Revisiting Taiwan’s “Nuclear-Free Homeland” Policy

The issue remains politically charged, but the challenge of global warming is causing Taiwan to reexamine the decision to halt nuclear power development.

BY PHILIP LIU

Confronted with volatile oil prices and the challenge of global warming, Taiwan has embarked on a serious review of its “nuclear-free homeland” policy, following many countries worldwide that have re-embraced nuclear power. 

The review was triggered by the release of the report “Global Warming and Taiwan’s Energy Policy” in February 2008, on the eve of the presidential election, by the environmental and energy research panel of Academia Sinica, Taiwan’s highest academic institution. The report urged the prospective new administration to adopt a policy of promoting nuclear power, calling it is an inevitable choice for Taiwan in order to slash CO2 emissions and stabilize energy supply in view of the immaturity of renewable energies such as wind power, solar energy, and even bio-fuel. Besides continuing construction of the fourth nuclear power plant, the panel proposed postponement of the decommissioning of the three existing nuclear power plants – and even consideration of installing additional nuclear units at the existing plants – as long as safety can be assured and nuclear waste properly disposed of. 

The report also recommended adjusting the island’s industrial structure by discouraging the further development of energy-intensive industries such as petrochemicals, steel, paper-making, and cement. Headed by Lee Yuan-tseh, a Nobel laureate in chemistry and former president of Academia Sinica, and composed of leading scientists at the institution from a variety of disciplines, the panel devoted half a year to researching and writing the report. 

Lee Yuan-tseh later described Taiwan as caught in a dilemma between its commitment to reduce greenhouse-gas emissions and the concept of a “nuclear-free homeland.” While personally endorsing the principle of a “nuclear-free homeland” as an ideal, Lee suggested that Taiwan continue utilizing nuclear power for another 50 years – regarding it as the “lesser of two evils” – until renewable-energy alternatives mature. He noted that human beings are living in a world of “excessive development,” that the world’s crude oil reserves are expected to be exhausted in 40-60 years, and that Taiwan’s situation is especially serious in that its per capita CO2 emissions are 2.5 times the global average.  

The report received the endorsement of Kuomintang presidential candidate Ma Ying-jeou, who is now president. But it caused an uproar from environmentalist groups, who reminded the government and public that the policy of striving toward the goal of a “nuclear-free homeland” is enshrined in the “Basic Environmental Law” enacted in 2002 and reaffirmed by the National Energy Conference in 2005. Under the policy, the existing three nuclear power plants should be decommissioned after 40 years of operation, and no new nuclear facilities should be built after construction of the fourth nuclear power plant is completed. 

In line with the apparent pro-nuclear power stance of President Ma, the executive branch under Premier Liu Chao-shiuan has started to modify the “anti-nuclear power policy” of the former Democratic Progressive Party (DPP) administration. In June, the Executive Yuan approved a set of “Guidelines for a Sustainable Energy Policy,” which call for stepping up efforts to utilize clean energy and promote energy conservation. Among the objectives is increasing the proportion of low CO2-emission fuels in power generation from the current 40% to over 55% by 2025, so that total CO2 emissions can be returned to the 2008 level in the period 2016-2020 and to the 2000 level by 2025. The guidelines list nuclear power as an alternative energy that is free of CO2 emissions. 

In late August, the Executive Yuan further approved the “Strategy for Energy Safety,” calling for raising the combined contribution of indigenous energy, renewable energy, and semi-indigenous energy (nuclear power) to a total of 18% of power generation by 2025. That would be double the 9% of 2007 and help cut Taiwan’s reliance on imported energy. The document includes a plan to solicit opinions from various sectors of society so as to forge a “consensus for the expanded utilization of nuclear power.” It pledges to put a mechanism in place for “attaining the reasonable utilization of nuclear power.”

Although the Executive Yuan stopped short of directly challenging the “nuclear-free homeland” policy, Economics Minister Yiin Chii-min concedes that to solve the problem of CO2 emissions, the resumption of nuclear-power development appears to be inevitable. Sooner or later, that would mean revival of national debate on the issue – the source of bitter arguments and political contention in the past. 

What may strengthen the hand of the pro-nuclear side this time is that last year’s soaring oil prices and more importantly the growing concern over climate change have altered the content of the global debate. Further, hopes have been diminished that bio-fuels would provide the answer to the energy challenge, as it has become apparent that this alternative threatens global food supply, consumes large amounts of energy during the production process, and releases stabilized CO2 during the cultivation of bio-fuel crops. 

Worldwide trend

If Taiwan now reconsiders its approach to nuclear power, it would be but one of many countries in the world to be rethinking its position. During a seminar in Taipei on nuclear power last November, for example, Irene Aegerter, a Swiss nuclear-power expert, reported that Switzerland has moved away from its anti-nuclear power stance. In a 2003 referendum, 66% of voters opposed the dismantling of nuclear power plants, and in another referendum in 2006, 70% supported the continuing operation of the existing five nuclear-power generators and 49% even endorsed the construction of new nuclear plants. That was in sharp contrast to a 1979 referendum, held in the wake of the Three Mile Island incident in the United States, when 51% favored the elimination of nuclear power.  

