Overview of Chineses Taipei ’ s Energy Sector: Current Status and Plans for Future Development

1. Overview of Chineses Taipei’sEnergy Sector: Current Status and Plans for Future Development Huang, Yophy * Bor, Yunchang Jeffrey Peng, Chieh-Yu

2. Content • Introduction and Country Overview • Energy and Environmental Policy • Taiwan’s LEAP Model Framework • Model Results for Business As Usual Case and Other Scenarios • Future Plans

3. Introduction • Western edge of the Pacific Ocean, • South of Japan, • North of the Philippines, • 160 km off the southeast coast of mainland Chain across the Taiwan Strait

7. Landscape • 2/3 is Mountianous, only ¼is arable • Rivers are short, but useful for power generation • 23 million population on 36,000 km2 one of the most densely populated • With biodiversity

8. Economy • Foreign trade has been the engine of Taiwan's economic growth (FX Reserve ranks 4th ) • A leading producer of high-technology goods • GDP (2008) = US$ 392 billion, per capita GDP = US$ 17,116 • Agriculture accounts for 2%, Services at 73%, and Industry around 25%. • Unemployment Rate (Jul. 2010) is 5.20%; lower than 2% before 1990. • Development relies on further transformation to a high technology and service-oriented economy

10. Energy Facts Share of world population: 0.3% Land area: 0.06% of total Share of world energy consumption: 1.0% Share of world electricity consumption:1.3% Per capita power consumption: 9,550 KWh Rank 13th in the world ~ 3.7 times of world average Total Amount of CO2 Emission: 261 MT Rank 22nd around the world ~ 1.0 % of world total 2005 Data from IEA Statistics of 2007

11. Energy Policy • With scarce natural resources, thus depends almost exclusively on imported energy (99%). • Formal energy policy framework formulated in 1973, after the first energy crisis. • In the latest revision, the goal of Taiwan’s energy policy has been set to establish a liberal, orderly, efficient, clean, and sustainable energy demand and supply system

12. Energy Authority • Energy Commissionunder the Ministry of Economic Affairs (MOEA) in 1979. • In 2004, upgraded as the Bureau of Energy(BOE) • Formulate and implement national energy policies such as the "Energy Management Act (EMA)", "Electricity Act (EA)", "Petroleum Administration Act (PAA)", "Regulations Governing Administration of Gas Utilities (RGAGU)", and other energy-related regulations.

13. Energy Authority BOE also : • Guides the operations of energy enterprises • Evaluates energy supply and demand • Establishes energy database system • Promotes energy conservation programs • Implements R&D on energy tech. • Promotes international energy cooperation.

14. Main Approaches* • Stabilizing energy supply, • Increasing energy efficiency, • Deregulating energy markets, • Emphasizing energy security and environmental protection, • Enhancing energy R&D, • Promoting energy education

15. Environmental Protection • Environmental protection policies developed later. • In 1987, "Environmental Protection Administration" (EPA) was established as a formal administration. • The EPA mandate includes: air quality and noise control, water quality , waste management, environmental sanitation and toxic substance management, supervision, and evaluation, and many others.

16. Focus on Climate Change • Many Environmental Levies/Charges implemented in the1990s. • The EPA has been actively responding to the UNFCC. • Currently facilitating the legislation of“Greenhouse Gases Reduction Act (GHGRA)” • Tentative goal of the reduction of CO2 emission: return to the level of 2008 between 2016 and 2020; return to the level of 2000 (=214.5 Mt) in 2025.

17. The

18. Higher Profile of Energy/Environmental Authorities • The BOE will be upgraded as the Ministry of Economy and Energy, • The EPA will be upscaled to the Department of Environment and Resources. • Taiwan’s core principle of energy policy has been shifted to the balancing of the “three Es”, seeking a “Win-Win-Win Solution” for energy security, environment protection, and economic competitiveness.

