Taiwan always scores badly in GermanWatch, particularly in the field of poilcy and law.
By Anton Ming-Zhi Gao email@example.com
Taiwan’s energy transition has been initiated ever since the Democratic Progressive Party (DPP) won both the parliamentary and the presidential elections in January 2016. President Tsai Ing-wen mentioned last year in the inaugural address on May 20th, thus revealing the direction of his energy policies: (1) “Consecutive adjustment of sustainable concepts in the future;” and (2) “Establishment of a dedicated energy and carbon reduction office in the Executive Yuan.” After the Energy and Carbon Reduction Office was officially established in the Executive Yuan in June 2016, the DPP government has put a series of energy policies into force.
During the year 2016, the new DPP government seemed to emphasize that the development of green energy had previously been limited due to the pro-nuclear ideology of the Kuomintang of China (KMT). However, the actual green energy development data shows that the installation capacity of onshore wind turbines grew from 346,900 kW in 2009 to 642,300 kW in 2015 before the change in ruling party. The growth of solar photovoltaics (PV) is even more significant, growing from 44,400 kW in 2011 to 668,500 kW by the end of 2015. All of these results were attributed to the National Energy Conference in 2009. Former president Ma Ying-jeou made a clarion call to promote the promulgation of Renewable Energy Development Act. This Act also introduced the Feed-in electricity tariff (FIT) mechanism from Germany, which produced a highly stable investment environment for the industry.
The development of green energy may have been even better without the boycott of the opposition party, the DPP. Despite that, the DPP continued to proclaim that they supported green energy. The anti-wind-turbine protest in Yuanli Miaoli was the biggest anti-renewable energy event in Taiwan, and it dealt a serious blow to Taiwan’s green energy transition. Onshore wind turbines in Taiwan stopped going up after the event. In May 2013, the legislator of the DPP, Wu Yi-chen、Lin Shu-Fen, accompanied residents from Sanzhi,Taoyuan Xinwu, Yuanli and held a conference in the legislative Yuan to protest against InfraVest Wind Power Group because they didn’t take noise and safety into account while installing and operating wind turbines around Taiwan. At that time, the opposition party (i.e., the DPP) spared no effort to fight against the growth of wind power generation.
In December 2012, Legislator Lee Ying-Yuan (DPP) (currently the Minister of the Environmental Protection Administration) claimed that the establishment of electrical transmission lines was going to connect wind power from Penghu to Taiwan. In the process, not only did Tai Power destroy the environment in the name of low carbon emissions, but they also “reclaimed the sea for money (i.e., making money from exploiting the sea).” Lee had won the support of the DPP to boycott the budgeting process for the plan. During the Ma administration, DPP legislator Kuan Bi-ling criticized that inviting Chinese ships to conduct work off the prohibited coast of Taiwan would seriously threaten our National security. Using the introducing entry of the Qing army (because the Peoples Republic of China would spy on Taiwanese maritime regions and coasts) as a metaphor to suppress offshore wind power has become popular among the media in recent years.The DPP had proposed political slogans, which were embodied in the “White Paper on New Energy Policy” and included the idea of a “nuclear-free homeland in 2025” during the presidential election. As such, the apparently two-track strategy that the DPP pursued made people confused: one track was to claim that they stand on the same side with green industry; and the other track was to suppress the development of green energy. There’s truly no telling what the DPP really believes in. As businesses may typically only believe in money; the DPP only seems to commit to slogans that gets votes but doesn’t take substantive action.
The more interesting observation was that the green development during Ma Presidency, especially photovoltaics, mostly occurred in the counties which were governed by the DPP. Notably, the former government provided Million Rooftop PV subsidies, even in the pan-green cities. On the contrary, the discussion of forward-looking infrastructure development programs by the DPP seems to illustrate some regional discrimination, which appears in the counties governed by the KMT. Perhaps in the eyes of the DPP, only the pan-green cities are worthy of “green development.”
