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Post-Paris Climate Conference

Taiwan’s Major Emissions Challenges

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Taiwan’s Major Emissions Challenges

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Taiwan has made a “non-nuclear homeland” a priority. But with renewable energy technology and investment lacking and limits to energy-saving initiatives, Taiwan will find it hard to cut emissions, eliminate nuclear power and keep electricity prices low.

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Taiwan’s Major Emissions Challenges

By Kuo-chen Lu , Kwang-yin Liu
From CommonWealth Magazine (vol. 588 )

Paris may be 9,855 kilometers away, and Taiwan is not a member of the United Nations, but the climate change conference held by the U.N. there in early December could have a profound influence on the country.

Though Taiwan could not participate in the meeting because it is not a U.N. member, it was still one of 160 countries and territories that declared “Intended Nationally Determined Contributions.” These INDCs represented commitments by each country on the climate actions they intended to take under a new climate change agreement.

In its report, Taiwan pledged to the world that its greenhouse gas emissions in 2030 would be 20 percent below 2005 levels, which would require Taiwan’s carbon dioxide emissions to fall to 216 million metric tons per year, or about 40 million tons lower than its emissions last year.

Will Taiwan be able to meet its own targets? If the country’s latest investments in carbon reduction in Changhua and Yilan counties are any gauge, it has evidently not faced up to an inconvenient truth: the country will have to start up the mothballed fourth nuclear power plant or extend the lives of existing nuclear plants before 2025, or face power shortages or fall short on its INDC commitment.

Part of the problem is Taiwan’s high carbon emissions, which began ballooning in 1990. According to International Energy Agency statistics, Taiwan generated 256 million metric tons of carbon dioxide emissions in 2014, ranking 24th in the world. That translated to 10.95 metric tons of emissions per capita, ranking 20th.

Simply put, though Taiwan is small, it is a major greenhouse gas emitter and will face a daunting challenge to bring them down to the targeted levels. Five challenges in particular stand out.

Challenge I

Solar, Wind Power a Drop in the Bucket

Taiwan plans to invest heavily in alternative energy, investing more than a trillion Taiwan dollars in installing wind turbines or solar panels on a million roofs. But the electricity that will generate is only a drop in the bucket compared with nuclear or thermal power plants.

In Fangyuan along the coast of Changhua County sits Taiwan’s biggest offshore wind power zone. In the future, this wind farm is expected to generate more power than the fourth nuclear power plant, but the first wind turbine has yet to be installed, a pace of progress far slower than the West or even China.

Not only has construction lagged, solar and wind power installations will also face the conundrum of high investment and low efficiency.

“The goal is 4 million KW for installed offshore wind power and 8 million KW for solar power, and could even reach 20 million KW, but this is only installed capacity,” says Hwang Jung-chiou, chairman of state-run utility Taiwan Power Co.

For renewable energies, nature has to cooperate for power to be generated, which explains why, according to Hwang, average electricity generation is only 40 percent of installed capacity for wind power and 13 percent of installed capacity for solar power in Taiwan. 

Those big “discounts” result from Taiwan’s natural conditions. Even in southern Taiwan, which gets plenty of sun, there are only three to four hours of full sunlight a day on average to generate electricity, compared with more than six sun hours a day in parts of California.

So for an investment of more than NT$1 trillion, how much power can be generated to substitute for traditional energy sources and result in lower carbon emissions? According to Vice Economic Affairs Minister Shen Jong-chin, who heads the National Science and Technology Energy Project, the goal is for renewable energy to account for 27 percent of Taiwan’s installed power capacity, but that will only generate 12.6 percent of the country’s actual electricity.

Challenge II

Not a Substitute for Thermal Power  

Beyond the lower efficiency of renewable energies, Taiwan as an island has an independent power grid, and solar and wind power must be integrated with a stable power source to ensure an uninterrupted supply of power.

Hwang, who is also responsible for the country’s power distribution, explains that the 12.6 percent share of power generated by renewable sources cannot be traded off 1-for-1 with power produced from high emissions sources. That’s because solar and wind power are intermittent and cannot be absolutely counted on. For a company like TSMC, for example, it cannot wait for the sun to shine or the wind to blow to run its chip-making foundries and allow its production lines to sit idle if those renewable energy sources are not available.

A somewhat ironic situation has therefore arisen. On the one hand, Taiwan is building renewable energy facilities. On the other, it is spending more than NT$300 billion to upgrade thermal power plants in Linkou, Dalin and Tongxiao, a two-pronged strategy that may ultimately limit the extent of carbon emission reductions.

Because the electricity generated by renewable energy sources can be erratic, why not store it and then redistribute it when needed? Some countries are trying, resorting to reservoirs as the main storage repositories for renewable energy at a time when large storage batteries have yet to be commercialized.