19. National Energy Conference The National Energy Conference (April, 2009) further developed the following four major policies : • Sustaining energy development and establishing energy security for a low carbon society; • Developing energy technology and applying energy conservation and carbon dioxide reduction technology; • Promoting efficient energy management and setting up green power and a concentrated non-energy industry; and • Designing energy price and an open energy market for reasonable cost-based rates

20. Draft GHG Reduction Act Will control GHG emission in three phases: • Phase 1: emission required to conduct GHG inventories, verification, and registration • Phase 2: performance standards would be implemented to control per unit consumption or per unit product emission • Phase 3: a cap-and-trade system would be implemented

21. Renewable Energy Development Act (2009) • Give credits to the total amount of renewable energy in the range of 6,500MW to 10,000MW, • Establish funds to subsidize renewable energy, to set up purchase rates, • Design procurement rates for different renewable resources, • To give incentives to highly potential self-faculties, • Assist renewable energy owners in acquiring land. • Based on government target, installed capacity of renewable energy is projected to be around 8,450MW, or 15% of the system total installed • capacity around 56,640MW in 2025.

22. Renewable Energy Target • 2,500MW will come from hydro, 3,000MW from wind power, 1,000MW from solar photovoltaic (PV), 1,400MW from biomass,5 50MW from fuel cell, geothermal and ocean power. • Taiwan Power Company’s (Taipower’s) 7th transmission and substation plan from 2010~2015 will greatly enhance the system’s ability to connect a large scale of wind power and solar PV to the power grids.

23. Wind Power • The offshorewind power project started in 2007, up to 300MW until 2011 • Renewable Energy Development Act offers preferential price of wind energy and to ensure that not less than the average cost of power generation from fossil fuels • However, the annual CF (capacity factor, see Appendix) decreased significantly, from 0.43 to 0.27 with more wind turbines installed and low operational performance was also a serious problem.

24. Wind Power Problems • Average wind speed (5.6m/s) is lower than other countries • Need to develop localized low speed onshore wind turbines and high efficiency SWTs ( Small wind Turbines) in the future. • Should focus on producing power from them, instead of installing capacity of wind turbines

25. Sustainable Energy Policy Guidelines on June 5, 2008 • and approved the Energy Conservation and Carbon Dioxide Reduction Action Planbased on the Guidelines on September 4, 2008.

26. Low Energy Prices • Historically, Energy prices have been low in Taiwan, even during the oil-price spikes in mid-2008. • For exmaple, prices for 95 Unleaded Gasoline (US dollars per liter) were $0.64 in 2002, $0.9 in Sept. 2009. • Average electricity prices (US$/kWh) were lower than $0.07 for the two decades from1988 to 2007, and rose to $0.08 in 2008 • Thus, consveration incentive is weak and energy efficiency low.

27. Electricity Rates Comparison NT$/kWh 資料來源：The International Energy Agency（IEA）《ELECTRICITY INFORMATION（2008 Edition）》、美國The Energy Information Administration (EIA)、馬來西亞電力公司（TNB）2007年統計資料、中國社會科學院。 註：1美元等於31.358元新臺幣 27

28. Green Tax Reform • the high-profile Tax Reform Committee (May 2008 ~ Dec. 2009) proposed a Green Tax Reform • To levy energy taxes and carbon taxes on exhaustible fossil fuelson a revenue-neutral basis; that is, by recycling Green Tax revenues into income tax cuts and subsidies for public transportation systems • Provide incentives for energy savings and CO2 abatement without hurting the economy and the poor. • Very likely to be legislated in 2011.

29. Movable Polluting Resources • Air Pollution Control Fees Fixed Construction Sites Green Tax Planned Green Tax Water Rights Fees（not yet levied）、Hot Spring Fees、 Water Resource Conservation and Feedback Fees Resource tax Mines Fees Soil & Stones Extraction Fees Excise Tax、Vehicle Fuel Fees, Oil Fund Energy Tax Pollution Fees or tax • Soil and Underground Water Pollution Control Fees • Sea Disposal Fees (not yet levied) • Water Pollution Fees (not yet levied) Environmental Tax • Noise Control Fees • Waste Disposal Fees CO2 added as new • Reclyclable Disposal Fees 29

30. Six Key Emerging Industries Plan • Green energy and tourism, medicine and health care, biotechnology,, culture and creation, and high-end agriculture. • Goal: to upgrade industrial competitiveness and break through the difficulties facing exports at a time when the international economic situation is yet to recover.