In a reversal of its policy to suspend the construction of new nuclear power plants following the Three Mile Island and Chernobyl incidents, the U.S. Nuclear Regulatory Commission (USNRC) has approved applications to postpone the scheduled decommissioning of 25 nuclear power plants, one-quarter of the nation’s total. That will extend their operational life from the original 40 years to 60.

Korea, Taiwan’s major economic rival, is building six nuclear power units, to be added to the existing 20, as part of a plan to boost the contribution of nuclear power from the current 20-30% of electricity generation to 50%.

Backed by its strong nuclear-power technology, China plans to install 13 new nuclear power plants by 2020, mostly in coastal provinces. Together with the four plants already in operation, that would boost nuclear-power generating capacity to 40 million kilowatts, 4% of the total capacity, up from 17 million kilowatts or less than 2% now. The purpose is to slash reliance on coal-fired thermal power, which now supplies over 80% of China’s total power consumption and is responsible for over half of all CO2 emissions. 

Many countries have been inspired by the success of France in nuclear power. Nuclear facilities now account for 77% of French power supply, lowering the share of power generation in the nation’s total greenhouse-gas emissions to 10%. In other industrially developed nations the average is 40%. 

According to World Nuclear Association data, over 39 nuclear power plants are currently under construction worldwide, with another 106 on the drawing boards.  The result has been severe overstraining of equipment supply, leading to backlogs of at least 10 years for the delivery of orders. 

David Lin, director of the nuclear generation department at the state-run Taiwan Power Co., notes that the revival of global interest in nuclear power should also be attributed to the marked progress in nuclear-power safety over the past years, due both to technological improvements and efforts by the World Association of Nuclear Operators (WANO) to raise operational standards. 

Encouraged by the global trend, Taipower has started planning for the postponed decommissioning of the existing three plants. Under the existing schedule, the two generators of the first nuclear plant, located in Chinshan, should be shut down nine and ten years from now, respectively. David Lin says the utility has begun studying the feasibility of extending the operation of existing plants and even installing additional generators at the existing plant sites. “In fact, we have obtained the approval of the Ministry of Economic Affairs to renew the license of the first nuclear power plant and will apply for postponing its decommissioning in 2009,” he says. 

Taipower stresses that postponed decommissioning may be the only way to avoid future power shortages, as almost all of its new thermal-power projects have been blocked by environmental opposition. Taipower Chairman Chen Kuei-min has warned publicly that Taiwan may be affected by a major power shortage between 2013 and 2019 as the utility has been unable to obtain environmental-impact assessment approval for a series of projects that would have increased the system’s installed capacity by over 6 million kilowatts. 

Re-embracing nuclear power would also help Taipower reduce its heavy power-generation costs and its staggering deficit. Due to high oil prices and the government’s low power-rate policy, the utility wound up NT$31 billion (US$895 million) in the red in 2007; final 2008 figures are expected to show a loss of NT$100 billion (US$2.9 billion). Taipower points out that its nuclear power generation cost NT$0.63 per kilowatt-hour in 2007, compared with NT$1.18 for coal-fired plants, NT$3.72 for oil-fired, and NT$3.24 for liquefied natural gas (LNG). 

The three existing nuclear power plants generated 39 billion kilowatt-hours of power in 2007. If other fuels were substituted for nuclear, the additional cost would have come to NT$21.5 billion (US$620 million) for coal, NT$120.5 billion (US$3.5 billion) for oil, and NT$102 billion (US$2.9 billion) for LNG. 

In addition, nuclear power is regarded as a semi-indigenous energy. Because of its compact size, Taipower can store more than a year’s worth of nuclear fuel, compared with less than one week’s stock of LNG, which accounts for 30% of the island’s power generation. That is an important consideration for Taiwan in view of its heavy reliance on imported energy and its particular political environment. A nuclear power plant with 1 million kilowatts of capacity consumes only 30-40 metric tons of uranium a year, compared with 3-4 million metric tons of coal for a thermal power plant of the same capacity. 

Adding more generators

Besides extending the operation of the existing plants, Taipower is also looking at boosting nuclear’s share in the island’s total power generation by installing new generators at the four existing plant sites, in line with the Academia Sinica proposal. The company says 10 additional generators could be installed at those sites, adding 13 million kilowatts in capacity. The current total installed nuclear capacity of 5.14 million kilowatts represented 13.5% of the island’s total power capacity as of the end of 2007. After the two generators of the fourth nuclear plant come onstream (scheduled for this year and next), the nuclear portion would increase to 7.84 million kilowatts or 20% of the total. In view of the complexity of the projects and the difficulty in procuring equipment, Tai- power hopes that preparatory work for the installation of extra generators could start as soon as possible. 

Formidable opposition to all these plans can be expected from environmental forces, whose strong pressure prompted the DPP government to announce the suspension of construction of the fourth nuclear power plant on October 27, 2001. Work was resumed 110 days later under heavy pressure from the Kuomintang-dominated Legislative Yuan and following a ruling from the Council of Grand Justices. But the disruption pushed back the target date for inauguration of the plant’s first generator to July 2009, three years behind the original schedule, and forced the government to provide NT$44.7 billion (US$1.3 billion) in additional budget to cover increased construction costs. The revised price tag of NT$233.5 billion (US$6.7 billion) makes the plant the most expensive nuclear facility in the world.  

