Overview of Chinese Taipei Energy Sector Current Status and Plans of Future Development

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Overview of Chinese Taipei Energy Sector -
Current Status and Plans of Future Development
Dr. Yophy Huang October 31, 2007
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Contents

• Preface
• Energy Supply / Demand
• Major Energy Policy
• Challenges

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I. Preface
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1. Densely populated island with limited natural
resources

• Population 23 million
• Area 36,000 km2
• Landscape 2/3 mountain

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2. Economy(1986-2006) 1/2

• Agriculture dropped from 6 to 2 of the GDP
• Industry dropped from 47 to 25
• Services rose from 47 to 73
• GDP rose from US76.9 billion to US355.6 billion
• Per capita GNP increased from US4,071 to
  US16,098
• Foreign trade increased from US64.0 billion to
  US427.0 billion

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2. Economy(1986-2006) 2/2

• Foreign Trade (At Current Prices)

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II. Energy Supply / Demand
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1. Energy Supply Structure - 1/4

• 98 of total energy is imported
• crude oil, the major portion of energy supply,
  80 from the Middle East
• In 2006, 91 is fossil energy.

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1. Energy Supply Structure - 2/4
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1. Energy Supply Structure Changes - 3/4

• 1986-2006
• Coals share increased from 21 to 32
• Petroleum decreased from 53 to 51
• Natural gas increased from 3 to 8
• Hydropower decreased from 5 to 2
• Nuclear power decreased from 16 to 7
• Coal was the main energy source before 1966, but
  oil replaced it as the major energy source as of
  1967.

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1. Energy Supply Growth Rates 4/4
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1.1 Electricity Supply Structure - 1/2

• MAIN ENERGY SUPPLY SYSTEM

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1.1 Electricity Supply Structure 2/2

• 1986-2006 (Taipower IPPs)
• Average annual growth rate of Power Generation
  6.9
• Average annual growth rate of total installed
  capacity 5.1

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1.1 Electricity Supply by Taipower 1/3

• By the end of 2006, Taipower had a total of 74
  power plants.
• The total installed capacity of Taipower was
  30,045 MW.
• The peak load was 32,060 MW.
• Power generation by Taipower totaled 156.0 TWh.
• Total electricity consumption in 2006 amounted to
  2,214 TWh.

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1.1 Electricity Supply by Taipower - 2/3
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1.1 Electricity Supply of nuclear power plants
3/3
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1.2 Coal Supply
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2. Energy Demand 1/3
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2. Energy Demand 2/3

• Structure of Energy Consumption (By Consuming
  Sector)

• Structure of Energy Consumption (By Energy Form)

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2. Energy Demand 3/3
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2.1 Coal Consumption 1/3

• Coal Consumption by Sector
• 77 for power generation
• 12 for iron and steel production
• 3 for cement production
• 8 for other uses
• Consumption by Types of Coal Product
• Steam coal 92
• Coking coal 8

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2.1 Coal Consumption 2/3
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2.2 Coal Consumption 3/3

• Coal consumption

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2.3 Petroleum Consumption 1/3

• The consumption in 2006 totaled 47.26 million
  KLOE, by sector as follows
• 1. 44 for industrial use
• 34 for transportation
• 11 for power generation
• 3 for residential use
• 1 for agricultural us
• 1 for commercial use
• 2 for other uses
• 4 for non-energy uses

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2.3 Petroleum Consumption 2/3
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2.3 Petroleum Consumption 3/3
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2.4 Natural Gas Consumption 1/3

• Natural gas consumption in 2006 totaled 10.29
  billion cubic meters, breakdown by use as
  follows
• 76 for power generation
• 12 for industrial use
• 9 for residential use
• 3 for commercial and others use

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2.4 Natural Gas Consumption 2/3
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2.4 Natural Gas Consumption 3/3
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2.5 Electricity Consumption 1/2
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2.5 Electricity Consumption 2/2
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2.6 Energy consumption CO2 emission
Sources 1. Bureau of Energy, MOE, Chinese
Taipei 2. Carbon Dioxide
Information Analysis Center
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3. Energy Supply and Demand Projection 1/3
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3. Energy Supply Projection 2/3
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3. Energy Demand Projection 3/3
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III. Major Energy Policy
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1. Framework of the Energy Policy
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2. Energy Policy Contents 1/6

• Stabilizing Energy Supply
• Intensification of integrated energy planning.
• Diversification of kinds and sources of primary
  energy.
• Precise stipulation of energy safety reserve.
• Promotion of energy-related mines exploration,
  development and investment.

