Last month saw two major fires at Formosa Group’s sixth naphtha plant in Mailiao Township (麥寮), Yunlin County. These fires have led to public concern and calls for the ongoing environmental impact assessment (EIA) for the fifth phase of expansion of the plant to be put on hold until the causes of the fires have been established. The fires have also cast a shadow over the petroleum leviathan Kuokuang Petrochemical’s EIA. These events raise the question of whether there really is a need for Taiwan’s petrochemical industry to continue expanding.
The official Petrochemical Industry Policy EIA (石化工業政策環境影響評估) says the strength of the Taiwanese petrochemical industry is its high degree of supply chain linkage. According to the EIA, it’s a key industry providing the raw materials needed for specialized chemical industries, textiles and electronics. In other words, upstream petrochemical products are used to supply Taiwan’s downstream producers.
However, figures provided by the Bureau of Energy tell a different story. The bureau’s data show, in the period 1995 to last year, total demand for petrochemical products increased by 69 percent, whereas domestic demand rose by only 30 percent. While there was very little change in demand for transport fuel, exports increased the most, from 4.5 percent to 29 percent. In other words, foreign demand for Taiwan’s petrochemical products was roughly equal to domestic demand last year. This means the Kuokuang plant and Formosa Group’s sixth naphtha cracker plant expansion will meet foreign demand, not domestic.
In the past few decades, Taiwan’s energy intensive industries have accounted for around one third of national energy consumption, and in fact, most of this goes into the upstream manufacturing of chemical materials. This sector accounted for 14 percent of national energy consumption in 1995, increasing to 28 percent last year.
In the same period, we saw improvements in energy efficiency in Taiwan, but this was not mirrored in the energy intensive industries, where efficiency conspicuously declined. If the fifth phase of the naphtha cracker plant expansion and the Kuokuang project go ahead as scheduled, it will make a mockery of energy conservation and carbon reduction efforts.
Taiwan relies on imports for 99.25 percent of its energy needs. In the past dozen years, with the rise of emerging economies such as China and India, demand for energy has risen dramatically, driving up prices on the international market. Taiwan’s energy expenditure increased from 2.6 percent of GDP in 1995 to 15.3 percent and 10 percent in 2008 and last year respectively.
We have already seen that energy intensive industries such as the petrochemical industry account for a third of energy consumption in Taiwan, but only contribute around four percent of GDP. Purely in terms of energy consumption versus GDP, the energy intensive industries are not pulling their weight. The more these industries expand, the greater the harm to the country.
Energy is indispensable for all human societies, economies and cultures, and indeed our very survival. There might be a high degree of integration, but Taiwan imports almost all of its energy supplies. How is it that neither the government nor advocates of the expansion of the petrochemical industry seem to notice this? They are using industry supply chain integration as an excuse to further their own interests.
According to Formosa Group’s sixth naphtha plant EIA, the plans for the plant do not include a power station, but the plant already emits over 42.5 million tonnes of carbon dioxide every year, around 17 percent of Taiwan’s total annual emissions in 2008. Kuokuang Petrochemical, has said that its carbon dioxide emissions are less than 12 million tonnes, but independent civil groups say the actual amount would be closer to 33 million tonnes.
The Mailiao expansion currently being evaluated would add another 8.3 million tonnes of emissions. If both plants being considered do go ahead, they would increase the 2008 nationwide figure of emissions by 16 percent. The Environmental Protection Administration’s greenhouse gas reduction strategy envisages that part of Taiwan’s future carbon reduction is to be offset by the global carbon exchange mechanism in which every tonne of carbon dioxide is to cost US$50. If this is the case, these two projects alone will cost Taiwan NT$2 billion (US$63 million) every year.
The government has already invested tens of billions of NT dollars to construct the Jiji Weir (集集攔河堰) specifically for the sixth naphtha cracker plant and it plans to spend billions more on the Dadu Weir (大度攔河堰) for the Kuokuang plant to make it possible to get water from 60km away. Taxpayers’ money is being spent on these petrochemical empires and in return we get polluted crops, fish and animal products and a possible rise in the cancer rate. The minute there is an international consensus on reducing carbon emissions it’s going to be the public that foots the bill for what these companies are doing. The time is ripe to stop feeding these petrochemical leviathans.
Gloria Hsu is a professor in National Taiwan University’s Department of Atmospheric Sciences and former chairwoman of the Taiwan Environmental Protection Union.
TRANSLATED BY PAUL COOPER
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