Taiwan Energy Transition: Rolling Under Three Gears

The COP28 in Dubai reached a historic milestone from parties called to contribute to global efforts to transition away from fossil fuels in energy systems in a just, orderly and equitable manner, accelerating action in this critical decade, to achieve net zero by 2050 in keeping with the science. Also, countries aim to triple renewable energy and double energy efficiency by 2030. These agreements have also been criticized by different groups for the ambiguities of many wordings, and there will be more discussions and contention on the strategies and measures for energy transition. For example, more than 20 countries initiated to triple the of nuclear energy in COP28, although nuclear is not in the conclusion, we can not ignore the power of stakeholders and the support of nuclear measures. Also, taking natural gas as an "alternative energy" was not appreciated by island countries.

Looking back on Taiwan, we will have three main parties in the next four years (DPP - Green, KMT - Blue, and TPP - White). To focus on 2030, the next president and the members Legislative Yuan (LY) will be the anchors for Taiwan's energy transition. As low-carbon energy transition is a global consensus, it still includes different ideas and strategies; this is also represented in Taiwan's energy policy discussions, such as renewable energy development, nuclear power, and natural gas development, which are the main debates among the three Parties. Many good media and NGOs are sharing the collection of the three Parties' energy transition and carbon reduction policies, for example, the "President Climate Politics Magnifier" made by the Taiwan Climate Action Network (TCAN) has good comparisons and comments. This article would like to further discuss the scenarios under different results and the challenges that need to be paid attention to regarding the proposed policies of the three Parties.

Energy transition is not just about setting development goals for the energy mix. The most important thing is how to realise the development and ensure the reliability of the power system and operation. We need to consider different policy principles and issues, which are interacting with each other, conflict or synergy. We should further review the proposed policies in detail to assess the principles they adopt, or which direction they are looking on. I reviewed the relevant political views of the three candidates/parties with the following thinking and identified the scenarios of different results may be close. We can imagine Taiwan's energy transition under different Administration and Legislative Yuan Members, regarding the proposed development goals, technology R&D plan, economic incentives, political coordination, etc.

1. Centralised or distributed energy system:
The transition from the existing centralised system is important for renewable development. Nuclear power and thermal power plants are centralised generation, but natural gas can change load fast to adopt renewable generation characteristics, whilst nuclear and coal power may not be feasible.

2. Grid and energy storage development:
To embrace huge renewable development, energy storage systems, small and medium-scale grid and smart development are crucial. If the candidate only mentions renewable energy development but misses the attention on energy storage and grid improvement, it may also present their lack of understanding of the challenges for renewable energy development or ambiguous determination.

3. Renewable portfolio:
The three parties propose similar renewable targets for 2030 (30% or 27%), but it is important to understand their plans for the portfolio of different renewables and the development model. How much generation comes from wind and solar respectively? Both the marine spatial planning for offshore wind and the land availability for solar projects are meeting challenges now. The next ruling party needs to have a plan and strategy.

4. Emerging technologies:
All parties advocate new technologies R&D, but it is difficult to have a clear development strategy. Over-reliance on immature technologies to meet net zero is a risky strategy. Helping the development and implementation of new technologies should be the key task for the government. The development of emerging energy sources such as geothermal, ocean energy, hydrogen, and nuclear SMR need significant investment and R&D. Also, the work of social communication is not easy. The technologies R&D is uncertain, and they cannot be achieved overnight.

5. Phase-out fossil fuel:
It is worth checking the timeline/plan of the three parties to phase out coal and natural gas. In addition, the plan to combine the implementation of CCUS and hydrogen in the future is highly relevant. What are the views of the parties regarding the timeline for net zero emissions by 2050 and the midterm target for 2030? Accelerating carbon reduction is good, but it must be feasible.

DPP: William Lai and Bi-khim Hsiao - Continuity, no surprises, limited reflection

The ruling party's campaign team has the advantages and burdens of the existing government. Lai's government will imaginably continue the existing energy policies, and related work is also highly likely to follow the Tsai Ing-wen government's plan. The existing plans are adopted and embedded in Lai's policy. DPP policies have both the best "coverage" and "completeness of details" among the three Parties. Under Lai's Administration, it will be a foreseeable future. However, the existing challenges and issues are also avoided or not discussed in his public speech. The difficult issues are likely to continue to be left unaddressed or develop slowly. I expect the pace and implementation it is likely to be close to the 2020-24 Tsai Administration.

There are three things worth watching about Lai's Administration after he takes office. The first is the development of wind and solar energy. After eight years of the "Tsai Great Leap Forward", solar and wind are both facing bottlenecks in new site selection. Lai Administration will face more renewable projects that harm the DPP's environmental and social movement legacy and the controversies for development. Tsai Administration has allocated about 10GW of offshore wind and 15GW of solar PV. "Where are the next 10GW and 15GW and how to develop them?" will be a difficult issue for Mr Lai, which may lead to a delay in reaching 2030 targets. For example, Tainan is the "foundation" of Mr Lai and the DPP, but the Qigu (七股）solar issue has attracted attention from society. What is Mr Lai, who grew up in Wanli (萬里), view on the offshore wind development around the Three Northern Islands (北方三島)? He also needs to address the Opposite Parties' argument about DPP's involvement in renewable projects ( they called scandals).