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2. Energy Policy Contents 2/6

• Promoting Energy Efficiency
• Enhancement of energy productivity.
• Stress on energy conservation.
• Laissez faire determination of market mechanism.
• Reasonable reflection of social costs in energy
  prices.

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2. Energy Policy Contents 3/6

• Deregulating Energy Enterprises
• Review and revision of laws and regulations
  governing energy related enterprises in order to
  establish a fair and competitive environment.
• Promotion of the liberalization and privatization
  of energy-related enterprises.

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2. Energy Policy Contents 4/6

• Enhancing Environmental protection
• Active introduction and production of clean
  energy.
• Promotion of high efficiency burners and
  pollution prevention equipment and technology.
• Mitigating the greenhouse effect to cope with
  international environmental protection.

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2. Energy Policy Contents 5/6

• Reinforcing Energy Research and Development
• Promoting RD on energy conservation
  technologies.
• Promoting RD in renewable energy and utilization
  on a cost effective basis.
• Strengthening international cooperation and
  information interchange.

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2. Energy Policy Contents 6/6

• Promoting Energy Education and Dissemination
• Fostering correct energy concepts.
• Promoting energy education.
• Training energy professionals.

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3. Key Prospects in Energy Policy
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4 The Main Items of Energy Policy 1/9
A. Promotion of Energy Diversification

• Diversification of Energy Use

The use of natural gas will increase significantly

• Diversification of Energy Suppliers
• -decreasing the dependence on the oil
  imported from the Middle East
• -enhancing energy cooperation with other
  energy suppliers

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4 The Main Items of Energy Policy 2/9
B. Enhancement of Energy Conservation
Implementation of energy efficiency
management(EEM)
Expansion of energy conservation technical
services (ESCOs)
Popularization of the use of high-efficiency
products
Key Strategies
Education and guidance
self-initiated energy conservation by industries
Goal
The goal for energy efficiency and energy
productivity improvement is set at over 2 per
annum.
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4. The Main Items of Energy Policy 3/9
C. Development of Renewable Energy
Targets and Current Status
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4. The Main Items of Energy Policy 4/9

• ? Wind Power
• Current Status 187.7MW
• Targets 2,159 MW by 2010
• Strategies
• ? Review incentive measures for
  enhancing the
• development of wind energy.

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4. The Main Items of Energy Policy 5/9

• ? Solar Photovoltaic Systems
• Current Status 1.306MW
• Targets 21 MW by 2010
• Strategies
• Promote demonstration projects such as the Solar
  City.
• Establish solar PV systems in remote areas
• Develop PV industries.

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4. The Main Items of Energy Policy 6/9

• ? Hydropower
• Current status 1,911 MW
• Targets 2,168MW by 2010
• Strategies
• Promote 5 hydropower generation projects by
  Taipower, with total installed capacity of
  171MW.
• Promote 6 hydropower generation projects by
  private sectors, with total installed capacity
  of 72 MW.

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4. The Main Items of Energy Policy 6/9

• ? Geothermal Energy
• Current Status A BOT project at Qing-Shui
  aims at the integration of geothermal energy
  usage with recreational facilities.
• Targets 50 MW by 2010
• Strategies Facilitate the development of
  geothermal projects with local governments in
  finance and technology .

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4. The Main Items of Energy Policy 7/9

• ? Biomass
• Current Status 619.3MW
• Targets 741 MW by 2010.
• Strategies
• Promote district RDF systems for waste treatment
  and power generation.
• Promote RDF systems fueled by industrial wastes
  for power generation.

