate initiatives into a coherent strategy. President Lai leads the charge, giving the Committee’s recommendations some weight.

“Now we’re operating at the presidential level, so climate policy has a very high mandate for the administrative branch,” says Committee member Chao Chia-wei. Founder and director of the Taiwan Environment and Planning Association and cofounder of the Taiwan Climate Action Network, Chao is a research leader who also teaches a “Pathways towards Net-Zero” course at National Taiwan University and National Chengchi University.

The Climate Change Committee’s mandate is sweeping, spanning short-term action and long-range strategy – from ramping up renewable energy and cutting emissions to strengthening Taiwan’s defenses against typhoons, heat waves, and other climate-related threats.

“Every time we meet, President Lai sits through the entire session,” Chao says. “His personal engagement has made it clear that this is a top priority.” This high-level visibility has pressured ministries to pay attention.

But Chao is also candid about the limitations. Committee meetings occur only every few months, and individual members get just one speaking round, with little opportunity for discussion or follow-up. Specialized subgroups were formed to dive deeper into topics like energy transition and sustainable lifestyles, but these have fallen dormant in recent months. “From the third committee meeting to now, we haven’t seen some subgroups meet at all,” Chao says.

Unlike similar bodies in other countries, the Committee lacks hard mandates or independent review mechanisms. “There’s no oversight power like the UK’s Climate Change Committee,” Chao says. “No clear KPIs or fixed legislative deliverables.” He recognizes that the Committee serves as a coordination platform rather than a regulatory body. Still, “platforms can’t replace real accountability.”

One of the Climate Change Committee’s first major undertakings was to set an interim emissions reduction target for 2035. The administration ultimately settled on a goal of cutting carbon emissions by 40% from 2005 levels – a significant commitment for an economy as heavily industrialized as Taiwan’s. Nevertheless, some civil society leaders argue that the target falls short. Among them is Chao, whose network had advocated a 52% reduction, citing modeling that indicated deeper cuts were technically achievable with more robust policy support.

This 12-percentage point difference sparked debate in early Committee meetings. Experts presented analysis showing that more ambitious cuts were technically achievable. Government officials countered that even 40% would be a stretch, and challenged experts to definitively show how deeper reductions could be reached in practice.

President Lai responded by framing the 40% target not as a cap but a starting point. “The 40% reduction is a floor,” Chao recalls Lai saying. The president asked ministries to begin sector-by-sector dialogues with business and civil society to explore how the goal might be raised.

This “floor, not ceiling” approach sends a clear signal: if stakeholders can demonstrate that more is feasible, Taiwan is willing to do more. For companies, it’s also a prompt to get involved, helping to shape the policies while the path forward is still being written.

The sleeping giant

Taiwan’s industrial sector – home to globally renowned manufacturers and energy-intensive heavy industries – is both the backbone of the economy and the biggest obstacle to its climate ambitions. Including the electricity it consumes, industry accounts for more than half of Taiwan’s carbon emissions. Any credible path to net zero must pass through the nation’s factories, steel mills, petrochemical plants, and semiconductor fabs.

But cutting emissions in these sectors is no simple task. Decarbonizing heavy industry often requires costly overhauls or next-generation technologies that are not yet commercially viable. So far, the government has taken a cautious, incremental approach. It has called on manufacturers to boost energy efficiency – typically by 1% to 1.5% a year – through upgrades like more efficient motors, heat-recovery systems, and smarter controls. These improvements add up, but they won’t turn a coal-fired blast furnace into one powered by green hydrogen.

Even Taiwan’s carbon fee – the central tool for pricing industrial pollution – is too low to spur change, critics say. Set at just NT$300 (under US$10) per ton, and with broad exemptions for companies that submit reduction plans, the fee imposes little real cost. “China Steel will probably pay only NT$20 (US$0.67) per ton,” Chao says. “That’s less than one-tenth of what’s needed to incentivize change.”

Government incentives for industrial decarbonization also trail behind those offered in other advanced economies. In countries like the United States and Germany, subsidies are often tied to union cooperation and technology upgrades to push broader systemic improvements. In Taiwan, grants tend to be smaller and come with fewer conditions.