The second is nuclear energy issues. Regarding DPP's anti-nuclear legacy, it is very unlikely to promote nuclear development (operation extension or commission Fourth plant). However, Mr Lai mentioned that he is not completely against nuclear if the safety and nuclear waste have a resolution. The running mate, Bi-khim Hsiao, who was the de facto ambassador in the US for many years, must have a clear understanding of the US efforts to promote nuclear power and SMR technology. Under his administration, It is necessary to maintain the view that "it is not a complete NO for nuclear development" and the nuclear-phase-out target will not be put into the law again. He will have no big plan for nuclear in the next four years, but to maintain international technology interaction and study only.

The third is the implementation of hydrogen. AS DPP adopted natural gas as an alternative fuel for energy transition, in recent years, the government has worked on policy discussions and industrial planning for hydrogen development, and planning for mix hydrogen in natural gas plants. However, the industries still hold a conservative attitude towards pragmatic hydrogen energy, especially green hydrogen. I also heard the saying that "hydrogen energy is no doubt important for net zero targets, but it will not be a crucial player before 2030." Economic feasibility will be the main challenge. We need to keep a practical view of hydrogen use, as well as the development of CCUS. Lai's team needs to think about the feasible and practical plan for hydrogen regarding his energy transition plan.

KMT: Yu-Ih Hou and Shao-Kang Zhao - Restart, KMT transformation is a must

Many comments believe that the key difference in energy policy between Hou and Lai is the 12% nuclear generation from operation extension of the existing plant and commissioning of the Fourth nuclear power plant, and the Hou team has proposed a timeline for coal power plant phase-out. The KMT's version of energy transition is also in line with global trends and a strategy that has been discussed. It is feasible on a macro level, but many challenges need to be solved, such as how to keep the nuclear power plants operating and how to deal with nuclear waste. The KMT has a long history of governing the central government. It was the KMT Administration that established the Greenhouse Gas Reduction and Management Act and the Renewable Energy Development Act, thus it has the team and think tank talents with capabilities in energy energy transition. However, I found that the KMT's policies have "the lowest coverage" but "have feasible plans for most issues." I believe the internal conflict in the decision-making of the presidential candidate within the KMT, followed by the tragedy of “Blue and White Cooperation", which led to the delay of forming the running team late, and the policies look like "rushing to hand in homework." They use the party legacy and old materials to "refill old wine in new bottles." At the same time, they focus on criticizing the DPP's potential green energy scandals. KMT is criticized as the "old party," but there are a lot of new issues and challenges for energy transition and new technology development. It seems the Hou team is relatively weak on new topics such as social engagement and just transition. I think what Hou's team needs for the energy transition is to ensure that the KMT team and talent pool can be restarted after eight years of leaving central government. Also, they need to have an open mind to face new technologies and trends. No doubt, KMT has nuclear energy experts, but there is a lack of visible policy discussions on issues such as energy market deregulation, market design, and grid development. It will take some time for Hou Administration to assess the status and re-propose the strategies and work that Hou Administration wants to develop and promote.

Perhaps the biggest challenge for Hou's team is nuclear power. Compared with the DPP, which wants to phase out all nuclear power plants, it is more difficult and time-consuming for the KMT to "restart" them. Also, the anti-nuclear movement will revive. It is hard to say KMT can take the majority of the Members of the Legislative Yuan, and "reshaping social consensus" will be another challenge whilst they have limited policy views for social engagement. In addition, nuclear SMR is similar to hydrogen energy - it has been discussed a lot but is not a short-term commercial option. Over-reliance on this technology can not help the 2030 target. If the development of nuclear energy does not go well, Hou Administration will be in the dilemma of "nuclear is stuck, no goals can be achieved" in four years.

The second challenge for the Hou team is how to act following the DPP's ruling achievements/legacies. Hou's team set the 27% renewable target is also high, and the current challenges faced by the Tsai Administration will also be faced by the Hou Administration. Compared to Lai's 30% target, a 3% difference just gives Hou's team a little buffer time. How can the Hou Administration take a different path to achieve similar goals? I expect this may need half to a year for settling, debating, and re-planning, but Hou's policy for renewables would not be very different from the current one, regarding the nature of Taiwan. In addition, it is impossible for the KMT to roughly change the plan or status back to eight years ago for topics such as ports and supply chain development, energy industry deregulation, renewable energy market, and CPPA of TSMC, etc. However, the KMT's energy experts may not be familiar with those topics. We need to keep a close eye on if Huo can catch up on the status and keep the development and improve the practices.