The role of green energy opposition has changed rapidly after the DPP took control of the government. Apart from the inaugural address, which was mentioned above, a series of energy transition measures have been initiated after the Energy Office(the Executive Yuan) was established. The DPP has seemingly become a strong defenders of green energy. But is it really the truth? Could their role change so quickly?The first measure to attract people’s attention was the DPP’s initiative to raise the capacity of renewable energy generation from 17.250 MW by 2030 (which was previously established as a goal by the Ministry of Economic Affairs) to 27,423 MW by 2025 and the gross power output to 51.5 MW. Another target was the 50-30-20 goal; which means that by 2025, natural gas will account for 50 percent of electricity generation capacity, coal will account for 30 percent, and green energy 20 percent. Both targets had appeared on the government website and in the media over the past year. However, green energy accounted for only 5 percent of the growth over ten years, not to mention that hydroelectric power were included in the calculation. How can it double and double again in less than eight years? The secret to accomplishing this impossible mission will never be known.To speed up the development of green energy, there is nothing better than the Feed-in tariff system (FIT), which had been pioneered by Ma Presidency. Integration of green energy development was important to achieve the target noted above. As a result, the new government released various policies, including the four-year plan for wind power, the two-year promotion of solar power (July,2016~June,2018), Energy Development Guidelines (revised in Apirl,2017) etc. Green energy has even been included in the infrastructure development program, which was the green energy policy that the government had put forth as a major “carrots” for green energy development.
Germany’s experience with its transition to green energy informed us that whether or not the policies can achieve the target will depend on the law. The government has done more planning on green energy, for example, the Action Program for a nuclear-free homeland during the Chen shui-bian government(2000-2008), and the statement of Sustainable Development during the Ma government. But without the promotion of the Renewable Energy Development Act of 2009, the policies of the new government won’t play such an important role. This article will have further observations to evaluate whether the new government has done better than the act of 2009.
The DPP government was eager to break from the Renewable Energy Development Act of 2009 (which was the standard promotion (or obstacle) of President Ma), having proposed the peculiar concept of “green energy first” in the Electricity Liberalization Bill during the “Governmental Policy Negotiation Meeting” last November (by President Tsai, who previously wasn’t a strong energy experts). The government spent a lot of money to create advertising campaigns promoting the policies, such as “the justice of the energy transition” campaign, the “better future after electricity reform and energy transition” campaign, the “free the electricity industry to support the energy transition” campaign, and the “supporting electricity reform, achieving energy transition” campaign.
However, after this series of advertisements and short versions of the policies, we didn’t see the government promote any new meausres for green energy development. We seemed to find out that the government was only selling us a fantasy/lie!
“The Electricity Act over 50 years was the obstacle of green energy,” was the advertisement made by the government and the Apple Daily. It has hostilely compared Tai Power to the wholesalers who buy vegetables after a typhoon. Also, the government compared all of the renewable energy facility installers to the exploited vegetables growers, claiming that these people were unwilling to work because of the Electricity Act.The above idea, which was too awful to be accepted, has deviated from the success of FIT of renewable energy experienced in Germany and has discredited this structure, which was world famous. It is “incredible” that the new government would have such high hopes in the future development of green energy that it would even leave Germany (which has already successfully achieved the energy transition) behind. In the free market economy, if there are wholesalers who are willing to pay high prices without any limitation, will the vegetables growers be unwilling to work or be exploited? Instead, Tai Power was the one being exploited because of the ban on increasing electricity prices after purchasing energy at already high prices.In the advertisement “The draft amendment of Electricity Act-A gift,” the government tried to subvert our thinking of basic economics. The advertisement seemed to describe a new business model, which can make more money than the FIT. A community generates electricity for themselves, and also sells any extra power to another neighboring community. Can the community generate enough power for itself was already a question, let alone selling the more expensive electricity to another neighbor? The more important question is can the electricity generated by the community have a higher price than that of Tai Power? Will there be anyone to buy the green energy, which costs much more than the market price?
