Max's 3rd Update: In Taiwan, Energy Matters.

Taiwan is small, its natural resource endowments are minimal, and its current energy supply leaves its economy extremely vulnerable to changes in international energy prices. Needless to say, the country needs to change how it supplies its energy.

大家好 - greetings everyone, I am Max, a Sigur Center Chinese Language Fellow in Taiwan. Today (partly due to typhoon Soudelor), will provide a brief introduction to the topic for my final presentation at the International Chinese Language Program - Taiwan’s Energy Security.

For simplicity, I’ll use three topics to surmise the state of Taiwan’s energy security– why Taiwan’s current energy supply is problematic, the policies the Republic of China has enacted to resolve this problem, and the progress that has been made to improve the country’s energy outlook.

Foreign energy chokehold 

Reliance on imported energy is a serious problem for Taiwan’s economy. At present, Taiwan imports 98% of its energy, of which 90% are fossils (primarily oil, natural gas, coal). According to two Taiwanese economists’ research published by the Brookings Institute, importing energy ties manufacturing costs to international energy price fluctuations, and weakens the country’s trade competitiveness because Taiwan’s carbon emissions do not necessarily comply with increasingly stringent carbon emissions standards for international trade. Moreover, Taiwan’s ambiguous international status makes it difficult to lock in bilateral agreements that would ensure reliable energy sources from abroad.

A hefty government response

Nonetheless, the Republic of China established a 2008 Sustainable Energy Policy that is overseen by its Ministry of Economic Affairs (MOEA). The strategy intends to (1) develop domestic clean energy in Taiwan (2) increase the country’s energy efficiency, and (3) create a secure energy supply that is less dependent on sources from abroad.

A number of policies have followed to meet these goals. In 2009, the Renewable Energy Development Act was passed in the Legislative Yuan (Taiwan's national legislative body), which intends increase renewables’ stake in Taiwan’s domestic supply to over 16% by 2030. It does so with “feed-in-tariffs”, a policy tool in which a government guarantees fixed payments to renewable energy developers through long-term contracts.

Additionally, an Energy Management Act was partially amended in 2009 to help meet goals of increasing overall energy efficiency by 2% per year. It establishes compulsory energy standards for cars, appliances, and industrial equipment. In addition to these major pieces of legislation, the government has taken a number of other actions, including numerous incentive programs that support energy conservation, residential solar deployment, and adoption of LED lighting, as well as investment in key renewable energies’ research and development. Also related, in June a bill was passed that would establish the framework for a carbon cap and trade system. 

Nonetheless, with these policies in places, the question then becomes – how has Taiwan performed?

Slow steps to a Sustainable Energy 

Simply put, progress has been slow.

Starting with renewable energy deployment, little has improved. According to the MOEA data, less than 0.5% of power generationis supplied by hydroelectric, solar, or wind power.

Flow Chart provided by the Ministry of Economic Affairs.

Additionally, little has changes in terms of imports, as coal natural gas, and petroleum together in held 90% of the supply in 2014. However, the MOEA data also shows that in 2010 solar deployment grew by over 70% since 2010. Additionally, major offshore wind projects are currently in development, and Bloomberg news recently named Taiwan the world's 6^th largest emerging renewable energy market.

Yet, the real challenge with renewable energy development, beyond Taiwan's topographic hurdles (steep mountains aren’t perfect for solar or wind farms), is Taipower – the island’s state owned energy provider - and its subsidized energy prices. Until the playing field is leveled, which will inevitably increase energy prices in the short run, bolstering domestic renewable energy will continue to be an uphill battle.

Regarding energy efficiency, it is difficult to use indicators like energy intensity (a measure of how much energy is produced per unit of Gross Domestic Product) to parse out any meaningful trends because such indices reveal little about what drives efficiency.  However, as the energy flow chart above showcases, manufacturing gobbles a huge portion of the total energy Taiwan consumes. Thusly, shift in what is produced, and or to using more efficient machinery, will be key to decreasing energy demands, and thusly making the goal of supplying the country with domestic sources easier.

Nonetheless, the energy challenge in Taiwan is massive and will require continued work by the government, investors, businesses, and its people to ensure a domestic supply is in place to shield the country from changes in global prices.

            On a separate note, next week is my last in Taiwan. Stay tuned for a video update regarding my final presentation and last week of adventures!

Max Grossman, B.A. International Affairs and Geography 2017, 

Sigur Center 2015 Chinese Language Fellow, 

National Taiwan University, Taiwan.