Climate change has made soaring global temperatures the new normal and brought structural risks for continued economic development.
The World Meteorological Organization has projected that temperatures would range between 1.3°C and 1.9°C above pre-industrial levels from this year to 2030. The World Economic Forum’s Global Risk Report has identified extreme weather events as the top severe risk for the next 10 years, and an Organisation for Economic Co-operation and Development study has suggested that rising temperatures would reduce labor productivity. All these show that rising temperatures have officially become an economic variable with growth, inflation and supply chain implications.
The Climate Change in Taiwan: National Scientific Report 2024 by the National Environmental Research Academy warned that unchecked warming could lead to seven-month-long summers this century and about 75 extra days a year exceeding 36°C. The results would include drastic power demand increases for air conditioning, rising costs in outdoor construction and logistics sectors, and higher healthcare expenses and occupational safety costs for heat-related illnesses.
Governance and investment logics are being rewritten by health risks, productivity drops and basic infrastructure disruptions due to increasingly extreme temperature — the true costs of which are spilling over from power bills into corporate operations and public finances.
In Taiwan, drier winters with water shortages and more frequent flooding disasters in the plum rain and typhoon seasons are on the cards. Predicting reservoir fluctuations, power grid operating reserves and urban drainage requirements could become a real challenge.
Chip manufacturing, artificial intelligence servers and data centers rely on stable water and power supplies. Their operational resilience would be tested by rising temperatures and periods of doubt. For Taiwan, where technology supply chains are a lifeline, whether or not the silicon shield can withstand such conditions is a matter of national security.
The government should establish an interagency heat warning and tiered emergency response system; accelerate the deployment of smart grids and energy storage; expand demand response programs and deepen energy efficiency measures; and promote reclaimed water, groundwater infiltration systems, seawater desalination and industrial water recycling. Shade, natural ventilation, green spaces, permeable pavements, cooling public spaces and energy-efficient building design should be built into urban renewal and public infrastructure projects.
The government must also ensure a stable electricity supply and a more resilient climate framework. Climate adaptation can no longer be viewed solely as environmental policy — it must also become an integral part of industrial and national security policies.
Businesses must recognize extreme heat as core operational risks, rather than seasonal cost increases. Tech firms should improve resource efficiency by adopting high-efficiency cooling systems, energy storage backups, long-term renewable power purchase agreements and closed-loop water systems. The logistics, construction and manufacturing sectors should adjust working hours and improve heat management in workplace design. Financial firms should incorporate heat, flooding, water scarcity and carbon risks into lending decisions, insurance underwriting and investment pricing. Climate risk disclosure should also be integrated into board-level governance, capex decisions and supply chain management.
Su Wei-cheng is a lecturer and a former secretary to the president of the Legislative Yuan.
Translated by Gilda Knox Streader
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