Amendments to the Electricity Act (電業法) are aimed at phasing out nuclear power generation by 2025 and liberalizing the market. This ambitious policy poses challenges as well as opportunities for “renewable” energy trade and investment.
Taiwan’s energy import dependence is about 98 percent. An efficient legal framework for cross-border energy transfer is crucial to achieving energy sustainability and security.
Internationally, the Energy Charter Treaty is the only legally binding framework that is tailored to the precise needs of the sector. Despite its initial focus on industrial cooperation within Europe, the treaty has expanded its geographical application since the 1990s with signatories across Asia, Africa and Latin America. The treaty has become an East-West gateway for energy trade and investment.
The treaty is based on a core principle that all nations mutually benefit from the international free flow of capital, resources and technological innovations. A balanced international legal foundation is therefore necessary for consolidating long-term cooperation in the energy sector.
In this context, Taiwan could have three advantages as a signatory of the treaty.
First, the binding investment protection devices provide a climate of stability for both foreign and local investors. The dispute settlement mechanism offers an alternative to other national or regional dispute resolutions, such as when state-run oil company CPC Corp, Taiwan, faced compensation-related risks in two expropriation cases involving Venezuela in 2013.
Second, the treaty can help the nation, as the world’s fifth-largest importer and consumer of liquefied natural gas to secure reliable long-distance energy transit flows. Article 7 of the charter requires member states to respect the principle of freedom of transit and not to interrupt established global transit flows by imposing any unreasonable delays, restrictions or charges.
The treaty’s provisions are also more detailed than the WTO framework in terms of energy trade and investment. The treaty would be complementary to Taiwan’s WTO membership and provide added value to energy sector development.
Third, the treaty pays special attention to the environmental effects of energy-related activities and improving energy efficiency, such as the Protocol on Energy Efficiency and Related Environmental Aspect in Article 19.
This feature could trigger further legal innovations in Taiwan’s domestic environmental, energy and related commercial regulations.
In 2014, the treaty secretariat was invited to attend the annual APEC Energy Ministerial Meeting, exemplifying the role of the treaty in the Asia-Pacific region. Taiwan chairs the APEC’s Energy Working Group and already had direct contact with the secretariat in 2015 through the Knowledge Sharing Platform to Energy Smart Communities proposal.
If Taiwan were to become a treaty signatory it would be valuable stepping stone enabling access to the meetings, documents and, more importantly, a network of global energy governance.
The negotiation process employed to join the WTO in 2002 provides a precedent and some strategic insights, since China is now also a treaty observer.
Meanwhile, the treaty Industry Advisory Panel also welcomes participation from the private energy industries. CPC Taiwan, Taiwan Power Co, industrial associations and other energy corporations could consider the potential opportunities provided by this avenue.
Yang Chung-han is a doctoral candidate at the University of Cambridge and a member of the Taipei Bar Association.
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