Due to the impact of the Russo-Ukrainian War and the global energy transition, energy supply has become a major concern among industries. Former CEO of the Australian Energy Council, Matthew Warren, stated in a pre-recorded video played at Business Today's New Energy Forum in Taipei on July 24 that Taiwan, being an energy-importing country, must ensure its decarbonization efforts are fast enough to adapt to changes in international energy trade.
With Australia planning to reduce carbon emissions from oil, natural gas, mining, and manufacturing industries in the future and implementing regulations related to energy prices and imports and exports, Taiwan, which imports 37% of the liquefied natural gas (LNG) it consumes from Australia (which is also the largest source of coal for Taiwan), should beware of the urgency for policy changes.
Warren believes that Taiwan needs stable and low-cost energy to support its economic development, but it must also consider national security and decarbonization to address carbon-related trade risks. However, due to Taiwan's residential, industrial, and geographical characteristics, large-scale development of renewable energy such as solar and wind might not be suitable. Thus, adopting a single-source renewable energy approach for Taiwan's electricity generation in this century raises concerns.
As an energy-importing nation, Taiwan depends on imported coal and natural gas. However, with countries like Australia planning to impose export controls on energy due to the global shift towards renewable energy, Taiwan should cut its dependence on high-carbon emitting energy sources.
Matthew Warren pointed out that there are only three clean energy sources that can be scaled up globally: hydropower, renewable energy, and nuclear power. Currently, the majority of countries still heavily rely on fossil fuels such as coal, natural gas, and oil for their energy needs.
In 2022, Taiwan's energy generation mix was dominated by coal at 42.07%, followed by natural gas at 38.81%, renewable energy at 8.27%, nuclear power at 8.24%, fuel oil at 1.54%, and pumped storage hydro at 1.06%. Warren emphasized that nuclear power and renewable energy would both be important sources of electricity generation in Taiwan, despite the controversy surrounding nuclear power.
Warren highlighted three major factors influencing energy trends: poverty, national security, and sustainability. He cited Taiwan's post-World War II development as an example of how poverty pushed countries, including the Asian Tigers like Taiwan, to use cheap coal to fuel their economies, leading to electrification and improved economic conditions over the past 60 years.
Regarding national security, recent events such as the Russo-Ukrainian War demonstrated the impact of energy supply disruptions on countries' security. Taiwan, situated amid tensions between major powers like the United States and China, cannot overlook the importance of ensuring its national security, especially in the face of a new Cold War.
As for sustainability, as civilization develops and living conditions improve, people start considering the sustainability of energy sources. Warren cautioned that poverty, national security, and sustainability have a prioritized order, and if an economic crisis arises, other issues such as sustainability might be overshadowed.
Warren mentioned that carbon emissions have already started to decline in major countries like the UK and Germany, and Australia has begun to reduce its emissions after reaching its peak in previous years. However, the challenge for Australia lies in being an energy-exporting nation, while Asian countries, including Taiwan, continue to increase their demand for coal and natural gas. To address this, Australian mining and natural gas industries need to decarbonize their production processes, which may impact energy-importing economies like Taiwan.
Moreover, Warren warned that China's electricity demand is still rising, and high carbon emissions might pose a trade risk. Other countries might negotiate trade conditions based on carbon emissions, as evidenced by the EU's carbon tariffs. Taiwan must ensure that its decarbonization efforts are swift to avoid increasing impacts from carbon tariffs.
Currently, the global development of renewable energy is accompanied by active advancements in energy storage systems. However, Warren noted that Taiwan's total energy demand is approximately 5,000 petajoules, which is equivalent to 10,000 large-scale offshore wind turbines or 1,000 square kilometers of solar power. While these renewable energy sources can be achieved, the challenge lies in energy storage.
Source: Taiwan's Ministry of Economic Affairs, July 2023
Article translated by Judy Lin
