The recent rise in the price of petroleum-based fuels has both indirectly and directly led to fluctuations in retail prices, and the public is feeling the effects.
Following hot on the heels of price hikes for gasoline and diesel products, the government last week announced that the price of electricity would go up before President Ma Ying-jeou’s (馬英九) inauguration for a second term on May 20. The government says the price of electricity must be increased to make it correspond with the cost of production. The electricity price increase will have a heavier impact on the public than the fuel price rises.
Some experts say that Taiwan’s fuel and electricity prices have been intentionally kept at the same level for a long time. They say that by suppressing price hikes, the government has been using taxpayers’ money to subsidize refiners and power consumers, and that this is socially unjust.
Petroleum-based fuel products and electricity are difficult sources of energy to obtain. In Taiwan, these resources are completely controlled by state-owned enterprises, so the government has a duty to manage them in a reasonable way, and to be prepared to respond to any energy crisis that might occur.
The double impact of fuel and electricity price rises may affect the way people use these resources. Hopefully, the price rises will prompt the development of sustainable energy policies. Soon after the price hikes were announced, people started talking about adjusting policy to save energy and reduce carbon dioxide emissions. A possible effect of this new policy drive could be lower consumption of fuel and electricity and major changes in people’s behavior. For example, the fuel price rise has already caused a sharp increase in the number of people using the Kaohsiung Mass Rapid Transport System.
If the government takes advantage of this opportunity to step up publicity for behavior that results in less energy consumption, we might see a bigger shift toward energy saving.
Many scientists in the field of energy resources think that saving energy should take priority over all alternative forms of energy generation. According to this premise, the government should introduce measures and inducements to encourage energy-saving behavior. The key point is that fuel and electricity price rises can have an impact on the overall deployment of sustainable energy policies.
If the government would clarify its policies, it would have a positive and lasting effect and promote the establishment and development of sustainable energy. The fuel and electricity price rises provide an excellent opportunity for the government to promote energy saving, carbon emissions reduction and the cultivation of renewable energy sources. This could also be a good time for the government and public to think about nuclear energy policy. If the public feel that fuel and electricity price rises are unbearable, perhaps they will once more come to see nuclear power as an acceptable way of generating electricity.
The Statute for Renewable Energy Development (再生能源發展條例) came into effect on July 8, 2009, but sustainable energy sources, including solar, wind, geothermal, wave, tide and biomass, still account for a mere 3.5 percent of total electricity generation. That is far less than the 79 percent generated by fossil fuel combustion and 17.5 percent by nuclear power. This suggests that there is plenty of space for development of sustainable energy.
The development and use of renewable energy in Taiwan has been weak and ineffective. The low prices of fuel and electricity is one of the main reasons that sustainable energy production has failed to take off.
The next question is whether there is any chance of Taiwan’s use of renewable energy reaching the levels of advanced countries such as Germany, which derives at least 17 percent of its energy from renewable sources. As things stand, such a target may not be easy to achieve, but if we don’t promote renewable energy policies today, we will regret it tomorrow.
Not long ago, I invited Wu Tsai-fu (吳財福), director of National Chung Cheng University’s Elegant Power Application Research Center, to give a lecture. Wu said the government and business leaders do not support the development of smart, or digitally enabled, electric grids, and that this has caused Taiwan to miss out on a lot of opportunities for saving energy.
Taiwan does not lack research and technology related to renewable energy. Smart grids can integrate smart meters to monitor supply and demand, and this is even more effective if combined with an off-peak electricity price policy.
What Taiwan does lack is incentives for developing this research and technology into renewable energy policies. Suppliers, including Taiwan Power Co, major state-owned and private companies, and consumers are not keen on adopting sustainable energy technology on a large scale, which has hindered the development of sustainable energy policies in Taiwan.
An underlying reason for this is ineffective government. The government has not done as much as it should have with regard to the overall planning of sustainable energy policy.
Taiwan has not developed effective market incentives to encourage the adoption of renewable or sustainable energy sources. In the future, when confronted with fuel and electricity shortages, Taiwanese could face major difficulties. The best way to prepare for such a scenario would be for the government to take the lead in developing sustainable energy policies. Such policies cannot be limited to raising the prices of fuel and electricity. At the same time, the government must think about formulating comprehensive plans for developing sustainable energy.
It may be that the Ministry of Economic Affairs and related agencies are already implementing sustainable energy policies. If so, now is an excellent opportunity to promote them. The best thing would be for Ma to use his authority to speak out about these issues and to integrate policy initiatives.
Whether this year’s fuel and electricity price increases have a positive effect on sustainable energy policy depends on how much effort the government is prepared to put into developing it.
Yang Yung-nane is a professor in the Graduate Institute of Political Economy and director of the Research Center for Energy Technology and Strategy at National Cheng Kung University.
Translated by Julian Clegg
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