Energy efficiency is Taiwan’s answer to COP21 challenge

SPECIAL REPORT/ Energy efficiency has been identified as a central economic and environmental policy response to a series of challenges faced by Taiwan, including higher fossil fuel prices as a result of this week’s UN Climate Change Conference.

Taiwan only has observer status at COP21, but it is closely watching developments because of the ramifications a deal to cap global warming could have for the country, in particular, its export industry.

The island nation is also aware that, as a country that imports 98% of its energy, it must plan for a low-carbon future, especially given it has little influence over the Paris talks.

While Taiwan has always imported much of its energy, the country’s industrial boom – a 70% increase in GDP over 20 years – saw demand rise significantly.

That is particularly relevant because over the next 10, 12 and 20 years, energy import contracts, signed at low prices, are coming up for renewal.

Such contracts are signed over the medium and long-term, about 30 to 40 years, which has meant that electricity is much cheaper in Taiwan than in the EU, despite its import dependency.

“Our electricity rates are only one third of the price in European Union countries,” Su-Chen Weng, director of energy planning at Taiwan’s Bureau of Energy, told EURACTIV.

90% fossil fuels

Most of Taiwan’s energy imports come from Australia, the Philippines, Indonesia, and Qatar. Those countries supply Taiwan with oil, gas and coal.

Oil and coal in particular will likely become more expensive if an ambitious climate deal is struck this week in Paris. If it eventually results in a global emissions trading system, it would pose real issues for Taiwan. 90% of its energy imports are fossil fuels.

Policymakers have laid down rules that demand as 50% increase in energy efficiency in Taiwan by 2025, compared to 2005 levels.

“For every one dollar you earn, you must reduce 50% of your energy consumption,” said Weng.

That goal is backed by binding regulation that sets consumption limits on industry and specifies that only energy efficient technology can be used.

“We have also banned the use of imported energy inefficient technology,” Weng said.

Such measures have driven innovation in the sector. Most of Taiwan’s energy consumption is for lighting and the country is now a world leader in LED lighting.

One of Taiwan’s biggest challenges is to convince consumers used to low prices to invest in energy efficiency. But Weng said that a combination of industry regulation and innovation would eventually deliver changes in people’s homes, as new technology is rolled out.

In the meantime, law dictates that all new buildings must be insulated and meet energy standards, which are higher than their US equivalents, she added.

Export industry

Energy efficiency is also important to ensure that Taiwan’s exports remain competitive, which is vital for the country’s future prosperity, she said.

Higher energy costs could affect the country’s international competitiveness but greater efficiency could help safeguard exports from fluctuations in the energy market.

While Taiwan is also looking to invest in renewables, with two major programs to increase their deployment, there is recognition that won’t solve the country’s dependency on imports.

What is likely to prove more significant is its shift away from petrochemical-heavy industry to ICT industries.

“We are changing the structure of our industry. Gradually the high-consumption industry is being shifted to high-value, high-tech, lower energy intensive industries, Weng said.

Taiwan is not the only country to have recognised the importance of greater energy efficiency for both the climate and the economy.

EU policymakers recognise that efficiency, especially in buildings, can reduce emissions and consumption, as well as boost local employment and energy security.

EU leaders in October agreed to increase energy efficiency by at least 27% by 2030. The European Commission favours a 30% target and the European Parliament 40%.

The final figure will be set by the Council of Ministers and MEPs, after the Commission proposes legislation next year. Those laws will be influenced by the final Paris deal.