Before the recently announced increase in electricity prices for large industrial users, the nation’s rates had been frozen for many years, and many Taiwanese have taken the low costs for granted.
However, keeping the prices so low has been a struggle over the past few years, as the nation relies on imported sources of fuel, and has no carbon tax.
Taiwan’s economic growth has in the past few years reached new highs.
The government’s successful control of the COVID-19 pandemic and strategies concerning US-China competition have led to order transfers, factory expansions and repatriation of production to Taiwan. All this resulted in a substantial increase in demand for electricity.
Data released by the Bureau of Energy showed that Taiwan’s annual electricity consumption last year reached 283 terawatt-hours, an 11.8 terawatt-hour increase from the previous year.
At the rate of 4.3 percent, it was the highest increase in the past 10 years.
The largest electricity consumption, and largest increase in use, came from the industrial sector, accounting for 57 percent of total use, or about 161.4 terawatt-hours, a 10.7 terawatt-hour increase from the previous year, and the highest growth rate in the past few years.
At the same time, the spot price of international thermal coal surged 290 percent compared with the same period last year, while the liquefied natural gas price also doubled.
These increases are reflected in international electricity prices.
Despite soaring international costs for fossil fuels and increasing domestic electricity consumption, sectors and industries that consume large amounts of electricity have been able to enjoy the advantages of the global political and economic situation, as well as favorable policies set by the government, including lower rates under the protection of a policy designed to keep electricity prices low for household users who do not have such advantages.
These energy-intensive industries are all competitive in their respective markets and create economic growth for Taiwan, but ultimately the shortfall caused by low electricity prices has to be made up by taxes paid by the population as a whole.
Industries or people that consume less electricity also have to bear the consequences of the low electricity rates, resulting in inequality, which is exacerbated by the added pressures of inflation.
Setting electricity prices involves a great deal of expertise, and the decisions are made exclusively by a review committee.
However, since the beginning of the year, the Russian invasion of Ukraine has driven up prices for oil and gas, which shows that it is necessary for the government to promote the diversification of renewable energy sources to boost the nation’s energy resilience.
Companies that have benefited from Taiwan’s economic development and have achieved record profits must also sense the trend of increasing international energy and carbon emission costs.
Inflation has increased the pressure on ordinary people. In addition to many factors in the review of electricity prices, social justice must also be considered.
Chen Ping-hei is a distinguished professor in National Taiwan University’s Department of Mechanical Engineering. Chiang Ya-chi is an associate professor of intellectual property law at National Taipei University of Technology.
Translated by Lin Lee-kai
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