As a state-owned enterprise, the business model of TSC is characterized by its contributions to the country and society, its ability to address areas where private-sector involvement is insufficient or unfeasible, and allowing the enterprise to generate reasonable profit. Therefore, in response to Taiwan's "net-zero emissions by 2050" goal, it has collaborated with external academic research institutions on carbon capture and reuse technology, the goal is to identify technological pathways with scalable and commercial potential, while also aligning with the nation's key strategy for net-zero transformation and natural carbon sequestration, to help promote the implementation of forest carbon sequestration (green carbon) and soil carbon sequestration (yellow carbon).

As a major agricultural enterprise in Taiwan, Taiwan Sugar Corporation actively utilizes land and agricultural resources to promote the development of natural carbon sequestration. However, related projects still need to be based on scientifically grounded methodologies. As of the end of 2025, Taiwan has six natural carbon sequestration methodologies, including afforestation, enhanced forest management, bamboo forest management, improved agricultural soil management, seagrass restoration, and mangrove reforestation.

As conditions for promoting natural carbon sequestration gradually mature, the Company has begun developing forest carbon sequestration. In cooperation with the Hualien Branch of Forestry and Nature Conservation Agency, Ministry of Agriculture, we plan to apply to the Ministry of Environment for a voluntary carbon reduction project using 50 hectares of afforestation land in Danongdafu Forest Park. Referring to the example of corporate afforestation by the National Property Administration, TSC plans to publicly lease 20 hectares of irregular sugarcane land in Erlin Township, Changhua County, to provide enterprises with opportunities to invest in afforestation and enhance the benefits of forest carbon sequestration.

In terms of yellow carbon (soil carbon sequestration), the Company has a solid foundation in agricultural operation, land resources, and circular utilization conditions. Sugarcane, a highly efficient C4 carbon-fixing crop, is cultivated on approximately 10,000 hectares (including contract farming areas), showing strong potential for soil carbon sequestration development. In response to the international "4/1000 Initiative" and the promotion of "Carbon Farming", the Company has registered approximately 270 hectares of farmland with 300 smallholder farmers. In 2023, we partnered with the Green Consumers Foundation and Eco-affinity Inc. to join the Smallholder Carbon Farming Project under the Gold Standard for the Global Goals. Moving forward, we will also follow the methodology of "Improving Agricultural Soil Management", evaluating and implementing technologies such as stable organic materials, livestock manure recycling, and carbon-fixing microorganisms to increase soil organic matter content and reduce carbon loss. This will serve as the basis for subsequent applications to the Ministry of Environmental Protection's voluntary carbon reduction program and for securing carbon reduction quotas.

Currently, basic scientific data on soil carbon sequestration in Taiwan still needs to be supplemented. While the relevant measurement methodologies were announced in March 2025, no verification agency has yet been established. TSC is taking the lead by joining Taiwan's first international soil carbon sequestration project – the "Smallholder Carbon Farming Project". We have also signed a project development contract with Eco-affinity Inc., contributing 2 hectares of sugarcane land from our Liuying Farm to the Smallholder Carbon Farming Project. This will involve increasing the use of organic fertilizers such as "filter cake (press mud)", a byproduct of sugar production, halving the use of chemical fertilizers, and at the same time, improving soil fertility and organic carbon storage, and it will also make Taiwan Sugar Corporation the only company that currently increases soil carbon sinks through sugarcane planting.

In recent years, the carbon credit market has faced growing criticism due to allegations of greenwashing, attracting close attention from international NGOs, investigative organizations, and the media. Furthermore, as soil organic carbon methodologies undergo their first international certification, and with the Gold Standard revising its certification rules several times during the past two years, the certification process has become more challenging, time-consuming, and costly. Therefore, although the Taiwan Smallholder Carbon Farming Project has been established for three years, project design validation did not begin until 2025. The first year of project performance verification is expected to take place in 2026, after which carbon credits and SDG performance will be issued by the Gold Standard.

The 2-hectare sugarcane field at TSC’s Liuying Farm was harvested in January 2025. Soil samples were taken by Eco-affinity Inc. and sent to the Environmental Laboratory of Department of Public Health, Tzu Chi University for soil organic carbon analysis. The results will be released after international verification. Once verified, in addition to being certified under the Gold Standard, our related products can generate internationally recognized carbon credits, further promoting TSC's net-zero transition.

In 2024, Shanhua Sugar Factory cooperated with the Department of Chemical Engineering of the National Atomic Research Institute (NARI) to use the "CO₂ Capture Pilot Equipment" during the sugar production period to conduct field tests of bagasse biomass boiler flue gas carbon capture (BECCUS). The flue gas can be directly reacted with alkaline solution to absorb the CO₂ in it through carbonation, and sodium bicarbonate is generated at the same time, which is then provided for people's livelihood and industrial use. This technology does not require complicated and expensive pre-treatment steps and equipment, and can directly process flue gas that has met emission standards. It is a CO₂ capture process at room temperature and pressure, making it extremely cost- and economically competitive.

In 2025, we continued to upgrade our cooperation, signing a tripartite MOU with the National Atomic Research Institute (NARI) and Nice Enterprise Co., Ltd. During the 2025/2026 sugar production season at the Huwei Sugar Refinery, NARI provided its independently developed carbon capture equipment and technology to capture carbon dioxide emitted from the factory's chimneys and convert it into baking soda. This baking soda will then be processed by Nice Enterprise Co., Ltd. into eco-friendly cleaning products such as soap and laundry detergent. This initiative embodies the concept of "turning carbon from waste into valuable resources" and demonstrates our commitment to sustainable stewardship of the land, the environment, and future generations.