The dual impacts of the COVID-19 pandemic and Russia’s invasion of Ukraine have driven the costs of raw materials up globally, including for electricity and fuel.
In the past, the price of electricity in Taiwan has been lowered in response to declines in the international cost of fuel, so it is reasonable to adjust the price of electricity when there is a major increase in fuel costs.
Apart from international fuel costs, another problem with Taiwan’s electricity pricing is that it does not fully account for environmental costs. Taiwan relies on imports for 97.4 percent of its energy, but the price of electricity in Taiwan is cheaper than some countries that have their own energy sources.
Taiwan Cement Corp chairman Nelson Chang (張安平) on Wednesday last week said that electricity prices in other countries are higher than those in Taiwan.
The environmental and social costs of unreasonable electricity prices are borne by the entire population.
The need to rationalize electricity prices has been the consensus at yearly National Energy Conference sessions, and it must be faced on the nation’s path to net zero carbon emissions.
ECONOMIC BENEFITS
Energy transition is not just an environmental issue, but also an economic one. Industries that fail to respond to the worldwide trend of energy transition will be eliminated. Many companies in Taiwan have already got on board this trend by pledging to obtain a large portion of their energy from renewable sources.
Reducing subsidies for fossil fuels would have a positive effect on the development of new energy sources and on the energy management industry. This makes rationalizing electricity prices all the more important from the perspective of economic development.
Some people blame the need to rationalize electricity prices on the government’s nuclear policy, but that is a mistake.
Setting aside the likely additional cost of processing nuclear waste, consider that during former president Ma Ying-jeou’s (馬英九) tenure — when Taiwan had three active nuclear power plants — the prices of oil and electricity rose in response to international fuel costs.
Since then, government policy has prompted the green energy movement to gradually mature. That many companies want to purchase green energy shows that using renewable resources is not the reason for rising electricity prices.
In the second phase of offshore wind power, suppliers have won tenders by quoting rates of about NT$2.2 per kilowatt-hour, which is already lower than the cost of power generated by burning some fossil fuels.
FINDING A BALANCE
Evidently, developing independent renewable energy resources not only creates new business opportunities, but can also offset rising international fuel costs.
For many reasons — the carbon reduction trend; offsetting international fuel costs; furthering companies’ environmental, social and governance goals; and developing new energy industries — rationalizing the price of electricity should be supported by all parties.
While rationalizing the price of energy, the government should also protect the rights of disadvantaged families, and promote energy conservation.
If that is done effectively, Taiwanese need not spend too much more on electricity.
Chen Bing-heng is former deputy chairman of the Taiwan Renewable Energy Alliance.
Translated by Julian Clegg
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