In some areas of green transitioning, industry is vocal. Taiwan-based manufacturers integrated into global supply chains are already under pressure from multinational clients to go green. Major electronics firms have committed to using 100% renewable energy and are demanding that the grid supply more of it.

But when it comes to deeper industrial reforms such as low-carbon materials and cleaner processes, the private sector has been quieter. “Companies are asking for renewable energy, but we rarely hear them asking for low-carbon cement, steel, or petrochemicals,” Chao says. “That silence enables government inaction.”

In other words, businesses have been quick to support policies that help them meet public-facing climate targets, but slower to advocate for the harder, more expensive structural changes that net zero will require. That hesitancy may reflect cost concerns, technological uncertainty, or a wait-and-see attitude toward government leadership.

Still, the dynamic is beginning to shift. Foreign investors and multinational companies operating in Taiwan, many of which already face stricter climate rules abroad or anticipate carbon border taxes in markets like the European Union, could become powerful catalysts for change. These companies increasingly view cleaner supply chains as essential to future market access.

“If they tell the government that by 2030, they’ll only buy low-emission steel or are ready to co-develop circular systems for petrochemicals, that gives policymakers a reason to act,” Chao says.

Some domestic champions are already taking steps. The Formosa Plastics Group has begun exploring carbon capture technologies, and major semiconductor companies are investing in renewable energy and electrified production processes. The Climate Change Committee, Chao says, offers a platform where such innovators can engage directly with policymakers and push for the broader reforms that industrial decarbonization demands.

“We’d like to see the private sector talk about what kind of support they need from the government,” Chao says. By clearly articulating their needs, businesses can help shape policies that make decarbonization faster and more achievable. The success of the net-zero push may hinge on turning today’s incremental steps into tomorrow’s transformative shifts through true public-private collaboration.

Local leadership in action

Climate change is a global challenge, but many of its solutions are inherently local. Cities and counties control transportation systems, zoning laws, waste management, and increasingly their own energy and environmental policies. In Taiwan, the central government has acknowledged this reality. Under the Climate Change Response Act, each local government must establish its own climate action committee – a move aimed at tailoring mitigation and adaptation efforts to local conditions and engaging communities and businesses in the process.

The result is a mosaic of climate initiatives across Taiwan, with some localities emerging as leaders. Among them is Taoyuan, a rapidly growing city in the north that serves as both a national gateway and a major industrial hub. Known for its tech clusters, smart logistics, and new town developments, Taoyuan is also increasingly vulnerable to climate risks – from urban heat islands to emissions-intensive infrastructure.

Rather than wait for directives from the central government, Taoyuan has taken a proactive stance. Under Mayor Chang San-cheng, the city has pursued ambitious sustainability planning, with Deputy Mayor Su Jun-bin emerging as a key figure in driving the city’s net-zero strategy. An engineer by training, Su brings a systems-thinking approach to the table, emphasizing cross-sector integration and data-driven policy.

“Carbon emissions aren’t isolated – they’re systemic,” Su said during a recent speech at the 2024 Asia-Pacific Sustainability Expo. “We need holistic solutions, not siloed fixes.” Under his leadership, every municipal department – from transportation and urban planning to education and environmental protection – has been asked to align their mandates with the city’s 2050 net-zero roadmap.

One standout initiative has been Taoyuan’s approach to extreme heat. Last year, as Taiwan experienced record temperatures, Su led a review of the city’s urban development strategy and found it lacked comprehensive planning for heatwave adaptation. In response, the Urban Development Department was tasked with incorporating climate resilience into zoning regulations, new town planning, and building codes.

The resulting measures include expanded green spaces, transit-oriented development designs that reduce car dependency, installation of reflective “cool roofs,” and revised codes to enhance ventilation in new construction. These components have been incorporated into the city’s next-generation redevelopment blueprints.

Taoyuan is also using artificial intelligence to improve environmental governance. Through initiatives led by the Department of Environmental Protection, the city has introduced an AI Environmental Pollution Recognition System, alongside smart dust suppression and water-quality monitoring technologies. These tools have enhanced enforcement capacity and earned national recognition, including top honors at the 2024 TSAA Taiwan Sustainability Action Awards.