Still adamantly opposed to nuclear power, environmentalists cite Taiwan’s limited space and high population density, greatly complicating the logistics of emergency evacuation, should that ever become necessary. The most serious situation is in Taipei County, where Magistrate Chou Hsi-wei has expressed concern that his county is host to three of the four nuclear sites. 

Gloria Hsu, professor of atmospheric sciences at National Taiwan University, is among those who insist that the “nuclear-free homeland” policy remains valid despite global warming. “There is still no effective solution to the nuclear waste-disposal problem, and it’s irresponsible to pass the buck to the next generations,” she maintains. “The global-warming problem can be solved by energy conservation and expanded utilization of renewable energy, as has been demonstrated in Germany.”  

The issue has been complicated by Taipower’s failure so far to find sites for the final disposal of nuclear waste, as mandated by the “Statute for Final Disposal Facilities for Low-Radioactive Nuclear Wastes.” According to the statute, the Ministry of Economic Affairs (MOEA) is responsible for recommending such sites, after which residents of the prospective host communities would vote in a referendum on whether to accept the facility in return for payment of up to NT$5 billion (US$144 million) annually. Last August, the MOEA nominated three potential candidate sites – Daren Village in Taitung County, Mudan Village in Pingtung County, and Wangan Village in Penghu. The Ministry is now soliciting volunteer sites before finalizing a short-list of at least two locations. The final disposal facility, which the statute stipulates should be set up by 2016, will accommodate the existing 130,000 barrels of low-level nuclear waste, including 97,000 barrels now stored on Orchid Island.  

Taipower must also find a means for final disposal of high-level nuclear waste, or used fuel (although 96% of it could be processed for re-use). The used nuclear fuel of the existing three nuclear plants is being stored temporarily in water pools inside the plants. Last August the Environmental Protection Administration approved the environment impact assessment for the construction of an intermediary dry storage site for the used fuel of the first nuclear power plant. The facility, consisting of a 5.7-meter-thick concrete structure to house sealed metal boxes containing the used fuel, is considered indispensable for the continued operation of the plant’s two generators, as its storage pools will be full by 2010 and 2011. 

With the thawing of the cross-Strait relationship, some have proposed negotiating with China to arrange for final disposal sites on the mainland for both low- and high-level waste. Another possible solution for the high-level waste is the Global Nuclear Energy Partnership (GNEP) proposed by the U.S government in 2006; for nuclear fuel purchased from the United States, the program calls for the U.S. government to retrieve used fuel it sells from other countries for final disposal. The initiative is designed to reduce the risks associated with nuclear proliferation.  

Given the multitude of challenges, the road for Taiwan to return to developing nuclear power promises to be a rugged one, should it finally decide to take that path. 

The Greenhouse Gas Emission Dilemma

Taiwan wishes to show that it is a good international citizen, but can it effectively reduce CO2 levels without damaging its economic prospects?

BY TIMOTHY FERRY

The Greenhouse Gas Reduction Act (GGRA) bill sponsored by the Environmental Protection Administration (EPA) is once again before the legislature, raising hackles among industry leaders and environmentalists alike. The business community fears the bill will straightjacket Taiwan’s economy with uncompetitive energy policies, while environmentalists decry the bill’s lack of clear timetables and objectives.

The bill aims to limit Taiwan’s greenhouse gas emissions through a multistage, open-ended approach that would ultimately lead to Taiwan entering into an international carbon cap-and-trade system, such as the European Carbon Trade network. First proposed in 2006, the bill has gone through a series of revisions that seek to make it more palatable to industry while still achieving its stated purpose of carbon emissions reduction. 

At first glance, the bill seems like a positive step for Taiwan to help mitigate the effects of global warming. Taiwan represents just 0.38% of the world’s population, but emits nearly 1% of the world’s total greenhouse gases, primarily CO2 . According to International Energy Agency (IEA) data, Taiwan released over 270 million metric tons of CO2  in 2006, a rate of  11.87 tons per capita, more than double 1990 levels and the highest per capita level in Asia. Taiwan’s average temperature has increased by over one degree Celsius over the past century, faster than the global average, prompting President Ma Ying Jeou to promise, in his inaugural address last May, to undertake “anti-global warming measures.” 

Critics in industry assert that the act would put Taiwan’s competitiveness at risk at a time of worsening global economic conditions. The GGRA bill aside, they are already concerned over what they see as the EPA’s recent obstructionism in the face of Taiwan’s growing energy demand. Currently, proposals to build six new coal-fired power plants are being held up by the EPA’s Environmental Impact Assessment panels, threatening Taiwan’s future electricity supply. These projects include proposed new high-efficiency units at Changgong, Linkou, and Dalin. 

L.C. Chen, co-chair of AmCham’s Infrastructure Committee and president of Gibsin Engineers, the firm that designed many of Taiwan’s power plants, says he doubts that the EPA performed a thorough assessment of the bill’s impact on Taiwan’s energy supply. “It’s easy to make a law,” he says, “but how to implement it? It’s not really thought through.” 

