China key to Taiwan energy crisis

By John Mathews and Hu Mei-chih 胡美智  / 

Mon, Apr 15, 2013 - Page 8

At present, Taiwan is embroiled in a debate over a referendum to decide whether to complete the Fourth Nuclear Power Plant in New Taipei City’s (新北市) Gongliao District (貢寮), which is currently under construction. The debate is focused on the risks of using nuclear power on an earthquake-prone island — with the 2011 disaster at the Fukushima Dai-ichi nuclear power plant in Japan being used as a point of reference — and the supposed costs of moving away from nuclear energy in terms of electricity prices and the reliability of the nation’s power supply. The nuclear debate has also become side-tracked by a longstanding debate over the legalities of the referendum process and whether the government can be trusted to frame referendum questions fairly.

What is missing in this debate is the recognition that the nation has more to gain by promoting renewable energy industries than by sticking with the nuclear option, in terms of energy security and building export platforms.

Chien Hsi-chieh (簡錫堦) (“Taiwan needs green energy policy,” April 8, page 8) is right in saying that Taiwan should develop “green” energy, but the example that the nation should be following is not Denmark, but itself.

Taiwan is justifiably proud of its achievement in building three “pillar industries” in semiconductors, flat-panel displays and PCs. Now it should be getting ready to use the institutional and entrepreneurial strategies perfected during its earlier economic development to add a fourth pillar industry in solar photovoltaics (solar panel electricity systems, or PVs) and other renewable energy sources.

The model for such a strategy is close at hand: China engages in the world’s most strenuous and dedicated promotion of renewable energy industries through an extraordinarily successful industrial policy. Renewable energy industries were considered marginal players until China got serious about promoting them in the mid-2000s. In one sector after another — first in wind, then in PVs, tomorrow probably in concentrated solar power (CSP) — China has relentlessly promoted a green option to balance and complement its pursuit of “black” coal or oil-fired energy.

China’s industrial policies are grounded in the need to build energy security and not be reliant on fuel imports from unstable countries. These policies have have been spectacularly successful and Beijing now exports its renewable energy products to many parts of the world. It is also exporting its green energy development model to other countries such as India and Brazil, and the Chinese model is being emulated by advanced countries such as Germany.

Whatever one thinks of China’s authoritarian political system, its relevance as an energy model for Taiwan is undeniable. China not only has an effective industrial policy that supports the development of new industrial sectors, but it has also been successful in pushing for drastic upgrades of its power grid so it can accommodate a variety of decentralized renewable inputs by making investments in information technology (a “smart” grid) and high-tension long distance high-voltage direct current power lines (a “strong” grid).

By contrast, Taiwan continues to be entangled in a debate over a nuclear option that Germany and many other countries are leaving or have left behind. This is a very different outlook of the future than that of Taiwan Power Co and other big firms, who anticipate that renewable energy sources will be costly and unreliable. China knows full well that the opposite is true.

Taiwan’s nuclear industry is nearly three decades old and based on now-outdated US technology. Four of the reactors used in the country’s three operating nuclear plants are General Electric boiling water reactors and two are Westinghouse pressurized water reactors, the same kind that failed at the Fukushima plant. The reactor designs date from the 1950s. The Fourth Nuclear Power Plant is designed to consist of two 1350MW Advanced Boiling Water Reactors (ABWR), sourced once from GE-Hitachi (reactors) and Mitsubishi (turbines).

While ABWR technology is Generation III, apart from the contracting involved in building the reactor, very little contribution from Taiwan or spin-off from the technology are anticipated.

No doubt there has been pressure from US sources to ensure that Taiwan continues to implement US-made nuclear technology. This is where the contrast of sticking with the current policy and adopting a “Taiwan first” renewable energy industrial strategy would be most telling.

The approach that we propose is based on extending the Hsinchu model that has been the backbone of Taiwan’s success in high-technology industries. This strategy is quite different from the one being pursued by the Chinese Nationalist Party (KMT) with its pro-nuclear stance and the Democratic Progressive Party with its anti-nuclear stance. The key is to frame the energy issue in terms of Taiwan’s industrial strategies.

Suppose that the government today announced that the nuclear energy system would be phased out over five years and replaced by a series of CSP plants. Critics say that this policy would see the nation covered in photovoltaic cells, that it would be prohibitively expensive and that it would be unreliable since power could only be generated when the sun shines or the wind blows. However, all of these claims are false.

The reality is that enacting this policy would require just a few mirror farms using molten salt technology as a heat sink that would cover no more than 125km2 of land — which is negligible given the nation’s total land area of 32,260km2, and comparable to the land currently devoted to science and technology parks.

CSP plants operating with molten salt heat storage can easily generate all the power currently produced by the three nuclear plants operating in Taiwan, as well as generating energy 24 hours a day, seven days a week in a way that is infinitely more reliable and safe than nuclear plants. The key point of this approach is that it would catapult Taiwan into a world leader position in CSP technology and equipment supply, first for national use and then to the rest of the world.

In the long run, adopting CSP technology would drive down energy costs and open up a vast global market, while at the same time reducing global carbon emissions. CSP plants with molten salts are not the only alternative to nuclear energy, a comprehensive policy would also include having rooftop solar panel installations across the country, as well as utilizing wind power and other sources, together with an upgrade of the national power grid to accommodate these fluctuating sources. The CSP example simply shows how easy it would be for Taiwan to get off the nuclear path by utilizing existing technology in a way that incurs low subsidies and causes minimal land disturbance.

There are promising signs of “green energy shoots” taking root in Taiwan, but there is not yet any sense of commitment by the Ministry of Economic Affairs and the Industrial Development Bureau to launch a new industrial revolution, one that will take the nation’s industries beyond the 20th century and into a low-carbon, energy-efficient and renewable industrial system.

What the establishment of a new green industrial paradigm requires is not just the promotion of new industries, but the promotion of a domestic market to serve as a test-bed for new products and services. It must be said that Taiwan is lagging behind China in forming the conceptual tools needed for such a revolution.

Building a new industrial system for the 21st century, one that is expanding in terms of opportunity while maintaining a sustainable relationship with its natural surroundings, would encourage entrepreneurial initiative and creativity. This is a grand project that Hsinchu and the science and industry parks can focus on for the next decade or century.

John Mathews is a professor at the Macquarie Graduate School of Management at Macquarie University. Hu Mei-chih is an associate professor at the Institute of Technology Management at National Tsing Hua University.