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Abu Dhabi, UAEMonday 25 June 2018

Taipei in push to reduce energy imports

The island economy draws most of its oil imports from Saudi Arabia, Oman, Kuwait, Iraq, the UAE and Iraq as well as Angola and others

Kaohsiung Harbour in Kaohsiung, southern Taiwan. Courtesy Taiwan International Ports
Kaohsiung Harbour in Kaohsiung, southern Taiwan. Courtesy Taiwan International Ports

Taiwan is currently "99 per cent dependent upon energy imports", according to officials in Taipei but a new energy policy promulgated in 2016 by the president Tsai Ing Wen's government aims to sharply reduce dependence upon imported energy - coal, oil and natural gas in particular - by 2025.

This is in line with the "green" energy policy being promoted by Ms Tsai, which also envisages phasing out nuclear power and maximising use of wind and solar power. But it also reflects a strong sense of the need to promote energy security in Taiwan where insecurity has long been a way of life.

As Taiwan's minister for mainland affairs Hsiao-Yueh Chang notes, most oil exported from the Middle-East to Japan and Korea passes between Taiwan and mainland China via the Taiwan Straits. This implies vulnerability to energy shocks for East Asia in general but in particular for Taiwan

The island economy draws most of its oil imports from Saudi Arabia, Oman, Kuwait, Iraq, the UAE and Iraq as well as Angola and others. And the economy is also dependent upon imports of liquefied natural gas (LNG) from Qatar in particular and from Malaysia, Indonesia and half a dozen other sources.

Huge amounts of imported coal, meanwhile, reach Taiwan from two major supplies - Australia and Indonesia - as well as from Russia, Canada and South Africa among others and these imports, too, have to come via sea lanes that could be become vulnerable if Taiwan's relation with the mainland were to become strained seriously.

The official aim under an Office of Energy and Carbon Reduction plan is to cut the amount of electric power generated from coal-fired stations from 45 per cent (in 2016) to 30 per cent by 2025, while raising the amount generated from renewables from 12 to 20 per cent over this period. LNG and oil-fired power plant generation will account for the remainder.

Meanwhile, unlike Japan, South Korea and China whose economies all depend quite heavily upon nuclear power genearation (a dependence that is set to continue rising the case of South Korea and China while Japan cuts back its nuclear power programme), Taiwan aims to phase out its four nuclear plants.

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In her inaugural address in May 2016 (Taiwan's first woman president) Ms Tai declared that "Taiwan will not be absent from the prevention of global warming and climate change. "Together with "friendly nations Taiwan will safeguard a sustainable earth", she said.

Particular attention is being paid to solar power and wind power - the latter from both onshore and offshore wind farms. By 2020 Taiwan aims to increase its solar power generation from 1.3 Gigawatts (in 2016) to 6.5 Gigawatts and to 17 Gigawatts by 2025. Wind power generation is set to rise from 0.7 gigawatts in 2016 to 4.2GW in 2025.

All this is being done in the context of a growing Taiwan economy that, despite its relatively small size in geographical terms, still ranks around 25th (just behind Belgium) in terms of total GDP. Taiwan is also the world's 18th-largest merchandise exporter and importer and the world's fifth-largest holder of foreign exchange reserves.

Taiwan is, according to the country's ministry of foreign affairs, a "top player in the world's information and communications technology [ICT] as well as in major supplies of goods across the industrial spectrum". The island's New Model for Economic Development prioritises five high-growth areas: biotechnology and pharmaceuticals; green energy; national defence; smart machinery; and the Internet of Things

In 2017,Taiwan ranked 14th out of 63 countries in terms of global competitiveness ratings according to a survey by the International Institute for Management Development and third among 50 countries in terms of ease of doing business according to Business Environment Risk intelligence. Taiwan is, in short, "the little island that could" and, indeed, does.