The introduction of reasonable oil and electricity prices is one of the stated priorities of the new Cabinet. I would be thrilled to see the government take a sincere look at the longstanding distortion of energy prices and introduce reasonable oil and electricity prices. I suggest that doing so must include complementary measures for the basic needs of low-income households to meet demands for social fairness and justice.
Energy prices have been distorted for a long time and this has had a very negative impact on government finances and social justice and fairness, as well as the implementation of energy and carbon reduction policies and the green energy industry. Taiwan Power Co is providing for all the country’s electricity needs and CPC Corp, Taiwan, provides almost 70 percent of all domestic oil products.
The deliberate suppression of oil and electricity prices has created huge losses for these state-run companies. Following the continued increases in international energy prices, subsidies will continue to increase, as will losses. These subsidies are all coming from the national treasury and are therefore paid for by taxpayers, and as a result, the government’s fiscal deficit continues to expand.
In addition, the subsidies are the same across the board, which runs counter to the idea of social justice and fairness. The more oil and electricity wealthy people, energy-hungry companies and other big users consume, the greater the subsidies they receive, while low-income households that use less energy receive fewer subsidies. The current oil and electricity pricing is an inverted income distribution policy that takes from the poor and gives to the rich. The unfairness is self-evident.
Simply put, although the low energy prices created by the government’s subsidies might maintain price stability in the short run, it leads to energy waste, increased carbon emissions and crumbling government finances in the long run. Even worse, it intensifies social injustice and unfairness. Such a policy should have been changed a long time ago.
If oil and electricity prices are increased, low-income households will bear the brunt of the blow. That is why, as we let markets decide energy prices, the government’s most urgent task is to care for these disadvantaged groups by adopting effective complementary measures and offering energy subsidies to guarantee that they receive basic energy services.
I suggest that as the government allows markets to set energy prices, it should also emulate advanced countries and establish a universal energy service fund to satisfy the energy needs of disadvantaged groups.
Many countries have actually made the right to receive energy services a basic survival right and governments now provide minimum guarantees. In other words, these countries include energy services in social welfare in the broader sense that the government shoulders the responsibility for providing universal energy services so that the public has freedom from a lack of energy.
In the past, the main policy tool was the abovementioned use of a universal subsidy that is the same across the board. Because this approach was riddled with problems, countries are now moving toward a basic mechanism through which they provide universal energy services.
In 1999, the US state of New Jersey passed the Electric Discount and Energy Competition Act. A Universal Service Fund (USF) was set up by the state government to help low-income households pay for electricity and natural gas services. Users could apply for USF energy subsidies on two conditions: Household income could not exceed the poverty line by 175 percent or more and the applicant’s household electricity and natural gas expenses should exceed 6 percent of overall household income.
In short, the applicant has to guarantee that household electricity and natural gas expenses exceeded 6 percent of overall household income. There is also an upper limit to the USF subsidy at US$1,800 a year per household.
In other words, the first step toward removing subsidies from the price of energy is to establish a transparent and reasonable price-setting mechanism. The second step is to transform the “opaque” subsidy that wealthy people enjoy, into a transparent subsidy for low-income households to guarantee that these households can meet their basic energy needs.
Simply put, the spirit of any new policy to create reasonable energy prices must be to set those prices based on cost and to provide disadvantaged groups with subsidies according to their needs, thus clearly separating cost from subsidies.
When the new Cabinet implements its new energy policy, it should not be too concerned or cautious. So long as it includes complementary measures to care for disadvantaged groups and set up a long-lasting mechanism for setting reasonable energy prices, it will be supported by the public. In doing so, it would correct the distortion of energy prices once and for all and lay a good foundation for a future energy tax.
Hwang Jenn-jiang is a professor at National University of Tainan’s department of greenergy.
Translated by Perry Svensson
Recently, China launched another diplomatic offensive against Taiwan, improperly linking its “one China principle” with UN General Assembly Resolution 2758 to constrain Taiwan’s diplomatic space. After Taiwan’s presidential election on Jan. 13, China persuaded Nauru to sever diplomatic ties with Taiwan. Nauru cited Resolution 2758 in its declaration of the diplomatic break. Subsequently, during the WHO Executive Board meeting that month, Beijing rallied countries including Venezuela, Zimbabwe, Belarus, Egypt, Nicaragua, Sri Lanka, Laos, Russia, Syria and Pakistan to reiterate the “one China principle” in their statements, and assert that “Resolution 2758 has settled the status of Taiwan” to hinder Taiwan’s
Singaporean Prime Minister Lee Hsien Loong’s (李顯龍) decision to step down after 19 years and hand power to his deputy, Lawrence Wong (黃循財), on May 15 was expected — though, perhaps, not so soon. Most political analysts had been eyeing an end-of-year handover, to ensure more time for Wong to study and shadow the role, ahead of general elections that must be called by November next year. Wong — who is currently both deputy prime minister and minister of finance — would need a combination of fresh ideas, wisdom and experience as he writes the nation’s next chapter. The world that
The past few months have seen tremendous strides in India’s journey to develop a vibrant semiconductor and electronics ecosystem. The nation’s established prowess in information technology (IT) has earned it much-needed revenue and prestige across the globe. Now, through the convergence of engineering talent, supportive government policies, an expanding market and technologically adaptive entrepreneurship, India is striving to become part of global electronics and semiconductor supply chains. Indian Prime Minister Narendra Modi’s Vision of “Make in India” and “Design in India” has been the guiding force behind the government’s incentive schemes that span skilling, design, fabrication, assembly, testing and packaging, and
Can US dialogue and cooperation with the communist dictatorship in Beijing help avert a Taiwan Strait crisis? Or is US President Joe Biden playing into Chinese President Xi Jinping’s (習近平) hands? With America preoccupied with the wars in Europe and the Middle East, Biden is seeking better relations with Xi’s regime. The goal is to responsibly manage US-China competition and prevent unintended conflict, thereby hoping to create greater space for the two countries to work together in areas where their interests align. The existing wars have already stretched US military resources thin, and the last thing Biden wants is yet another war.