Looking ahead, Taiwan’s continued industrial competitiveness will clearly depend on its degree of success in adopting an effective national energy policy. Considering Taiwan’s dearth of domestic natural resources, growing pressures to cut greenhouse gas (GHG) emissions and otherwise preserve the environment, and strong antipathy in some quarters to further development of nuclear power, devising satisfactory policy measures and building the political support to carry them out will be a difficult challenge for the government.

This month’s two-day National Energy Conference, the first such gathering since 2005, was therefore an excellent opportunity to work toward achieving greater consensus on setting energy goals. More than 200 government officials, academic specialists, and business leaders attended the session, ensuring that a wide variety of views was considered.

Among the conference conclusions was to put greater emphasis on alternative energy sources, and the government quickly followed up by announcing plans for NT$50 billion (US$1.47 billion) in public investment in green-energy projects over the next five years, with the goal of inducing another NT$200 billion in private-sector investment. This is an admirable initiative, particularly since Taiwan industry has demonstrated strong potential in such areas as solar energy, LED lighting, and rechargeable batteries.

But virtually all energy experts agree that it will be decades before reliance on alternative energy forms such as wind, solar, and geothermal for a substantial portion of power generation can be cost-effective. It was therefore also gratifying that the Conference accepted the notion that the further use of nuclear power in Taiwan deserves reconsideration. Much of the emotional opposition in Taiwan to nuclear energy is based on misinformation. When all the facts are aired, a fair-minded public is likely to accept that modern nuclear power plants are safe, much more economical than gas-fired plants, and environmentally much cleaner than coal.

Most of the news coverage of the Conference centered on President Ma Ying-jeou’s speech emphasizing the need for Taiwan to act responsibly as a “world citizen” to support global initiatives to reduce GHG emissions. He reiterated his administration’s highly ambitious target of returning GHG emission levels to 2008 levels by 2020 and to 2000 levels by 2025.

That attitude is commendable; Taiwan should certainly do its part as a member of the international community. But as AmCham has consistently cautioned, Taiwan needs to set its policies for GHG controls in a prudent manner that takes the practical impact on business and the economy fully into account. If adopting overly aggressive goals to lower pollution leads to expanded use of LNG in power generation, for example, especially if the nuclear option is still spurned, Taiwan could wind up with such high energy costs that its industry becomes uncompetitive. Because of limited LNG storage capacity, Taiwan’s energy security would also be put at risk. The government should be careful about committing itself to goals that may turn out to be unrealistic, leaving the domestic economy in a bind.

A more detailed explanation of the need for greater energy balance will be given in the 2009 Taiwan White Paper currently under preparation.