A Chance to Accelerate Decarbonization

On Earth Day this year, Taiwan set up the preparatory office for its Climate Change Agency, a new government body under the Environmental Protection Administration. The establishment of the Agency, which will be responsible for planning details for a carbon tax and helping Taiwan respond to climate transition requirements, is a positive step toward Taiwan’s goal of reaching net-zero emissions by 2050. 

While many renewable projects are currently in progress, it is concerning that the government will not meet its green energy goal for 2025 due to regulatory approval requirements and lack of sufficient flexibility. For example, stringent localization demands in the offshore wind industry have hindered energy providers from fully utilizing the international supply chain to ensure the most competitive green energy prices. With lowered feed-in tariffs for the industry in Taiwan, costs have also risen considerably.   

The Climate Change Agency’s establishment also provides an opportunity for the government to increase administrative efficiency and ensure that Taiwan remains competitive in the renewable energy sector. The government should take this opportunity to address regulatory barriers that are currently impeding the development of renewable energy in Taiwan.  

In addition, investing in more energy alternatives – such as geothermal energy, which has great potential in Taiwan – would help Taiwan achieve its energy transition goals. Currently, no clear laws and regulations for geothermal energy development have been put in place, even though investors will need the government’s assistance to create a feasible and transparent roadmap to plan their business operations. 

To maintain global competitiveness, renewable energy development must occur while maintaining a balanced and diversified energy mix for power generation from the perspectives of supply reliability and cost efficiency. The past 12 months have been challenging for the energy sector, particularly due to the global energy market disruptions caused by Russia’s invasion of Ukraine. Price volatility and supply shortages of liquefied natural gas (LNG) have highlighted the importance of ensuring a stable supply of this energy source, which is expected to represent half of the energy mix in 2050. 

The government should therefore streamline and enhance the procurement and delivery process of LNG, increase infrastructure development for renewable energy, other energy types, and low-carbon technologies, as well as provide business incentives to these areas to more effectively support the net-zero roadmap. 

Among the various means adopted to achieve net zero, the use of Carbon Capture, Utilization, and Storage (CCUS) and hydrogen are critical decarbonization solutions. With its excellent geological conditions for carbon dioxide storage, Taiwan has the potential to become a leader in CCUS technology development in the Asia-Pacific region. 

Besides implementing carbon taxes, a game plan for introducing Carbon-Free Energy Certificates (CFECs), modeled after the existing Taiwan Renewable Energy Certificates (T-RECs), would help resolve the longstanding T-REC supply shortage issue. Such certificates are desperately needed by high-tech industries to comply with supply chain requirements for lowering emissions during the manufacturing process. A market-based mechanism for carbon-free certificates would incentivize the adoption of CCUS by creating a tangible market value for the CO2 captured, stored, and utilized, thereby driving investment in CCUS technology development. 

If the Climate Change Agency, together with other relevant government bodies, makes the best use of available resources, there is reason for optimism regarding the creation of a streamlined regulatory framework for renewable energy. By forming a conducive environment for the development of decarbonization solutions, Taiwan can lead the way in tackling climate change and ensure a sustainable future for generations to come.