Since 1990, Taiwan’s energy demand has grown roughly in lockstep with the economy, maintaining nearly 6% annual growth until slowing since the turn of the century. Short of natural resources, Taiwan must rely on imports for over 98% of its energy needs, which highlights the importance of effective policies to ensure a steady supply of fuel. 

Nearly 60% of that fuel is used for electrical power generation. The Taiwan Power Co., the state-owned utility, owns 75% of the country’s power-generating capacity, with IPPs (independent power providers) taking up the rest. About half of Taiwan’s electricity is produced by coal-fired plants, 20% from liquefied natural gas (LNG), 20% by nuclear reactors, and the rest by hydroelectric facilities or other renewable energy sources. 

According to L.C. Chen, Taiwan has added nearly 30% to installed capacity since 2000 – mostly in the form of LNG plants – to meet the growing demand. Taipower’s website forecasts further energy demand increases of 4% annually for the next decade.

The IEA reports that Taiwan imported 8,349 million tons of LNG in 2006, making it the third largest importer of LNG in Asia, following Japan and South Korea, and the seventh largest in the world. LNG is considered a greener alternative to coal-fired power plants, as it produces half the CO2  but provides more energy per equivalent unit. But an over-reliance on LNG can create some unintended consequences that industry sources see as harmful to Taiwan’s future. 

Energy policy needs to strike a balance among three factors – the “three E’s” of energy security, economics, and the environment. While LNG power plants are environmentally more acceptable, there is a danger of the balance tipping dangerously toward environmental concerns to the detriment of energy security and the economy. 

Taipower charges about NT$1.5 per kilowatt generated, but currently spends about NT$2.5 producing it. As a result of last year’s energy crisis, the company ran a deficit for 2008 of over NT$30 billion (US$866 million) and with fuel contracts already locked in, it looks set to lose substantial sums again this year. Over-emphasizing LNG will only exacerbate this serious problem, the critics say. At today’s prices, it costs NT$1.5 more per kilowatt-hour to generate electricity with LNG than with coal. The current dependence on LNG to produce 20% of Taiwan’s electricity already adds tremendously to Taipower’s budget woes, and that reliance is set to increase. 

The Ministry of Economic Affairs’ Bureau of Energy notes that under its “Expanding Domestic Natural Gas Consumption Project,” annual natural gas consumption is expected to increase to 10.5 million tons in 2010, 16 million tons in 2020, and 20 million tons in 2025. The Executive Yuan’s Sustainable Energy Policy Framework envisions “over 25% LNG generation by 2025.” Business organizations argue that this will add billions to Taipower’s costs, necessitating steep hikes in utility rates and possibly causing power shortages (if the utility is strapped for funds to expand capacity), severely compromising Taiwan’s role as a major export economy. 

Questions of energy security

Other concerns relate to energy security. Coal is readily storable, allowing Taiwan to keep a 40-day reserve as a hedge against future energy shocks. LNG, in contrast, must be stored at a constant 160 degrees below zero to maintain the fuel in liquid form. This requires costly cryonic storage tanks, which are in short supply in Taiwan. Currently, Taiwan has only a 10-day reserve of LNG – far from stated goals. 

Procuring LNG is a complicated process. Much of Taiwan’s supply comes from Indonesia under long-term contracts signed in the early 1990s. Many of these contracts expire this year, necessitating a further round of contract negotiations. The last time Taipower opened a tender for LNG supply, there were only two bidders, CPC Corp. Taiwan (formerly Chinese Petroleum) and another local company, due to contractual inconsistencies with international norms.

Further complicating the procurement process, Indonesia has recently proven to be an unreliable energy partner. Due to shipments that were cancelled or never arrived, Taiwan last year was in the uncomfortable position of having to acquire supplies from Qatar on the open spot market, where competition for fuel is intense. The U.S. Energy Information Administration forecasts that by 2015, LNG will lose its allure – as nations recognize the inherent risks associated with the relatively scarce fuel – and the market will see a return to coal. Locking in Taiwan’s energy system to LNG threatens to put Taiwan on the wrong side of that trend, many experts warn. 

Industry leaders further worry that the GGRA bill would centralize too much power over business options in one agency, the EPA. But the EPA counters that the GGRA does not regulate which fuels may be used, as long as emissions decrease. It also notes that the bill does not specify targets and anticipates that entrance into a global cap-and-trade scheme is at least eight to ten years away, with a steady sharing of best practices in the meantime. 

The EPA contends that the GGRA bill is necessary to avoid future sanctions by the EU or other regions participating in cap-and-trade programs. “If you aren’t ready in advance and if someday the global village asks you to cut down CO2  emissions, what can you do?” asks Jenny Hui-chen Chien, manager of the EPA’s Greenhouse Gas Reduction Management Office. “It will take more money at that point.”

Significantly, the GGRA bill itself contains no specific carbon reduction objectives. Rather, the EPA says, it “provides a framework for our government agencies to effectively work together to coordinate GHG reduction efforts.” According to the EPA, the GGRA bill and other initiatives all target the energy and industrial sectors as they are biggest polluters and the most easily managed. 

