Last month, the International Energy Agency (IEA) officially released last year’s World Energy Outlook, outlining global energy supply and demand projections up to the year 2035, together with its thoughts on the waxing and waning of a range of energy sources, as well as predictions of the cost of these energy sources.
In addition the IEA’s predictions on electricity supply differing from those of the nation’s government, the report specifies a great many supplementary benefits to renewable energy sources beyond electricity generation. The serious implications that energy price fluctuations are to have for the competitiveness of energy-intensive industries are also discussed
Not only has the government intentionally suppressed the development of renewable resources, refusing to take them seriously as a viable alternative, it is also ignoring the worsening competitiveness of energy-intensive industries, while insisting that this is not tying Taiwan’s future to fossil fuels, nuclear power and an economy heavily reliant on energy-intensive industries.
The IEA predicts that by 2035, global energy demand will have risen by 30 percent or more compared with current levels, but due to various factors — including the electrification of industry, an increase in the amount of electrical equipment installed and the increase in the number of air-conditioned buildings — global electricity demand is set to increase at an even higher rate, at over 60 percent.
There will need to be more than a 70 percent increase in the amount of electricity-generation facilities, roughly half of which will need to come from an increase in renewable energy resources.
Even though coal-fired electricity generation is the predominant form, the percentage of electricity generation it is responsible for will fall gradually, and it is expected to decrease from the current level of 41 percent to 33 percent by 2035. Renewable energy sources, meanwhile, are expected to close the gap with coal as the primary source of power generation in or around the year 2015, set to increase from 20 percent now to 31 percent of electricity generation by 2035, roughly equivalent to coal-fired electricity generation at that time.
In 2011 renewable energy sources accounted for 13 percent of the world’s energy sources. According to IEA predictions, this share will increase to 18 percent by 2035. Developing renewable energy resources will not only provide us with more energy autonomy, it will bring several other supplementary benefits.
First, it will reduce carbon dioxide emissions. Second, it will cut levels of a range of pollutants. It will also reduce our reliance on energy imports, decreasing the impact of international energy price fluctuations and, fourth, it will reduce expenditure on imported energy. Finally, the development of renewable energy sources will create a new domestic industry sector, thereby promoting economic development.
Further, the prices of renewable energy sources are increasingly approaching that of the cost of traditional ways of generating electricity.
Rapid developments in wind and solar energy production, for example, are impacting the existing traditional energy market. The original predictions for energy output by traditional power companies are being slowly eroded by renewables, and profit margins are gradually shrinking because of the free market in energy supply and the aging, inefficient and polluting coal-fired and nuclear power plants that are increasingly being decommissioned ahead of schedule.
It is said that renewable energy is expensive and reliant on government subsidies. In fact, fossil fuel subsidies for 2012 amounted to as much as US$544 billion globally. Renewables, on the other hand, were subsidized to the tune of US$101 billion worldwide, up 10 percent on the previous year, 60 percent of which was in the EU. By 2035, it is forecast that subsidies for renewables might be US$220 billion, still far less than the present level for fossil fuels.
The IEA report stressed that the price of energy not only affects consumers, but also influences industrial competitiveness.
Energy-intensive industries such as chemical engineering, aluminum and iron, steel refining, concrete, paper production, glass and oil refining account for 70 percent of global energy use, but provide only 25 percent of jobs in industry and account for just 20 percent of added value for industrial products. In certain petrochemical industries, energy accounts for 80 percent of costs.
It is natural, then, that energy price fluctuations affect the competitiveness of industry in the global market. Over the past several years, the balance of trade between countries has been affected as a result of these fluctuations.
Energy-intensive industries in Japan and the EU have to pay more than double the price for natural gas and electricity that their US counterparts do and as a result production is expected to fall significantly in the industries concerned in those countries.
The report also warns that, although international climate change negotiations are likely to help energy-intensive industries in nations that are taking positive steps to reduce greenhouse gas emissions, this will not be enough to help them face unequal competition from comparable industries in countries that are not actively engaged in reducing emissions.
Taiwan relies almost entirely on imports for its energy. Expenditure on this went from 2 to 4 percent of GDP 20 years ago, to 15 percent of GDP today and continues to rise.
Regardless, the government is still promoting energy-intensive industries, while taxpayers continue to subsidize the international competitiveness of these industries. If this approach is not just tying Taiwan’s future to fossil fuels, nuclear power and the endless expansion of energy-intensive industries, then what is it?
Gloria Hsu is a professor in National Taiwan University’s Department of Atmospheric Sciences.
Translated by Paul Cooper
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