TPP: Wen-Zhe Ke and Cynthia Wu - Need a team, the packing-all strategy will neither lose nor win

The Taiwan People's Party, led by Wen-Zhe Ke, has also successfully attracted ignorable support as an emerging party, but it inevitably has the limitations of a new party. It is uncertain that TPP can form a proper government with the experience and capability to continue the energy transition policies. TPP’s energy transition policy has "very good coverage", especially emerging issues. It looks like an excellent report from a consultant, which represents Ke's team has had adequate efforts for the study. It shows a very ideal and reasonable strategy and planning. However, I found TPP’s policies less clear and ambiguous between the three Parties, regarding the detailed planning and practical measures. In addition, we acknowledged that TPP has energy experts or politicians with long-term attention on energy topics, whilst TPP has no people with central government experience either. With the absence of talent pools within the party and the limited number of legislators, it is very unrealistic for the Ke Administration to "build Rome in one day." Some political commentators pointed out that Mr Ke likes to adopt a "Pack-all-up" strategy for political stances. For example, Mr Ke is ambiguous about nuclear power. He demonstrated his objection a few years ago but includes nuclear power in his current policy. There are mismatches in Mr Ke's policy and thoughts, so it is difficult to guess Ke's actions according to his credentials. He said, "I messed up in the first year as Taipei City Major." We cannot state that the Ke Administration will mess around with energy policy at the beginning of taking office. However, it will be no surprise that the policy development will have at least one year of the "re-exploration" period.

Mr. Ke proposed a "coalition government", but it is difficult to say now in which direction it will lean. Ke Administration’s energy transition practice likely depends on who the Minister under the Ke Administration, instead of Ke's recent policy view. That is, "having the right people to form a team is the most important consideration." The people who favour the DPP or KMT will have different outcomes, and the outcome will be similar to the scenarios of the aforementioned DPP and KMT being in power. Ke Administration may adopt the "greatest common factor" governance, that is, speeding up the policies that are non-party's red line. For example, nuclear power is controversial, the government may not have development but only do some research and assessment. On the other hand, renewable is the greatest common factor of all parties, and the government can keep full speed on it. However, the controversial sea areas for offshore wind and land issues for solar may remain untouched for new development. However, the energy transition is a complex topic with interconnected issues, adopting the common factor for the policies may also lead to problems of inefficiency and conflicting output. I expect the most likely scenario for the Ke government may have a lot of assessment works for the policies and directions from the Tasi Administration. Ke Administration is likely to have many engagements with the industry and short tenure shifts of cabinet officials in one to two years, then gradually have more concrete policy direction.

How will the Ke government interact with local governments is another crucial topic. TPP has a limited footprint in local government. The interaction for resource allocation and communication for different local governments to keep the development of the grid and the solving the land use issues will be crucial works for Ke's Administration. It will be a shame for both DPP and KMT if lose to Mr Ke for the president seat. DPP and KMT will likely make good use of their local power to prepare for the 2026 local elections, and boycott Ke's efforts. At the same time, TPP also learned from this election experience that it must "build up its local armies." As the Ke Administration is facing strong opposition from the local government, Ke's energy transition will be very challenging.

Energy transformation under the operation of three-party politics

The conclusion of COP28 set a consensus to triple the development of renewable energy. The three parties in Taiwan all don't want to suspend renewable development. How will the DPP, KMT, and TPP interact in the future to continue the long-term transition? The table below presents the scenarios regarding the ruling party and members of the Legislative Yuan (LY).

Looking into the polls one month ahead of the election, Mr. Lai, DPP, is likely to be the next president, and his policies will largely "just follow Tasi". This can be a safe situation for the current wind and solar development, but this also means the shortcomings or controversial issues may not be reviewed and re-planed. The polls also show that the DPP is unlikely to take the majority in the Legislative Yuan. The different results for the Legislative Yuan members from KMT and TPP will lead to different strengths for the DPP's policy review. Besides, the solar and wind development and auction are not subject to the Legislative Yuan. What legislators from opposite parties can do is to boycott the infrastructure budgets and law amendments. The grid and port development will be the main factor to slow down renewable energy development.

The KMT can keep promoting and reviewing nuclear policy, but it will be difficult for nuclear power to contribute to Taiwan's carbon reduction by 2030, regarding the time to deal with the issues of nuclear waste storage sites and operation extension, even if KMT wins the president seat. KMT and TPP can cooperate on the nuclear power plant extension issues, but this depends on the TPP's action in Legislative Yuan to fix the "Blue-White break up" event.

The DPP should self-examine whether it is the "best practice" now, and the two opposition parties must break away from the strategy of "disclosing the corruption and fraud" when it comes to DPP's renewable energy policies. Instead, I would suggest opposite parties aiming at "preventing fraud and promoting development" would be a better strategy for the discussion, and focus on thinking about the "best interests for sustainable energy transition". No matter which party is elected, renewable development cannot and will not be stopped, but the speed of development will be different. It will be the Taiwanese decision for the candidate, and we may move forward steadily or pause for reviews, this should be the decision of the Taiwanese, and industries must be fully prepared to follow the different scenarios.