“It’s a 20-year roadmap,” says Chien. “The point is to reduce CO2  emissions with the lowest possible cost.” 

The UN-sponsored Kyoto Protocol, established in 1997, set emission reduction targets for member countries as well as creating the cap-and-trade scheme to help achieve these targets, which began in 2005 and will expire in 2012. As the world nears the post-Kyoto era, much uncertainty exists over the future direction of global climate accords. The current system has come under mounting criticism. The EU’s sourcing of bio-fuels such as palm oil, for example, has aided in reducing Europe’s carbon emissions, but has turned Indonesia into the world’s third biggest carbon emitter (behind the United States and China) as rainforests are destroyed to make way for palm plantations. 

Much of the discord over how to deal with global warming stems from profoundly differing views of its likely future impact. Former U.S. Vice President Al Gore, for one, has raised catastrophic visions of the potential ramifications, while the Bush administration downplayed all such fears. Even the United Nations’ Intergovernmental Panel on Climate Change (IPCC) has been hard put to come up with a consensus on the issue. About all that scientists party to the study can agree on is that global warming is happening and is induced by human activity. The IPCC’s estimates of future warming range from 1 to 6.5 degrees Celsius over the next century – a huge disparity that does little to dispel controversy or aid in policy development. 

This disparity is seen in how countries treat the issue. The recent Hokkaido conference of the “G8 plus eight” countries was only able to achieve agreement to reduce pollution levels by 2050 – a political eternity and essentially meaningless. Virtually every major developing nation stands firmly opposed to any commitments on carbon emissions that might retard its economic growth.

Determining Taiwan’s burden

Ultimately the question boils down to how much of the burden of mitigating the global threat should Taiwan shoulder. “Taiwan produces only 1% of the world’s emissions,” notes L.C. Chen, “yet the EPA tries to save the world by stopping six units” of coal-fired power plants held up in the EIA process.

The EPA proudly touts the GGRA as the first such initiative among developing countries, but this very fact leads many to question its necessity. The United States and China together account for 40% of global CO2  emissions, yet neither is a signatory to the Kyoto Protocol or United Nations Framework Convention on Climate Change, nor do they engage in any comprehensive cap-and-trade system. The incoming Obama administration is widely seen as more receptive to the Kyoto accords, yet most experts doubt that the United States would be able to install a comprehensive cap-and-trade system before Obama’s second term. In the meantime, China on the average adds two coal-fired power plants every week, and vows to match the U.S. installed electrical-generating capacity of 1,000 gigawatts by 2010. Taiwan’s 40 gigawatts are relatively insignificant by comparison. 

During his presidential campaign, Ma Ying-jeou pledged to return CO2  emissions to 2008 levels by 2020, and to reduce them further to 2000 levels by 2025. But those goals are a practical impossibility, argues L.C. Chen, as efficiencies and alternative energy sources cannot be developed quickly enough to meet these stringent targets. The only way to achieve these goals, he says, would be for Taiwan to annually acquire almost US$3 billion worth of credits off the open market. Combined with Taipower’s huge deficits and the cost of producing electricity from LNG, Chen estimates, the total bill would be NT$300 billion (US$8.7 billion) dollars a year – a vast sum that some feel would be equivalent to economic suicide. 

Alternative energy is where industrialists and environmentalists find common ground. Chen considers solar energy a possible replacement technology for current systems, noting that while solar is now still quite expensive, costs are coming down 10% every year and by 2050 will reach parity with conventional energy sources. 

Andreas Gursch, Greater China Representative for environmental consultancy EPEA Hamburg Institute, agrees that alternative energy is the path of the future but sees strict regulations on greenhouse gases – and pricing adjustments – as necessary to ensure progress in that direction. “Electricity in Taiwan is too cheap – this is a fact,” he says. “You only promote efficiency, especially in manufacturing, if there’s an opportunity cost. Without these attendant costs, who cares?” 

Gursch says that these price adjustments can be made without hurting Taiwan’s competitiveness. “Taiwan is not on the horizon for companies looking for cheap labor, cheap power, cheap water,” he argues. “You come to Taiwan because of the extremely good infrastructure and the clusters of industries in science parks, and because you want to produce high quality stuff.”

Jenny Chien maintains that the GGRA in fact poses an opportunity for business. She says the bill is open and flexible, and would spur Taiwan to “invest in technology for the new economy.”

The Legislative Yuan will clearly have much to consider on both sides of the issue as it deliberates the GGRA bill.

Solar and LED Industries Provide Energy Alternatives

The already fast growth in these sectors may accelerate as larger players begin to enter the market.   

BY SEAN SCANLAN

Due to a drop-off in levels of GDP growth and the migration of heavy industries to mainland China, Taiwan will find itself under less pressure than before to continuously expand its energy supply – always a difficult challenge because Taiwan is almost entirely dependent on foreign sources for its energy. According to the Bureau of Energy of the Ministry of Economic Affairs (MOEA), energy demand is expected to grow by just 2.1% a year until 2020. As a result, the Taiwan government will be able to concentrate on renewable energy and energy efficiency as the key pillars of its energy policy.  

