63 Taiwan Sporting Goods Manufacturers Association Costs category Items Contents Carbon neutrality costs Voluntary carbon credit purchase costs Carbon credit costs purchased to meet carbon neutrality demands Verification/assurance costs Verification/assurance fees Verification and assurance costs incurred to meet various objectives and requirements Source: Compiled from this article Regarding cost structure, direct material costs are impacted by carbon costs both from domestic and foreign raw materials. Domestic basic raw materials (such as iron and steel, aluminum, and plastics) may experience costs pass-through due to levying domestic carbon fees, while future imported raw materials may incur additional carbon border adjustment costs. Manufacturing expenses are influenced by the demands for renewable energy, RECs, and replacing energy-efficient facilities, leading to direct and indirect increases in production costs. Although most of the sports goods manufacturing industry consists of small and medium-sized enterprises, with annual direct and indirect greenhouse gas emissions not exceeding 25,000 tons of CO2 equivalent and therefore not yet subject to compliance costs by carbon fees, there may still be a need to purchase carbon credits and incur related costs for declaring carbon neutrality when the supply chain requires that purchased or subcontracted products/raw materials meet carbon neutrality targets. In addition, there are ongoing efforts internationally to implement carbon pricing measures for the shipping and freight industries. For example, the International Maritime Organization (IMO), in addition to declaring a net-zero goal by 2050, is also promoting a carbon tax system for carbon emissions from international shipping activities. Similarly, the International Civil Aviation Organization (ICAO) encourages international airlines operators to adopt sustainable aviation fuel (SAF) or participate in the ‘Carbon Offsetting and Reduction Scheme for International Aviation’ (CORSIA) to offset greenhouse gas emissions from aviation transport that hard to achieve carbon reduction by using qualified carbon credits. Many freight companies are gradually transitioning to alternative fuels or adopting electric fleets to achieve their reduction goals. Therefore, when considering the impacts of comprehensive carbon cost changes on international market competitiveness, it is essential to include verification and assurance costs as a part of the overall costs. Failing to do so may result in losing focus or missing advantages.
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