In all these campaigns/initiatives of the new green energy policies, the government has chosen to keep silent regarding the renewable energy facilities that have already existed in the market. In order to emphasize the benefit of the draft amendment of the Electricity Act, the government has ignored the great political achievements of the Renewable Energy Development Act. The new government wants to let the new Electricity Act to be a policy which stands on the shoulders of the Renewable Act; however, it has become like a seedling germinating beside the Ma’s Renewable Act.
Of course, the green energy industry cannot be easily dealt with. In the process of promoting the Electricity Act, they have shown their concern and opposition again and again. Compared to the former government, the entire renewable energy industry had supported the Renewable Energy Development Act. Conversely, the DPP government forced the entire industry and the NGOs to accept the Electricity Act, thereby expecting them to admit that the government was promoting a great policy. It was just like being in an abusive relationship with the new government!
The new Electricity Act was doomed to failure when all the concepts put forward. and even the government, is still making up.
In the process of promoting green energy and liberalization all over the world, most countries chose “grey energy first,” which includes considerations regarding market competitiveness and advantage. Comparatively speaking, for green energy, the idea is generally to create a special, regulated market to protect green energy against the competition. Allowing green energy to enter the free competitive market, especially high cost photovoltaics), may result in green energy being “kicked out of the nest.” As shown by the experience of Germany, green energy has safeguards on prices, even in the direct sales market.. Was it ignorant or arrogant for Taiwan’s government to consider themselves more terrific than the Germans?
It was a ridiculous political play from the beginning to the end. I have visited with the industry and have participated in the international renewable energy conference recently. Most in the industry said few words regarding the Electricity Act. They focus instead on the investment stability offered by the FIT system. The new government seems to be operating in a parallel universe with another legal system, having no idea that the FIT system — which has already existed in Taiwan for a long time — was the very system that allowed green energy to be possible.
The mere idea of “green energy first” was a concept seeming to force green energy “to run before it could walk.” In my observation of the history of the development of green electricity throughout Europe; in the early liberalization stage, companies have been willing to offer a certain percentage of green electricity along with grey electricity on the free market. With the time of deeper liberalization, the companies started to enhance proportion of green electricity to higher and 100%. There were very few companies that offered 100 percent green energy in the beginning of liberalization. This was obvious because the public will not switch to the new power markets if the price is not stable and reasonable. However, the new Electricity Act ridiculously encouraged green energy companies to achieve 100 percent green energy and to expect the consumer to accept the eco-friendly but more expensive electricity, which is contrary to humanity.
On the other side, there were still many imperfect situations in modifying the law; for example, discussions with the local energy company in Changhua and Yunlin county government. In the process of modifying the law, I have emphasized many times that the renewable electricity “retailers” won’t be imported into Taiwan without the complementary measures of the Renewable Energy Development Act or the Electricity Act. However, the government didn’t accept my suggestion. This may cause the local energy company “to become the bull” and to bear the electricity market, if it can even establish itself according to the Electricity Act.
What was the important, substantive change after wasting so much social resources on the Electricity Act? It apparently wasn’t to emphasize liberalization; it was by the end of the term to shut down all nuclear power facilities before 2025. It was regarded as the realization of a nuclear-free homeland by 2025. After stopping all nuclear power, renewable energy can then provide a substitute supply for the needed electricity, which means business for the industry. Yet it remains uncertain that: Will the nuclear facilities be decommissioned in time? There are still many discussions about what the nuclear power will be replaced with. Will it be replaced by renewable energy or thermal power (gas fired or coal fired)? What kind of fresh air did the new Electricity Act bring? There were only lots of meetings for people from all walks of life discussing the sub-law related to the Electricity Act. However, the industry has responded that they won’t follow the policy of “green energy first.” And are not going to quit FIT and sell in the free unprotected market. So then, what was the meaning and purpose of all those meetings? There were so many questions. Even though the government adopts a carrot of 90 percent discount for the grid usage price, the renewable electricity companies would still stick to the twenty-year FIT contract. The government had claimed that the Electricity Act was the biggest change in 50 years. However, for the industry, it was something that was not good enough to get excited over, but not bad enough to forego without regret.