Taiwan is in a better position than most countries to capitalize on the potential of renewable energy. Its manufacturers are adept at producing just the sort of high-tech, low-margin OEM equipment – such as solar panels and wind turbines – that is associated with renewable energy. Taiwan’s solar industry already ranks fifth in the world in terms of production value, estimated at NT$90 billion (US$2.6 billion) for 2008, according to the Photovoltaics Technology Center of Taiwan’s Industrial Technology Research Institute. 

Taiwan has developed strength in all facets of the solar industry, with strong vertical integration ranging from solar cells to solar panels. It has come as a particular advantage that solar cells are made from the same polysilicon material used by Taiwan’s chipmakers. That enabled local semiconductor manufacturer Mosel Vitelic, for example, to refocus its operations from DRAM production to solar cells, a move that has significantly lifted corporate profits. 

Whereas Taiwan’s development of solar energy has been spurred mainly by the private sector’s vision of eventual profits from export opportunities, in many other countries governments have had to rely on subsidies and tax breaks to drive the solar industry. Germany initiated subsidies for solar energy in 2004, and similar programs have been implemented by Spain, Italy, and France. Passage of California’s Solar Initiative in 2008, providing for state rebates for installation of small solar energy systems, has also contributed to unleashing global demand. 

Taiwan officials hope that solar energy equipment could become the country’s third industry, following semiconductors and LCD panels, to exceed production value of NT$1 trillion (US$29 billion). As an indication of how this industry has been growing, the Southern Taiwan Science Park has added another 20-hectare site just to accommodate new players. Growth has been so strong that the number of firms operating in the solar industry in Taiwan more than doubled – to a total of 76 – from 2005 to 2007. With little prodding or government stimulus, Taiwan could see a thriving solar industry that will make a substantial economic contribution in the future. In addition, the domestic production of solar panels could help Taiwan’s government achieve its goal of producing 15% of the nation’s energy from renewable sources by the year 2025.  

The most significant growth sector in the solar industry is Building Integrated Photovoltaics or BIPV. This acronym refers to solar equipment designed to be part of a building’s design and construction, such as the array of products used by architects and engineers to integrate solar panels into both the facade and roofs of new buildings. One important development has been thin-film solar cells, the next generation of the original solar panel. Although they are less efficient in converting electricity, the thinness of the new solar cells allows them to be embedded in a range of materials, including glass, creating the opportunity for glass-curtain walls and windows that capture the sun’s rays and turn them into useful electricity. 

Domestically, the adoption of solar power has been making very slow progress, however. In 2010, solar energy is expected to contribute just 0.1% of the nation’s total energy supply, and by 2025 this figure is expected to rise only to 1.8%, according to the Bureau of Energy. Among the factors that have hindered more widespread adoption of solar energy are the continuing high cost of solar panels, the low cost of domestic electricity, and the limited government incentives and subsidies compared with those offered by European countries. Export orders are what have kept the Taiwanese solar industry going. 

Promoting energy efficiency

The government’s most important domestic initiative regarding energy supply has been the promotion of energy efficiency. Many believe that increased efficiency can dramatically lower domestic energy consumption, and in turn lower Taiwan’s CO2 emissions. Government-led programs to promote efficiency date back to the mid-1970s when refrigerators consumed nearly 35% of a typical family’s total electricity demand. This led California to establish the first refrigerator-efficiency standards, which quickly reduced the appliance’s electrical consumption to just 15% of total household electrical use. And to many people’s surprise, the purchase price of refrigerators fell. Many other governments, including Taiwan’s, followed suit, and the success of this program led to similar standards for air-conditioners, and most recently television sets.

Currently the increasing adoption of LEDs (light emitting diodes) has brought hope that another breakthrough can be achieved in creating more energy-efficient appliances. LEDs are best described as mini-light bulbs that fit easily into an electronic circuit board. First used to illuminate alarm clocks, they are now being employed in everything from cell phones to brake lights and even household lighting fixtures. Because LEDs have no filament thread, they are more durable than traditional incandescent bulbs. That also makes them longer lasting, with an average life of 30,000 hours, thirty times that of incandescent bulbs. LEDs also consume less electricity, as the lack of a filament wire means that little thermal energy is wasted. An LED bulb consumes between 2 and 10 watts, or one-third the electricity of an incandescent bulb.

The limitations of LED lights have traditionally been cost as well as size. LEDs are typically quite small and need to be clustered together, such as on a string of lights forming a brake light on the rear of an auto, or in a sunflower-type pattern arranged on a flashlight. Another shortcoming has been brightness, and for this reason they are not used as auto headlights or overhead lights in stores and offices. Perhaps the most common example of LED lights is the thousands of traffic lights and crosswalk signs now seen every day in cities throughout Taiwan. 

One of the cornerstones of the Ma administration’s four-year program to cut CO2 emissions is the replacement of all incandescent lamps in Taiwan with energy-saving alternatives. Going one step further, a new policy is in the works, much like other countries around the world, to stop production of incandescent bulbs by 2010. In line with this plan, the MOEA budgeted roughly NT$229 million (US$6.6 million) in 2008 to convert 420,000 traffic lights to LEDs. The amount of power consumed by the new lights is expected to be close to 85% less than the conventional versions. After all traffic lights have been upgraded, the next target will be street lights. 