RDF demon plant in Hualien BOE Project, Tech.
developed by ITRI
Biogas power plant, Municipal waste landfill,
Taipei
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4. The Main Items of Energy Policy 8/9

• ? Bio-diesel
• Current Status 3,000 KL (kilolitres) yielded
  from waste cooking oil in 2005
• Targets 100 thousand KL (B2 in all stations) by
  2010.
• Strategies
• Develop production technology for
  commercialization.
• Establish Green County Demonstration Program and
  promotion of B1-B2 supplied in all filling
  station by 2010

3,000 kl/yr Bio-diesel demo plant in Chiayi BOE
Project, Tech. developed by ITRI
Road-test of bio-diesel truck in Taipei city
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4. The Main Items of Energy Policy 9/9

• ? Solar Thermal Water Heater Systems
• Current Status The installed area of heat
  collectors has reached 1.47 million m2, the
  installed household number has reached 360
  thousand, and the ratio of installed household is
  up to 4.27.
• Targets Total installation area of 2.15 million
  m2 (estimated about 540 thousand Installed
  households) by 2010.
• Strategies Extend the incentive to building
  integrated applications.

Diwan College , Tainan County Solar Thermal Water
Heater System Installation area 307.5m2 (for
450 students)
Hualien College, Hualien County Solar Thermal
Water Heater System Installation area 77m2 (for
115 students)
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5. Future Energy Policies and Strategies 1/9

• (1) Stabilize Energy Supply enhancing energy
  cooperation and increasing indigenous energy
  supply
• A. Enhance security scheme of energy supply as
  well as international cooperation.
• B. Increase indigenous energy supply.

• Aggressively promote non-carbon renewable energy
• 2010 5,130MW.
• 2020 7,0008,000MW.
• To accelerate the enactment of Renewable Energy
  Development Act.

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5. Future Energy Policies and Strategies 2/9
C. Promotion Targets of non-carbon renewable
energy
Waste-to-energy generation 741 MW by 2010.
Biomass
Bio-diesel100,000 KLOE by 2010.
Wind Power
2,159 MW by 2010
Photovoltaics
800 MW by 2025.
Geothermal, ocean energy, hydrogen and fuel cell
are promoted with various programmes.
To meet the energy demand stabilize CO2
concentrations unprecedented technology changes
must occur in this century
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5. Future Energy Policies and Strategies 3/9
? Incentives for Renewable Energies
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5. Future Energy Policies and Strategies 4/9

• ? Renewable Energy Development Bill has been
  submitted to
• Congress for approval since 2002
• ? The goal of 6,500MW for renewable
  energies utilization was set
• ? Purchase price for renewable energy shall
  be reviewed for every
• fourth year
• Wind power (in land) NT2.0/kWh
• Wind power (offshore) NT2.7/kWh
• Bio-energy NT2.0/kWh
• Geothermal energy NT2.7/kWh
• Solar Photovoltaics NT810/kWh with
  50 of installation cost maximum
• ? A special-purpose Fund shall be set-up
  and comes from the following
• sources
• Electricity sectors
• Governments fiscal year budget

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5. Future Energy Policies and Strategies 5/9

• E. Energy Diversity
• (a) Expanding the usage of low-carbon energy
  (i.e.natural gas).
• Natural gas consumption is expected to be 13
  million tons by 2010, 1620 million tons by 2020,
  2022million tons by 2025.
• Increasing the the capacity factor for gas
  turbines and constructing new gas-fired power
  plants.
• Planning the extending construction of
  infrastructures, such as natural gas tanks,
  pipelines and receiving terminals.
• (b) Applying clean coal technology.
• (c) Completing the project of the fourth nuclear
  power plant (2,700 MW) and maintaining the
  previous nuclear power plants in operation
  (5,140MW).

