Taiwan government faces energy, climate policy challenge after elections

--

Taiwan’s government is expected to maintain continuity in energy policy with the ruling Democratic Progressive Party (DPP) winning elections again, but it also carries about uncertainty around long-term decarbonization plans to meet net zero goals and achieving its near-term 2025 renewables target.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.


Register Now

The newly-elected President Lai Ching-te has committed to continue his party’s climate agenda, but observers say Taiwan lacks a systematic plan to meet climate targets, and escalating geopolitical tensions with mainland China complicate equipment supply chains for renewables projects.

“Unfortunately, Taiwan has never had a rational and feasible path to achieve net zero, nor has it had a pragmatic plan for energy transition,” said Neo Lin, CEO of carbon project developer Beijing Qianyuhui Technology (QYH).

Lin, a Taiwanese entrepreneur based in mainland China, said Lai’s energy transition policies are likely to be in line with the previous government without any significant change, and the previous government wasn’t exactly making great progress.

“Taiwan’s carbon policies are mainly driven by the external pressure of carbon taxes on goods imported by foreign countries, not the domestic climate goals,” Lin said, adding that the recent election doesn’t alter the situation.

Under the previous administration, Taiwan was pursuing a policy of decommissioning its nuclear powered fleet by 2025, and cutting coal-fired power generation, while ramping up renewables and gas-fired power generation.

In 2023, coal-fired power generation accounted for 43% of its power mix, gas was around 40%, renewables around 9%, nuclear around 6.3% and the remaining was accounted for by other sources including hydro. By 2025, the share of coal has to come down to 30%, gas has to reach 50%, renewables have to reach around 20% and nuclear has to go to zero.

However, since the 2025 targets were set many years ago, the role of gas in carbon emissions has come under global scrutiny, nuclear has seen a revival in many countries, and governments have made huge investments in new fuels like hydrogen, all of which are yet to be seen in Taiwan.

Tough renewables goal

In March 2022, Taiwan’s National Development Council (NDC) released its 2050 net-zero roadmap, which set ambitious targets to build 40-80 GW solar PV and 40-55 GW offshore wind generation capacity by 2050. The government expects to build 20 GW of solar PV and 5.7 GW of offshore wind generation capacity by 2025.

“In the short term, Taiwan is anticipated to continue making efforts to achieve the 2025 targets, but with great pressure,” said Xue Shan, Principal Research Analyst for gas, power and climate solutions with S&P Global Commodity Insights.

“As of November 2023, Taiwan had 12 GW of solar capacity, translating to nearly 4 GW of additions per year to meet the 20 GW goal,” Xue said, adding that the task is quite challenging as rooftop capacities that are most suitable for solar panel installation have been almost developed, and many available land resources for utility-scale solar PV are inaccessible.

She said Taiwan is also expected to miss the 5.7 GW offshore wind target under the current engineering schedule due to some project cancellations and delays in environmental approvals.

“In the longer term, Taiwan’s renewables expansion is capped by natural resource endowment. The island land resources are extremely scarce,” Xue added.

S&P Global had previously reported that these targets were very difficult to achieve and not well thought out. Offshore wind requires opening up areas that are restricted due to environmental concerns or maritime boundary concerns with the mainland, while solar PV projects overlap with land resources in agricultural or fishery sectors, and the net-zero roadmap has no mention of energy storage targets to address intermittency.

The DPP government has also been cutting dependency on equipment supply chains from the mainland for low-cost solar PV products and wind turbines, forcing companies to import from markets like the EU or build domestic capacities at significantly higher costs.

Policy dilemma

Achieving 50% gas-fired power generation in Taiwan’s power mix by 2025 also requires accelerated development of both gas-fired power plants and LNG receiving terminals, but projects have been bogged down by environmental delays.

Currently, Taiwan has only two LNG receiving terminals — CPC’s 12 million mt/year Yung-An LNG terminal and the 6.5 million mt/year Taichung LNG terminal.

Taiwan plans to add three more LNG receiving terminals — CPC’s third LNG terminal with a capacity of 3 million mt/year, Taipower’s 1.8 million mt/year Hsieh-ho LNG terminal and the 3 million mt/year Taichung LNG terminal, according to the Ministry of Economic Affairs.

President Lai also faces a divided as it does not hold a majority parliament in both the executive and legislature. Lai’s attempt to phase out nuclear power and increase LNG imports could meet resistance from the opposition and face a hung parliament, S&P Global Market Intelligence said in a recent report.

Due to power shortages in recent years and energy security risks of high dependence on LNG imports, many industrial experts and politicians have asked the Taiwanese government to reassess its nuclear and LNG strategy.

On carbon policy, Taiwan recently implemented a carbon fee, similar to a carbon tax regime, and launched a voluntary carbon trading platform, after passing the Climate Change Response Act in early 2023.

“The biggest controversy about the bill is that the power generation industry does not have to pay carbon fees, but electricity users need to pay,” QYH’s Lin said.

Analysts expect the new administration to implement details in 2024 but said major upgrades will be needed to link carbon policy to its climate goals.

The article is in Dutch

Tags: Taiwan government faces energy climate policy challenge elections

-

PREV Analysis: Bitcoin breaks through resistance and reaches a high of $52,500 – BLOX
NEXT Africa Live: Kenya’s former athletics champion Henry Rono dies