During the process of amending the Electricity Act, the government continued to threaten the public directly or indirectly that it’s not only impossible for Google to buy the green energy but also for the manufacturers of Taiwan to maintain the supply chain with Apple (which will cause serious damage to the ICT industry and the economy, if we don’t amend the law).
However, after the new Electricity Act, Google again claims that the new change does not meet its need. It was a slap in the face from Google because the green power under the new Electricity Act doesn’t meet the requirement.
The reason why is obvious. Eligible Green power under the auspices of the Electricity Act that have been sold into the market were mostly developed after the Renewable Energy Development Act of 2009, which means the cost is higher due to the preceding “expensive power.” More importantly, the government didn’t adopt the regulation that was highly recommended by Google, i.e., the ERC (Energy Resource Certificate), during the process of amending the Electricity Act. This was a huge mistake. As a result, the executing focus of this year turns to the setup of National Renewable Energy Certification Center (NRECC). The Provisional office of NRECC was formally established on 21st April, and has issued about 2544 certificates through 30th June.
However, the seemly huge achievement paled before China unveiled the Green Certification for Renewable Energy, which has been tested by the voluntarily subscribers of green energy from 1st July and certified by the Chinese National Renewable Energy Centre with the “notification of the certificate of renewable energy green power and the system of the Voluntary subscription trading from the National Energy Administration of the National Development and Reform Commission of the People’s Republic of China (NDRC).”Especially, there are 569 subscribers and 847 certificates by 3rd July at 11:00 am after the beginning of China and transaction simultaneously.
Whether Taiwan is likely to catch up from behind depends on the current planning of the Taiwanese government. However, if it is true that under the current stage of planning, the biggest concern is that under the Taiwan Renewable Energy Certificate (which is often tied in to unviable business models of the new electricity law where only green electricity are allowed to be traded), the stimulation of the transaction cannot be achieved. That is to say, many units are free to obtain the certificate, but in fact have “no intention” or are “not legally allowed” to participate in the market transactions. For example, although the current Tai Power wind turbine accounted for the bulk of the RECs, it is still limited by the electricity law and the restrictions of the carbon emission coefficient requirement, thus causing the possibility of dealing almost to zero. In addition, for auto generators, in addition to their willing to not apply to FIT, the lack of law may make the certificate trading impossible and illegal. T-RECs do become T-“Rex” in the world’s REC market.
It’s proved that the sloppily-planned NRECC cannot be the shot in arm of green power, as it can barely even provide nourishment. Of course, Google also continues to slap on the face of the government with their own actions. Its green power target this year has already been achieved, which means it does not have to depend on Taiwan’s REC market.
No energy transition would be possible without a good renewable energy promotion legislation. Over the years, the main force promoting the development of renewable energy, ie., Renewable Energy Development Act of 2009, has been aged and it’s time to revise it in response to the current and latest situations.
Since last year, I have repeatedly advocated that if we want to promote green energy, the most important thing to do is to modify the renewable energy development Act of 2009. This proposal is to echo the situation that occurred in Germany in the energy transition process, where Germany revised the renewable energy law every three or four years (2000, 2004, 2009, 2012, 2014, 2017). This process of revising and amending the renewable energy law every few years reflects the importance of renewable energy promotion legislation during energy transition.
Yet Unfortunately, in the summer term parliament meetings, the new government once again dealt with green energy by focusing on relatively unimportant legislation of “Forward-looking infrastructure act” and Forward-looking infrastructure plan. It is unclear if this is simply a negligence or the fact that green energy is just being used to promote other juicier agendas.