31. Taiwan’s Energy Status(1/3)- Supply • Eenergy supply grew from 42 million kLOE in 1986, to 139 million kLOE in 2006 • Annual growth rate averaging 6.2%. • Petroleum and Coal account for 97%.

32. Taiwan’s Energy Status 50% 47% Structure of Energy Supply in Taiwan: 1986 - 2007

33. Taiwan’s Energy Status(2/3)- Demand • Energy consumed 37.73 million kLOE in 1986, increased to 112.28 million kLOE in 2007 • Average annual growth rate around 5.5%. • Industrial and transportation are the main users.

34. Taiwan’s Energy Status 11% 53% 14% The Structure of Taiwan’s Energy Demand by Sector, 1986-2007

35. Taiwan’s Energy Status(3/3)- CO2 emissions • Total CO2 emissions in 1990 were 108.6 million metric tons, growing to 215.6 mmt in 2000, then to 265.8 mmt in 2007. • The average annual growth rate of total CO2 emissions for Taiwan over 1990 -2008 was 4.8%. • It is noteworthy that in 2008, total CO2 emissions grew by -4%, falling from 2007 levels to 255 million metric tons, due to oil price hike and financial crisis.

36. Taiwan’s LEAP Model Framework

37. Taiwan’s LEAP Model Framework System Framework of Taiwan LEAP Model

38. Taiwan’s LEAP Model Framework Taiwan’s Energy Demand Side -The LEAP Framework

39. Taiwan’s LEAP Model Framework Taiwan’s Energy Demand Side -The LEAP Framework

40. Taiwan’s LEAP Model Framework BAU: Business As Usual Scenario for Taiwan

41. Taiwan’s LEAP Model Framework BAU BAU • Based on the structure of Taiwan’s energy sector as described in “Energy Balance Sheet of Taiwan”, • Which is prepared on the basis of the OECD Energy Statistical Tabular Form and in coordination with the needs of Taiwan (Bureau of Energy, MOEA, 2009).

42. BAU Taiwan’s LEAP Model Framework Demographic Trends • Taiwan’s population of 23 million in 2008 is expected to fall to 20.3 million by 2056. • The average number of persons per household was 3.01 persons in 2008 • The growth rate of household size, based on historical data (1998~2008), has averaged -1.33% annually

43. BAU Taiwan’s LEAP Model Framework Economic Growth (1/2) Recent GDP Growth Rates of Various Industries

44. BAU Taiwan’s LEAP Model Framework Economic Growth(2/2) Recent GDP Growth Rates of Various Industries

45. BAU Taiwan’s LEAP Model Framework Energy Conversion(1/3) • Summary of the Current Status of Installed Electricity Generation Capacity and Plans for Near-term Capacity Additions for the Power System Nationwide

46. CPC Corporation Taiwan LNG Terminal Existing Capacity and Expansion Plan BAU Taiwan’s LEAP Model Framework Energy Conversion(2/3)

47. BAU Taiwan’s LEAP Model Framework Energy Conversion(3/3) • Energy Conversion Module Framework for Tawian LEAP Model

48. Taiwan’s LEAP Model Framework Other Scenarios Modeled (GOV, FIN, RET, ALL)

49. GOV Taiwan’s LEAP Model Framework GOV: GovernmentAction • The government’s target is to reduce the energy intensity in Tawian’s economy • By enhancing energy efficiency, with an overall goal of reducing the economy’s energy intensity by an average of over 2 %annually thru 2025.

50. FIN Taiwan’s LEAP Model Framework FIN: Financial Tsunami (a sensitivity case) • The FIN was established to examine the impacts of lowered economic growth asumptions in the medium and longer term on energy use. • Based on assumption derived from the Taipower forecast, in the FIN sensitivity analysis case, the long-term forecast for overall economic growth in Taiwan falls to 3.42%/yr in 2016 and 2.59%/yr in 2021.