Besides being visible at almost every major intersection, LEDs are also making their way into consumer electronic products with a profound effect. For example, LED backlights are one of the reasons for extended battery life in newly launched notebook computers; some models now boast upwards of 16 hours of battery life. The same trend will be taking place with LCD monitors and TVs. At the moment about 7% of desktop-computer LCD monitors use an LED backlight, and vendors from Taiwan expect that figure to quickly increase to 25%, according to iSupply, a website that monitors the electronics industry. 

It is not just longer life and greater energy efficiency that is driving this industry, says Murphy Lin, director of the Industry and Technology Research Division, Photonics Industry & Technology Development Association. Also important, he notes, are LEDs’ better color saturation and “warm lighting” – an effect that is not possible through fluorescent lights or CCFL (cold cathode fluorescent lamps). He believes that LED lights will make their first splash as store lighting fixtures, particularly for retailers of clothing and accessories since they place a premium on warm, attractive lighting such as that now provided by expensive and less efficient tungsten bulbs. 

Another prospective LED application is use in refrigerated units, where typical lighting leads to energy inefficiency as the lights generate heat in an area meant to be cold. Installing cooler LED lights in these freezers can lead to exponential energy savings. For example, a hypermarket could save between 40-60% of their electricity costs by switching over to LED lighting, says Andy Liu, sales specialist for Energyled Corp., a Taiwanese company focused on LED packaging and model design. 

Another benefit of LED lighting is that it transmits no UV rays, which means it is well suited to museums displaying fragile works that could be damaged. Liu says this concern has led the National Palace Museum to refit all of its lighting to LED. The market penetration internationally for LEDs in general lighting applications is expected to reach 10% in the period 2012-2014, according Lin of PIDA. He adds that the cost per unit should drop dramatically, as much as 50% over the next two years, as economies of scale and manufacturing efficiency improve. 

LEDs are also suitable for outdoor lighting and digital signage or “narrowcasting,” as they consume less electricity and last longer. Those are important considerations when constructing huge freeway signs as well as scoreboards for major sporting events.

These diverse LED applications have led to tremendous growth opportunities for Taiwanese manufacturers. According to data released at the 2008 LED Forum, Taiwan’s production value reached NT$53.9 billion (US$1.6 billion) in 2007, accounting for approximately one-quarter of the total global value. 

Taiwan companies, already skilled in producing electronic components and appliances, find themselves perfectly positioned for yet another promising new industry that capitalizes upon energy efficiency and environmental concerns. LED production, much like the solar industry, is a low-margin, OEM-type industry that requires a tight-knit, vertically integrated supply chain. In fact, the structure of both these industries plays to Taiwan’s strengths. 

The LED sector encompasses as many as 200 mid-sized companies producing everything from upstream epitaxy (the growth of a crystal layer on crystal) to downstream packaging. But a number of patents held by U.S. and Japanese firms have left the local supply chain incomplete, and recently, interest from powerful local conglomerates such as Chi Mei and AUO have started to influence the industry. Most analysts agree that both patent licensing agreements and the involvement of larger local enterprises will lead Taiwan’s LED industry to experience continued growth.

Building on an R&D Foundation

Taiwan hopes that its experience in other tech sectors will provide a good model for research in energy conservation and diversification.

BY MICHELLE CHAING

Taiwan may not be at the cutting edge of energy research, but its R&D efforts in energy conservation and diversification techniques have gained momentum in recent years in response to increasing concern over the structure of the national energy supply structure and the environmental ramifications. Although the country is not rich in conventional energy resources, Taiwan has significant opportunities to develop such renewable energy as biomass, solar, wind power, and geothermal. Over the past decade since the adoption of the Kyoto Protocol to the United Nations Framework Convention on Climate Change, the Taiwan government has made substantial efforts to promote R&D on clean energy, with the hope of utilizing Taiwan’s existing well-developed technology infrastructure to its advantage. 

A key part of that infrastructure is the existence of strong technical universities and national research institutions such as the Industrial Technology Research Institute (ITRI). The costs and risks associated with R&D in Taiwan are typically shared through private-public alliances, akin to similar consortiums in North America, Europe, and elsewhere. What has particularly distinguished R&D in Taiwan – helping make possible the country’s prominent role in the semiconductor industry, for instance – is an emphasis on rapidly adopting new technological developments from abroad, improving them, and swiftly diffusing the results to as many private firms as possible. The hope is that this same capacity to move quickly from theoretical underpinnings to widespread commercial application can be repeated in the relatively nascent domain of energy conservation and diversification.