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5. Future Energy Policies and Strategies 6/9

• (2) Improve Energy Efficiency introducing price
  mechanism and strengthening efficiency
  management
• A. Energy efficiency and energy productivity will
  increase over 2 per annum.
• B. Straighten the energy efficiency standards of
  electrical appliances and conduct the mandated
  energy efficiency labeling system.
• C. Assist the Development in Green Energy
  Industries, such as renewable energy, energy
  conservation, and fuel cell industries.
• D. Introduce market mechanism and rationalize
  energy prices.

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5. Future Energy Policies and Strategies - 7/9

• E.Improve energy transformation efficiency.
• (a) Applying high efficiency power generating
  equipment. Enhancing efficiency of new coal-fired
  power plants from 35 to 40, new gas-fired power
  generating plants from 45 to 53.
• (b) Developing clean coal technology.
• (c) Enhancing transmission and distribution
  efficiency. Reducing line loss under 5 in the
  long-term .
• F.Continue promotion of co-generation system.
• The capacity of co-generation is expected to be
  8GW by 2010, and 10GW
• by 2025.

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5. Future Energy Policies and Strategies 8/9

• (3) Open Energy Market liberalizing energy
  market.
• A. Remove barriers to market entry from the
  petroleum market.
• B. Continue licensing the establishment of IPPs.
• C. Revise Electricity Act and legislate
  Natural Gas Business Act.
• (4) Emphasize on Environment and Security
  balancing the development of economy,
  environment and energy
• A. Energy assessment shall be considered in
  industrial, environmental, and social-economic
  projects.
• B. Capacity building to cope with GHG emission
  reduction.

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5. Future Energy Policies and Strategies 9/9

• (5) Increase RD expanding technology
  capability.
• A. Expand the budget allocated to energy
  technology research and increase its budget share
  annually.
• B. Create National Energy Technology Development
  Program to promote the progress of energy RD in
  all aspects.
• C. Emphasize on energy efficiency improvement,
  renewable energy technology, and innovative
  utilization of traditional energy.
• (6) Educate the public enlarging public
  participation.
• Encourage households and local governments to
  participate in energy saving and CO2 emission
  reduction.

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IV. Challenges
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Challenges

• Energy prices relatively low
• Sensitive to international energy shocks
• Liberalization of energy sectors behind schedule
• No-Nuke policy contradicts with GHG abatement
  program
• Conflicts between economic development and
  environment protection

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1. Wrong signaling

• Subsidies on electricity, water, oil
• When international oil prices hike, the
  government hesitates to let market mechanism
  function on state-run energy enterprises (such as
  Taipower, China Petrol)
• Sometimes even cut taxes on energy products
• Environmental taxes/fees (eg. air pollution fee)
  only lightly levied
• ? dampens the incentives to save energy
• ?Overall energy efficiency is still relatively
  low
• ? Hard for the ESCO industry to grow

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1.1 Comparison of Prices tax rates on Premium
unleaded gasoline
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1.2 Comparison of Prices tax rates on Diesel
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1.3 Comparison of tax rates on Fuel Oil
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2. Sensitive to international energy shocks

• Adjustment costs high due to the long run low
  energy prices
• Industry hollowing out
• Inflationary problems
• Energy security
• Energy tax halted

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3. Liberalization behind schedule

• Privatization of Taipower far behind schedule
• Forcing Taipower to buy electricity from other
  private IPPs.
• Heavily regulated China Petrol on floating prices

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4. Nuclear power plants at dispute
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4.1 The fourth nuclear power plant
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4.2 No-Nuke policy dilemma

• Ideological disputes Experts vs.
  fundamentalists
• Citizen participation without majority support
  60 people disagree with the ruling party
• Never legislated
• Facts Stock market and the economy plunged in
  2001( -2.2)
• Current status Re-construction still far behind
  schedule
• Unanswered question No-Nuke Program means more
  coal consumption? contradicting GHG abatement
  scheme

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5. Environment vs. Economy

• Energy authority, under the Ministry of Economic
  Affairs, ranks lower than EPA
• Sluggish economy vs. environment protection
• Energy tax legislation delayed

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Thank You For Your Attention