The Government has “quietly” launched the procedure to amend the Renewable Energy Development Act May 20 of last year. In the wake of the rise of the Electricity Act in the Legislative Yuan last year, the government “quietly” completed the public disclosure procedures of the new draft amendment after the energy bureau put the declaration on the website for two months (early November 2016 to early January 2017) Unfortunately, there were only four units that provided relevant legal advice.
The whole process also shows that the government beat gongs and drums in facing the Electricity Act, which was less important for promoting green energy. The government hastily gave the public less than two months for the discussion. On the other hand, facing amendment of the important Renewable Energy Act, the government has silently offered no propaganda, and no active communication in the two months since the announcement.
The Energy Bureau’s version of the draft amendment had only minor changes, and even a large part of it was dealing with the existing problem of renewable energy development cash flow. In fact, for renewable energy to promote the most relevant substantive part of the power grid and investment stability has less mentioned. It was such a pity. It was no wonder that the government was criticized in several internal discussions.
Even though an official public disclosure event for the revision of renewable energy act was launched in mid August. Nothing substantial caused less attention from the renewable industries.
The DPP MP Chen Man-li and others, also proposed part of the draft amendment of the Renewable Energy Development Act in March of this year. Basically, the draft was based on the existing Energy Bureau version, but with a slight adjustment. Specifically, it added incentive mechanisms to farmers, fishing villages, and aboriginal communities to develop renewable energy for their homes and communities, thereby encouraging citizens to participate in setting up and using renewable power. These initiatives, however, couldn’t provide the industry with the timely help it needed. both of these two revisions are unlikely to resolve the financial and regulatory barriers faced by renewable developers.
Originally, the green energy industry was looking forward to a “greener” government that would do more to promote green energy. What can the original environmental NGO members that entered the Executive Yuan Energy Office and a bunch of committees really do to help the new government promote green energy? And what can the industry feel?
First, offshore wind power is the main driver of the energy transition of the future. What did the industry and foreign investors see? In the fishery compensation and grant for facilitation (community support funds), which didn’t exist in the period of the Ma government, was imported into Taiwan in recent years after the new government took office. The burden that this added to the industry became heavier. The slogan of “green energy first” had ironically become transformed into “green first slaughtered.” The additional financial burdens cause more development costs!
The green energy financing program advocated by the industry was also moving slowly. For example, the green energy financial planning proposed by Minister Li of Economic Affairs from last September had referenced the examples of many advanced countries, such as the green energy financing of the German Kfw. However, the direction of efforts had been slow regarding integrating private funds/bank. The government had stalled for a long time to develop the Kfw-like public finance and guarantees. Even the news of developments from last March were almost exactly the same as the information about renewable energy financing this March.
It was no wonder that analysis by Bloomberg also believed that the current planning of the new government to achieve green energy targets by 2025 was out of reach. The most fatal point was the obstacle regarding investment and financing. The Government has, on the other hand, claimed that they have already managed the program in a variety of ways. But if it had been so effective, why did the government need to deal with the issues of investment and financing when discussing the forward-looking Infrastructure Act?
Of course, if money could solve the problems of industry, it would not be such a big deal. However, we discovered that in a variety of renewable energy development efforts, the industry encountered yet more difficulties. Such is the case of photovoltaic development, which could move rapidly during the former government. Although the government has divided work between the central and local governments, it has taken a long time to pass the law. Recently, the industry also complained that the development of ground-based photovoltaic systems was progressing too slowly. Even worse, there is a current controversy over PVs on high-quality agricultural lots. Facing the illegal factories on the farmlands, the government planned to legalize them. However, facing PV, the government played hardball and removed the facilities.
The onshore wind turbines, for example, having been legally established for a long time in the less environmental sensitive Lugang industrial area, faced the situation of demolition The development of many renewable energy projects are stalled due to the lack of the relevant transmission facilities/lines. Although the Energy Bureau of the Ministry of Economic Affairs published the clarification, it continued to advocate that “there is no such situation about the change in the policies” and that all should “avoid misunderstandings due to false information.”