Germany, for example, is currently studying the idea of sending the excess renewable energy it generates to Norway to pump water back into Norwegian reservoirs (increasing hydro plant capacities), and then import the hydro power back from Norway when it is in short supply in Germany.

Taiwan could also resort to the strategy, but its hydro power resources are unfortunately rather limited. Only Sun Moon Lake in central Taiwan would be suitable for such a project, but its energy storage capacity would be small, and an investment in the tens of billions of Taiwan dollars would be needed to install reversible turbines that could pump water into the reservoir or release water at any time. 

Challenge III

The Geothermal Alternative

One form of renewable energy that can consistently generate power 24 hours a day and replace nuclear or coal-fired power plants is geothermal power, which harnesses energy by extracting the heat from within the earth’s crust. But a trip to Yilan reveals that Taiwan lags even behind the Philippines in the development of geothermal power sources.

Taiwan’s geothermal development technology once led the world but has gathered dust for more than 20 years. Only in 2015 did Taiwan begin drilling wells again, and it is anybody’s guess when a power plant will actually be built. In contrast, the electricity produced by geothermal sources in the Philippines every year exceeds that of a typical nuclear reactor.

Kao Cheng-yan, founding chairman of the Green Party Taiwan, anti-nuclear activist and now retired National Taiwan University computer science and information engineering professor, laments Taiwan’s lack of progress in this area. He says that not only has the Philippines taken the lead in geothermal development but even Indonesia has gotten into the act, while Taiwan has faced several obstacles in developing its abundant geothermal resources.

Taiwan’s inability to match the Philippines stems from its getting involved late in the game and inadequate research funds.

“The National Science and Technology-Energy Project has a budget of about NT$13 billion but only NT$200 million of that has been devoted to geothermal research. Investing so little indicates the country’s lack of determination in developing geothermal energy,” says Chen Teng-chin, the director-general of the Environmental Protection Bureau in Yilan County, which has the most abundant geothermal reserves of any region in Taiwan.

The funding Chen referred to only arrived in Yilan recently and was used to finance the drilling of two wells in the county’s Sansing Township that will extend three kilometers into the ground looking for geothermal resources.

Two wells will be far from enough, however, to satisfy electricity demand. Professor Lee Chih-kung, the co-convener and executive director of the National Science and Technology Energy Project, says that based on overseas experience, geothermal exploration has a 90 percent failure rate. For every 10 wells drilled, there may be only one that is successful, a sober metric showing that Taiwan has only taken a first step in a vast unknown.

The Philippines’ has spurted past Taiwan in the field for two main reasons, Lee says. The country’s geothermal program uses Japanese technology, and it draws geothermal energy directly from volcanoes, giving it better results.

To exploit its geothermal resources, Japan has revised its laws to allow geothermal exploration in national parks, but Taiwan remains constrained by its National Park Law, under which people exploring volcanic geothermal areas could be prosecuted for illegal drilling.

The law must be revised to solve the problem, but uncertainty over how long that might take only adds to doubts over when geothermal power can start contributing to carbon reduction in Taiwan.

It should also be noted that geothermal development is not without its flaws. In Yilan, for example, residents have already shown their disdain for geothermal exploration, holding protests and displaying their appeals on big white banners. They fear that drilling deep wells could trigger earthquakes in a region already prone to them and worry that pumping hot water to generate power could hurt the area’s water resources.      

Challenge IV

Slow Start for Low-carbon Businesses

Many countries took aggressive steps early on to develop low-carbon economies, and the Paris climate change conference was something of a low-carbon economy Olympics. Each country’s athletes had seemingly started the race while Taiwan’s team was still selecting athletes and preparing to train, its independent technology and manufacturing skills lagging behind those of Germany and other European Union countries.

Off the coast of Houlong in Miaoli County, Taiwan’s first offshore wind turbine will soon be installed, but the equipment is being made far away in Denmark, and the after-sales service contract will be handled by German multinational Siemens.

“Only Siemens of Germany and Doosan of South Korea meet the international standard IEC Class 1A for wind turbines,” says Robert Tsai, the chairman of Taiwanese wind turbine parts maker Swancor Industry Co.

That reliance on overseas technology has led to two problems. One is that every wind turbine, each about the height of the Statue of Liberty, has to be shipped from Denmark to Taiwan, generating substantial carbon dioxide emissions on the high seas and adding costs that make it hard to bring down the overall price of the turbines.

The other is that Taiwan’s complete dependence on foreign technology and equipment can only hinder the development of the country’s renewable energy sector. As a result, not only does it have to buy more expensive equipment, the pace of construction is dictated by foreign interests.

The MOEA’s Shen says the government has very clear goals – investing in alternative energy to reduce carbon emissions and helping Taiwan’s own industrial supply chain get off the ground, such as bringing Taiwan’s China Steel Corp. and industrial conglomerate Teco Electric and Machinery Co. into the offshore wind power chain.