To maintain momentum, Su convenes interdepartmental climate progress meetings every two months. These meetings are results-focused: agencies must present updates on key targets, from EV charging infrastructure to energy-saving upgrades in public buildings. When shortfalls occur, the team works in real time to reallocate budgets or staff to stay on track.

Taoyuan’s model is drawing attention from cities across Taiwan and abroad. Taipei is doubling down on green finance, while Tainan is emphasizing historical preservation alongside climate mitigation. Kitakyushu City in Japan, a long-time industrial powerhouse, has entered into dialogue with Taoyuan to explore co-development opportunities in low-carbon urban planning.

Of course, capacity and political will vary across jurisdictions. But as Taoyuan demonstrates, determined local leadership can transform a city into a testbed for climate innovation. In the years ahead, this decentralized, city-led momentum will be critical to achieving Taiwan’s broader climate goals – whether electrifying transport, mainstreaming green construction, or futureproofing urban growth against climate shocks.

Finance and accountability

Transforming Taiwan’s economy to net zero is as much a financial challenge as a technical one. The pace at which renewable infrastructure is built, new technologies reach scale, and carbon-heavy industries transition will depend on how capital is allocated. Taiwan’s financial regulators and institutions have begun shifting in that direction, but the transition remains nascent and vulnerable to greenwashing.

The Financial Supervisory Commission, Taiwan’s top financial regulator, introduced the Green Finance Action Plan 3.0 in September 2022. Banks have followed with their own green finance initiatives, and new guidelines now define what counts as a sustainable investment or transition activity. This taxonomy is designed to classify economic activities based on their environmental impact, thereby steering capital toward sectors like clean energy, electric transportation, and industrial upgrade.

But experts say the criteria are too permissive. “We find a lot of the standards they set out are pretty weak,” says Chao. Under the current framework, a company can qualify as “sustainable” if its carbon intensity is just 50% lower than the industry average – meaning a moderately efficient coal-fired plant might earn a green label simply because others are worse. “That’s hardly a gold standard,” he says.

This concern is more than theoretical. Chao’s research group conducted a detailed analysis of corporate ESG claims in Taiwan and uncovered a wide gap between branding and performance. In one report, his team reviewed companies that had received ESG or sustainability awards and found that more than 60% fell short of what the researchers deemed meaningful climate benchmarks. Many were lauded for glossy reports while continuing to invest in fossil fuel infrastructure or failing to set emissions targets.

Taiwan’s banks show similar contradictions. While major financial institutions have endorsed the government’s 2050 net-zero pledge – and some have joined international coalitions – their balance sheets tell a more complicated story. Chao’s data show that many top lenders continue to underwrite coal power projects and finance oil and gas companies, even as they promote investments in offshore wind.

Regulators are starting to respond. Climate risk disclosure rules are being phased in for banks and listed companies, making it easier to track financial flows. Civil society groups are also increasing the pressure, publicly calling out banks that fund new coal projects while marketing themselves as green leaders.

“You should put more emphasis on engagement,” Chao says. “You can’t just say you invest in renewables – you need to drive real decarbonization in high-emitting industries.”

That means using financial leverage by tying loans to credible climate action plans, pushing companies to adopt science-based targets, and exercising shareholder rights to influence corporate strategy. These interventions, once rare in Taiwan’s boardrooms, are starting to take hold.

The business case for stronger green finance is compelling. Taiwan is poised to invest billions in renewable energy, low-carbon infrastructure, and clean technology in the coming decades. Those who fund the transition stand to benefit. Companies that demonstrate authentic leadership in sustainability could also attract lower-cost capital and long-term investors.

By setting ambitious benchmarks, transparently confronting contentious issues like energy security, enlisting industry and local governments as partners, and insisting on real accountability in green finance, Taiwan is stacking the deck for success. For the island’s businesses and investors, this is a clarion call to engage and innovate. Taiwan’s economic future and its climate future are one and the same – and everyone has a stake in getting it right.