Regardless, the KMT commissioners involved in generating the power from the agricultural land, and the KMT MPs judging the news as “the director Chi Po-Lin will cry owing to Taiwan being full of ugly stuffs(PVs).” Most of the time, the DPP play the roles of green energy redeemer and butcher at the same time, thus causing the public to be greatly confused.
It wasn’t news that the DPP government and the DPP legislators turned their concerns and questions toward the issue of PV on the agricultural land. The attitude of the new government under the Agricultural Council recently was opposed to photovoltaic development on agricultural land. In particular, the DPP legislator Bi-Ling, Guan opposed the installation of photovoltaic equipment in the Chengcing Lake; and Green Committee member Pei-Hui, Chai advocated that agricultural green energy development should not snatch entire farmlands. And recently, it is Man-Li, Chen members that were involved in coordinating the work. Cries of “DPP vs DPP,” and “the fight in the network” and “the fight in the party” are not uncommon! It is difficult to make people feel the sincerity of the new government promoting the development of renewable energy.
In the promotion of green energy, more active official officers seem to have not received fair treatment. Such is the case of Qi-Hong, Cao, the long-term promoter of green energy, who (in a kind of positive way) unfortunately became part of the first wave of cabinet casualties. And the Changhua county government, which had always been very green, ironically, did not get its due attention in the forward-looking infrastructure plan.
In the past year, we are curious about what was the tone of the government’s energy transition? Simply summarized, the attitude was: “Tomorrow will be better.” It is always expected that the industry should be patient, waiting for tomorrow and the coming spring!
The new government is really a superb actor in the performance of this green energy development saga. The most accurate interpretation of its lines was the word──”Huh?” After going up onto the stage, the government set up an incredible (one might say, impossible) target and began its acting performance.
“Huh? Seems to be missing a new law?” And then the government came up with the new Electricity Act, which was nothing significant. “Huh? Is there a lack of certification?” And then the government took out a shiny plate with the words “National Renewable Energy Certificate Center,” and hung it like a prize on the wall to show the audience. “No, no, am I still missing some money?” Then the government gathered a group of old actors, and some new ones, together to write a spectator “must buy” new script, called: “forward-looking infrastructure – green energy construction.”
But after all that’s been done, and with the new play finished, green development is still stagnant. The actor has to stick to the word “Huh.” Huh? Isn’t Taiwan’s energy transition still lacking a white paper?” “Huh? Isn’t the Renewable Energy Development Act still lacking amendment?”
Green energy development appears as if it were a never-ending play. It was always in a state of “what is missing?” We only saw the government repeatedly spend a lot of money and put a variety of energy transition planning in motion. In fact, the implementation of green energy facilities can only be helped in a very limited way.
The slowing effectiveness of centralized regulations has not only been seen by the industry but also by the DPP ruling county (Changhua). Recently, the Changhua County Government and the United States CRS cooperated to promote green power certification via a signing ceremony; and they also plan to bypass the current Ministry of Economic Affairs’s T-REC scheme. North America’s largest renewable energy product certification, i.e., the Green-e certificate, may be introduced. If the DPP local government governor is disappointed with the planning of the central DPP government, can we still have any expectations for this summer’s upcoming energy transition platforms and forward-looking infrastructure discussions?
In the last few years, Taiwan has been “famous” for its fraud networks and scammers around the world. From the past two year’s green energy policy or energy transition policy progressed by the new government, there seems full of scams to attract green investment.
At the beginning, the government showed very friendly face and welcome green investment. Once green investors really jump in, the government began to tighten up the regulations and add extra financial burdens. The recent burst-out of offshore wind “selection”(tendering) regulation could be a classic example.
It is hardly surprising that how strong Taiwan scam industry is! Scammers are everywhere! Yet it really leads to a dim future for Taiwan’s green energy future.