“If the private sector knows that there’s the opportunity to produce 800 offshore wind turbines, it will participate without hesitation and build up Taiwan’s green industry. Eventually, even the Asia-Pacific market will be ours,” Shen says optimistically.

“It certainly was. The international competition has already begun. Fortunately, the competition is a marathon rather than the 100-meter sprint. It will last for dozens of years,” professor Lee says.

The MOEA’s Shen explains that other goals include introducing 10,000 electric buses to lower emissions and improve air quality and encouraging vendors such as electric motorbike maker Gogoro to drive Taiwan’s low-carbon industrial chain. But the approach seems disjointed, like learning to run and competing in the Olympics at the same time, magnifying the carbon reduction challenge.

No Nuclear Power Means More Emissions?

The last major challenge revolves around the role of nuclear power in Taiwan. Nuclear power has accounted for roughly 20 percent of the country’s actual electricity generation in recent years, but its three active nuclear power plants will all be decommissioned by 2025, and the fourth nuclear power plant, though nearly completed, has been mothballed because of anti-nuclear opposition that mushroomed after the meltdown of the Fukushima Daiichi nuclear power plant in March 2011. Without nuclear power, can Taiwan meet its INDC commitment? 

Chen Li-cheng, the chairman of Gibsin Engineers Ltd., a U.S.-Taiwan joint venture engineering company specializing in power generation, transmission and distribution, says nuclear power can provide 25 percent of Taiwan’s electricity needs, and it’s carbon-free.

If the three existing nuclear power plants are in fact shut down by 2025 and the fourth nuclear power plant never opens, the actual electricity currently generated by renewable power sources cannot bridge that loss, and Taiwan will have to resort to natural gas and coal-fired plants, Chen says.

Assuming that half of the demand will be replaced by natural gas plants and half by coal-fired plants, Taiwan’s carbon emissions will increase by 40 million metric tons a year, Chen estimates, easily offsetting any carbon reduction initiatives.

But is Chen’s estimate accurate? If nuclear power is eliminated, will Taiwan’s carbon emissions in fact increase and will power shortages occur?

Taiwan has listed a “non-nuclear homeland” as a national policy, so why when it submitted its INDC commitment did it list the use of nuclear power as a carbon reduction method? When we asked the Environmental Protection Administration’s Office of Greenhouse Gases Reduction Management, which compiled the INDC report, about the apparent contradiction, it did not deny including the use of nuclear power as an option.

When the MOEA’s Shen was asked about it, he answered: “If you want to cut carbon emissions and eliminate nuclear power and still not increase electricity prices, that’s impossible.”

Lee observes that based on models that estimate carbon reduction, if nuclear power is eliminated from the equation, carbon reduction initiatives will fail, and Taiwan may also face power outages. This is the reality Taiwan is unwilling to face.

Lee stresses that the power shortages he foresees will not occur 365 days a year but rather about 45 days a year. Reliable smart grids and electricity tenders could be used to enable power operators or companies to buy power from those who have extra power, but the bid price will be NT$8 to NT$10 per kilowatt-hour, two to three times what electricity customers pay today.

So can the situation be turned around? Lee contends that existing R&D and investment projects must be stepped up if the non-nuclear homeland and carbon reduction goals are to be attained.

Daigee Shaw, a research fellow at Academia Sinica and former president of the Chung-Hua Institution for Economic Research who has studied climate change for many years, sees the crux of the problem as the private sector’s low-cost mindset and the government’s support for it.

Taiwan’s industrial sector puts a premium on low-cost manufacturing and competitively priced exports, and the government reinforces that by holding in check the costs of electricity, water, fuel and industrial park land and keeping tax rates, interest rates and the value of the Taiwan dollar low to enhance the country’s competitiveness, Shaw says.

But facing a low-carbon future will mean transforming this cost-oriented industrial structure. The MOEA’s Shen describes the situation as an industrial transformation battlefield, with both the carrot and the stick needed to encourage companies to move in the right direction.

Shaw argues that while German raw materials are expensive, the goods they produce command high prices, and Taiwan should learn from that. He believes that Taiwan must endure a painful period of transformation, such as in the 1980s when the Taiwan dollar exchange rate went from NT$40 per U.S. dollar in the middle of the decade to NT$28 to the dollar by 1988, driving up the price of exported goods in U.S. dollar terms by 30 percent. That forced manufacturers to restructure their businesses, and those that were not competitive either shut down or relocated abroad, Shaw says.

This is the brutal reality Taiwan must face following the Paris Climate Change Conference. The promise of eliminating nuclear power, lowering carbon emissions and keeping electricity prices unchanged smacks of idealistic rhetoric. The only real solution is for the country to end its addiction to low electricity prices, high energy consumption and high carbon dioxide emissions and move toward a low-carbon economy.

Translated from the Chinese by Luke Sabatier

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