Wang, Ju-Han Zoe, and Hu, Wen Cheng (2012) The potential for voluntary approaches to realize a climate smart economy: private-public partnerships in Taiwan. In: Srinivasan, Ancha, Ling, Frank Hiroshi, and Mori, Hideyuki, (eds.) Climate Smart Development in Asia: transition to low carbon and climate resilient economies. Routledge, Abingdon, Oxon, UK, pp. 90-106.

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Abstract

From the early 1960s to 1980s, the economic structure of Taiwan shifted from one that was agriculture based to one that is industry based. Taiwan is considered a newly industrialized economy because it has successfully oriented its economy to exporting increasingly sophisticated goods and products. Taiwan’s reputation as an export leader is well known: over the past 20 years Taiwan has become one of the world’s most important manufacturers of high-tech products such as computers and other information technologies. In fact, the active support of export-oriented industries has made Taiwan the 16th largest trading union with a foreign exchange reserve of $262.9 billion, the third highest in the world (TEPA 2008a). However, rapid economic growth, escalating energy consumption, and rising carbon dioxide (COization. The energy supply totaled 141.92 million kiloliters (kL) of oil equivalent in 2007, of which 99.32 percent are imported (TBOE 2008). The main energy source is oil, which accounts for 51 percent of the total energy supply and is primarily imported from the Middle East. Other energy sources include coal (32 percent), liquid natural gas (LNG) (8 percent), nuclear power (8 percent), hydropower (<1 percent), and other non-hydro renewables (<1 percent). The amount of energy consumed has increased at the rate of about 5 percent each year for the past ten years (TBOE 2008). As a result of its extensive use of fossil fuels, Taiwan’s per capita GHG emissions are about 13 metric tons, which is about three times the world average. Taiwan emitted GHG of 305.7MTCO 2 e in 2006, of which 265.2MTCO 2 e were from burning fossil fuels. CO share of Taiwan’s GHGs at 90.9 percent, followed by nitrous oxide (N 2 O), methane (CH 4 ) and fluorocarbons (Figure 6.1). Power generation accounts for about 62 percent of emissions. If electricity use is allocated by economic sectors, the major polluter is the industrial sector, which accounts for around 53 percent of emissions, followed by the residential and commercial buildings sector at 18 percent, the transportation sector at 14 percent, and the energy sector at 7 percent (TEPA 2008a). Based on projected business-as-usual (BAU) scenario with high GDP growth, CO emissions are expected to reach 465 million tons by 2020. Since industry is responsible for the majority of emissions in Taiwan, corporate VAs can make significant contributions to emissions reductions. This indeed appears to be the direction in which Taiwan is moving. In response to increasing growth in emissions, the Executive Yuan (Taiwan’s cabinet) adopted national emissions goals in its “Sustainable Energy Policy Framework” in June 2008 (Hwang 2010). For the short-term goal, emissions are set to return to 2008 levels within the 2016 to 2020 timeframe. The medium-term goal is to return emissions to 2000 levels by 2025. The long-term goal is to lower emissions to 50 percent of 2000 levels by 2050. These policy goals will be used as a reference for the National GHG Reduction Program and the Sectoral Reduction Plans that will be drafted after the GHG Reduction Bill, currently being debated in Taiwan’s Legislative Yuan (Taiwan’s chief law making body), comes into force. In January 2010, the Executive Yuan Steering Committee established the “Energy Saving and Carbon Reduction Promotion Commission”, which later designed the “National Energy Conservation and Carbon Reduction Master Program”. Under this, Taiwan set up several voluntary targets including (i) reduction of at least 30% GHG volume over BAU scenario by 2020; (ii) reduction of carbon emissions to 2005 levels by 2020; (iii) at least 2 percent increase in energy efficiency annually with a minimum 20 percent reduction in energy intensity by 2015 and 50 percent reduction by 2025 as compared with 2005 levels (Chien et al. 2011). To establish a strong legal foundation for achieving the above targets, two legislations have been already formulated and two are being formulated. The “Energy Management Act” was amended in 2009 with a view to enforce high energy efficient facilities and products in industries. The “Renewable Energy Development Act” of 2009 was designed to promote low carbon energy supplies. The draft “GHG Reduction Bill” aims to establish a cap and trade system and the draft “Energy Tax Bill” of the Ministry of Finance aims to provide incentives for consumers to purchase low carbon high energy efficient facilities and products. In 2011, national departments and local governments developed as many as 230 action plans. By 2014, each local government is expected to initiate six low carbon cities or 50 low carbon communities, with the participation of both the public and private sector, schools and households within their jurisdiction. By 2020, four low carbon metropolitan areas are expected to be developed in each of the northern, central, southern and eastern parts of Taiwan. Enhancing community awareness of low carbon lifestyles is central to such efforts. The “Sustainable Energy Policy Framework” consists of an action plan that focuses on four sectors: energy, industry, commercial and residential buildings, and transportation. In the energy sector, the goals include obtaining 8 percent of energy from renewable sources and 25 percent from LNG by 2025, replacing old power plants, introducing carbon capture and storage (CCS) and letting energy prices reflect environmental externalities. In the industrial sector, the goal is to reduce per unit production carbon intensity by over 30 percent by 2025, and to create incentives for low carbon production systems and green industries. In the residential and commercial sectors, the actions include promoting urban tree planting programs, green building designs, raising appliance efficiency standards by 10 to 70 percent by 2015, and using lighting equipment with higher efficiencies. At the same time, green public transport systems and increasing efficiency in new vehicles by 25 percent in 2015 will be promoted in the transportation sector. As the future climate regime starts to take shape, both the government and business sectors share concerns that Taiwan might be subject to the next round of commitments under the UNFCCC, or to possible trade restrictions imposed through non-UNFCCC channels; these trade restrictions are arguably more likely since Taiwan is not obligated to cut emissions under the UNFCCC and may not be obligated to do so until an agreement can be reached on its participation in the United Nations. For instance, in order to maintain the competitiveness of their businesses, the electrical and electronics industries, which account for more than 50 percent of Taiwan’s production value, have responded to environmental directives introduced by the European Union (EU), including Waste Electrical and Electronic Equipment (WEEE), Restriction of Hazardous Substances (RoHS), and Energy Using Products (EuP) (TEEMA 2009). This example shows that potential trade restrictions, outside of international agreements, could impact Taiwanese businesses. Another example is Taiwan’s aviation industry, which is very likely to be affected by a proposed EU regulation requiring airlines that land on and take off from EU territory to cap their emissions as a part of the EU emissions trading scheme. Managers from the two major airline companies in Taiwan have expressed interest in possible voluntary emission reductions while seeking assistance from the government (personal communication, 23 February 2009). The above cases show that there are strong drivers for Taiwan’s industry sector to partner with the public sector and initiate VAs.

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