Most government-sponsored R&D in Taiwan, in all sectors, is overseen primarily by the Science and Technology Advisory Group (STAG) of the Executive Yuan. STAG does not implement projects itself, but rather acts as the coordinator among relevant government agencies, industries, research organizations, and academic institutions. Eminent local and foreign science and technology leaders are invited to serve on the advisory board, whose mission is to devise policies and programs to be implemented on the national level. Three other government agencies also play an important role in energy R&D in Taiwan: 

• The Bureau of Energy of the Ministry of Economic Affairs (MOEA), which is responsible for adjusting the composition of Taiwan’s energy supply, has been encouraging research on renewable energy sources and the greater utilization of those resources. Since 2000, the Bureau of Energy has also worked together with National Taiwan University (NTU) and ITRI to establish an online database of renewable energy research. 
• The National Science Council encourages energy diversification and conservation research at academic institutions by coordinating research efforts and providing grants.
• The Ministry of Education promotes sustainable development on university campus, diffuses renewable energy into the curricula, and encourages researchers at universities to develop renewable energy technology.

The government has allocated NT$3 billion (US$86.6 million) annually since 2004 towards the advancement of clean energy technology. Compared with government investment in Japan (the highest in the world, at US$3.5 billion annually) and in South Korea (US$400 billion), Taiwan’s energy R&D budget is small, but the government has made a considerable effort to provide structure and coherency to its clean energy development goals. Since 1998, Taiwan has twice convened a National Energy Conference to coordinate the country’s response to technological developments in the energy sector. The latest conference, held in July 2005, oriented Taiwan’s R&D strategy in energy technologies towards five “mission-oriented” areas (see the accompanying chart). 

The Bureau of Energy and the National Science Council have commissioned various R&D institutes to carry out projects in line with the clean energy development goals since the 1990s. The Energy and Environment Resources Laboratories at ITRI have been charged with developing research in biomass energy, solar energy, and fuel cell/hydrogen technologies. Also at ITRI, the Materials and Chemical Research Laboratories are working on photovoltaic cells, which convert solar energy to electricity, for industrial use. Such universities as NTU, National Taiwan University of Science and Technology, National Kaohsiung First University of Science and Technology, National Cheng Kung University, National Chiao Tung University, and Yuan Ze University, as well as several national laboratories, have also made headway in energy R&D, often in conjunction with universities and laboratories abroad. 

Despite considerable progress in creating an effective environment for R&D on energy diversification and conservation, a number of shortcomings still remain, however. The Taiwan Institute of Economic Research (TIER), in a 2008 recent, for example, criticized the lack of funding of research into such technologies as Carbon Capture and Sequestration (CCS) and coal purification. According to TIER, studies have shown that implementing CCS and coal purification technologies nationwide would reduce carbon dioxide emissions by 25%, while the use of renewable energy would only bring about a 16% reduction. Currently, 40.4% of Taiwan’s energy technology R&D budget is spent on energy conservation, 30.2% on renewable energy, and 29.4% on innovative energy uses. As coal will remain an important source of energy for both Taiwan, the TIER report argues, the Taiwan government risks failure in its long-term energy goals by not addressing these coal-related technologies in its R&D policy, 

Organizational issues in Taiwan’s energy technology R&D are considered to be another area requiring attention. Chen Fa-lin, University Chair Professor at NTU’s Institute of Applied Mechanics and the former Vice President and General Director of the Energy and Environment Resources Laboratories at ITRI, notes that R&D into the fundamentals of clean energy technology and conservation is conducted primarily by the universities and national laboratories, whereas the development of practical applications is chiefly carried out by ITRI, as well as by private companies. This division of labor creates competition for the top research talent in any given field, with public entities often losing out to the private sector due to the lather's ability to offer better compensation. The personnel issue is particularly challenging for large research entities like ITRI, which is often hard-pressed to find enough experienced staff, says Chen. 

Despite these problems, Taiwan still manages to produce examples of quality research that make a difference in the field of energy conservation and diversification. Recently, for instance, Chin-Huai Young, professor at the National Taiwan University of Science and Technology’s Green Building and Materials Centre, successfully developed a new glass panel that is able to insulate heat, as well as generate power from solar energy. The new technology is regarded as having high potential for energy conservation, as under laboratory conditions it is able to save up to 10 kilowatt-hours per month per square meter of space. Working in collaboration with ITRI, Young is currently preparing the Heat Insulation Solar Glass for commercial use. The technology was exhibited at the 2008 Intersolar convention in Munich, Germany and is being scheduled for use in buildings in the giant Palm Island real-estate development in Dubai. 

TAIWAN’S ENERGY R&D TARGETS

1. Development and Utilization of Renewable Energy
   Solar thermal energy technology
   Solar photovoltaic energy technology
   Wind power generation technology
   Waste-to-energy utilization technology
   Bio-energy utilization technology
   Biogas and geothermal utilization technology
   Ocean energy technology
2. Development of Innovative Energy Conversion Technology
   Fuel cell and hydrogen energy technology
   Hybrid car technology
   Clean coal and decentralized power generation technology
3. Research and Development of Energy Conservation Technology
   Energy-saving technology for buildings
   Refrigeration and air-conditioning technology
   Electric energy and lighting technology
   Industrial energy conservation technology
   Energy conservation through nanotechnologies
4. Management of Energy Efficiency and Promotion of Technical Services
   Energy auditing and energy cons   ervation technical services
   Energy efficiency standards and indexes
   Promotion of energy conservation technology
5. Research in Cutting-edge Energy Technology and Knowledge Management
   Cutting-edge technology research and academic cooperation
   Knowledge management for energy technology