US president-elect Donald Trump is to return to the White House in late January and the US’ climate policies could shift directions, as Trump has in the past leaned toward trade protectionism.
Taiwan has already taken a hit in the wake of the implementation of the EU’s Carbon Border Adjustment Mechanism (CBAM).
The US’ Republican Party last year also proposed the Foreign Pollution Fee Act (FPFA), which targets carbon emissions by levying a “pollution fee” on imported goods. The act is anticipated to garner more emphasis and adherence.
Taiwan’s industries could end up pincered and squeezed between the CBAM and the FPFA. Firms would have to pay far more in “pollution tariffs” on product exports than before. The government should counter this by making arrangements in advance to assist Taiwanese enterprises in accelerating the roll-out of renewables and energy reduction, reducing the impact on Taiwanese firms by decreasing the volume of their carbon emissions.
Under “profound energy saving” policies, although Taiwan has an opportunity to reach its goal to “double the renewable energy efficiency rate by 2030,” its yearly increase in renewable energy supply is only about 3 terawatt-hours (TWh) or about 10 percent to 15 percent of the entire energy supply. At its current rate, it is hard to say whether the nation would achieve this international renewables efficiency doubling goal in time.
Faced with the massive lack in green energy supply for use by the semiconductor industry and in artificial intelligence (AI), a report by the National Renewable Energy Certification Center and Taiwan Semiconductor Manufacturing Co’s (TSMC), titled 2023 Environmental Sustainability Goals Report, showed that even if TSMC reduced its yearly energy consumption by 1.5 percent, it would still fall well short of its 2030 renewable energy goal by about 25,4TWh.
On a similar note, AI champion Nvidia Corp lists in its overall plans a renewable energy demand of 100TWh as an investment condition. With such a massive lack of renewable energy supply, it would be difficult for the current renewables doubling policy to succeed.
To fill in the supply gap for maintaining key industrial development, Taiwan would be forced to open up the entrepreneurial floodgates to “innovative capability,” allowing large-scale energy consumers in the AI field and semiconductor industry to enter the renewable energy production market. “Innovation capability” is the magic keyword in the title of the Statute for Industrial Innovation (產業創新條例) guidelines.
At present, the overhead costs for enterprises that have transitioned to renewables has reached more than NT$5.5 per kilowatt-hour (kWh), vastly higher than the cost for conventional fossil fuel-generated electricity, which has pulled the reins back on many enterprises’ willingness to invest in renewables.
If the Ministry of Economic Affairs integrates “self-provision of renewable energy production and energy storing facilities” into Article 10-1 of the Statute for Industrial Innovation and invests as much as 30 percent in carbon tax credits for companies that adopt renewable energy infrastructure, it could reduce the costs of building infrastructure and facilities. It could also reduce the overhead costs for green energy for industrial-use and lower electricity pricing to within NT$4.29 per kWh, effectively promoting the transition of high-energy use companies to renewables and resolving the imbalance in electricity supply.
The AI and the semiconductor industries are important keystones in the foundation of Taiwan’s economic development. They would guarantee that renewable energy supply is adequate and lead to industry stability and sound development, which could assist Taiwanese exporters and whole-system economic stability and sound growth.
The ministry should emphasize the importance of “innovative capability” and integrate “self-provision of renewable energy production and energy storing facilities” into Article 10-1 of the Statute for Industrial Innovation, using investment to reduce carbon emissions, encourage enterprises to develop self-sufficient renewable energy provisions, and untether enterprises from needing to be limited by supply in the renewable energies market. It should also encourage enterprises to invest simultaneously in promoting the transition to renewables, giving Taiwan a double win in achieving economic development and proactive carbon emissions reductions.
Chen Yung-jen is climate and energy project manager at Greenpeace East Asia.
Translated by Tim Smith
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