The National Taiwan University (NTU) Risk Society and Policy Research Center (RSPRC) held its annual Fubon Globalization Taiwan Risk Society Forum on 25 June 2019, on the topic of, 'Using the Circular Economy to Overcome Global Warming'.
This article summarizes the main points covered during the morning session (part 2).
Morning Session Moderator: NTU RSPRC Chief Director Professor Kuei-Tien Chou
NTU Risk Society and Policy Research Center (RSPRC) Prof. Chief Director Kuei-Tien Chou was the moderator for the first session of the forum. He highlighted how circular economy and green finance–key themes at the forum–could be used to facilitate sustainable development and energy transition in Taiwan. Prof. Chou also explained that Taiwan would need to undergo industrial transformation and adopt a new economic model in its transition to a circular economy. As part of the forum, the center also published policy recommendations on the circular economy strategies Taiwan can adopt to overcome global warming, which Prof. Chou informed the audience could be downloaded from the forum's event page on the center website.
Presentation by Chung-Hua Institution for Economic Research (CIER) Director Dr. Lih-Chyi Wen: Legal Reform As the Key to the Promotion of the Circular Economy
Chung-Hua Institution for Economic Research (CIER) Director Dr. Lih-Chyi Wen focused her presentation on the need for government regulations in order to compel businesses to change their business models for the circular economy. She pointed to a KPMG report that calculated externals costs to be as high as more than 50% of the output value in the food, electricity, mining, marine transportation and airline industries. (Note: data in KPMG's report was obtained from Trucost, part of S&P Global, which looked at 800 companies between 2002 and 2010, and converted into financial value 22 environmental impacts, such as greenhouse gas, water abstraction and waste generation.)
Source: KPMG's Expect the Unexpected: Building business value in a changing world
Dr. Wen also used two examples to highlight the necessity of regulations to promote the circular economy. First, Taiwan was able to successfully bring down pollutant emissions among businesses because of the introduction of the Air Pollution Control Act which obliged businesses to certain standards, and second, the success of Taiwan's world-renowned recycling program is also due to the regulations and incentives which have helped to reduce Taiwan's household waste by 66%.
Source: International Forum on Waste Management
Echoing Mr. Huang, Dr. Wen also pointed to the need for producers to shift their operation models from the production of goods to services, and consumer habits from ownership to usage, so that businesses would be encouraged to reuse resources. However, new regulations and incentives would be required to motivate businesses to reuse and reinvest their resources. In addition, businesses resist adopting decarbonization initiatives due to the lack of immediate data which could otherwise have allowed them to observe the gains made in energy usage patterns, so the Energy Management Law should be amended for the provision of such data, Dr. Wen said.
Taiwan could also look to adapt strategies from Europe, such as the Circular Economy Action Plan adopted by the European Commission in 2015, as well as Task Force on the Climate-related Financial Disclosures (TCFD) and the related environmental, social and governance (ESG) actions that businesses could take to enhance their governance, strategy, risk management, and metrics and targets, Dr. Wen highlighted.
Eventually, Dr. Wen pointed out that businesses need to recognize that the understanding globally has evolved such that businesses which use resources more sustainably are the ones which are seen as more competitive, and Taiwan's businesses would need to similarly evolve to maintain their competitiveness in the international market.
Presentation by Citizen of the Earth, Taiwan (CET) CEO Ken-cheng Lee: Legal Reform as the Key to the Promotion of the Circular Economy
Citizen of the Earth, Taiwan (CET) CEO Lee Ken-cheng started his presentation by sharing that he had asked the 2011 presidential candidates during a televised debate on their solutions to reduce Taiwan's reliance on fossil fuels, and only current President Tsai Ing-wen spoke about the need for green finance, and even incorporated the circular economy strategy in her presidential campaign.
Mr. Lee also highlighted past incidents of Taiwanese companies being involved in environmentally-damaging activities, such as Formosa Plastic's actions of illegally dumping mercury waste in Cambodia, only to have them shipped back to Kaohsiung after an international uproar, even though they continued with their illegal actions for some time after.
Mr. Lee also highlighted that the circular economy strategy is actually a concrete way in which Taiwan could achieve both industrial transformation and environmental sustainability, two objectives that have been talked frequently in Taiwan over the years. However, while the industrial parks have been encouraged to adopt the circular economy as a model, companies are nonetheless not required to commit themselves to doing so, and this acts as a barrier in the transition to the circular economy, Mr. Lee emphasized.
Presentation by Ministry of Economic Affairs (MOEA) Deputy Minister Wen-Sheng (Vincent) Tseng
Ministry of Economic Affairs (MOEA) Deputy Minister Vincent Tseng started off his presentation by highlighting an obstacle Taiwan faces when implementing projects – cross-ministerial and multidisciplinary work becomes slower due to the different responsibilities assigned to these agencies, but this is an issue of Taiwan's government system that needs to be addressed.
Nonetheless, he shared that the MOEA is collaborating with the EPA to develop a material flow database, so that a more complete picture of material flows could be created, in order for relevant baseline indicators to be developed to quantify the materials used, and to calculate the costs of the material, which would enable the government to hold businesses accountable in their resource management and recycling efforts. This database can therefore also serve as a common communication platform, which would allow stakeholders access to the data, to enable an evidence-based approach to facilitate the implementation of the circular economy. However, Deputy Minister Tseng pointed out that while the database is a worthwhile effort, discrepancies in data collected might exist because of unaccounted materials, such as that which flows to a non-registered company. In spite of this, the government will aim to develop a more complete database by reducing the materials unaccounted for.
Deputy Minister Tseng also explained that MOEA has been focused on industrial transformation in its efforts to promote a circular economy strategy. For example, the MOEA encourages businesses to use simpler designs for their products so that they could be easier to recycle. He also highlighted the energy needs of businesses as another issue that needs to be addressed and to do so, the MOEA has been promoting energy efficiency among Taiwan's industries by consolidating the energy needs of businesses. The government could also develop a timeline by which to phase out high-energy intensive industries like the petrochemical industries, but even so, MOEA predicts that even by 2040, the energy consumption in the petrochemical industry will still remain high. As such, it is necessary to develop a clear roadmap for the petrochemical industry.
Finally, Deputy Minister Tseng shared that the thinking within the MOEA is that the energy generation method with a greater societal consensus will be the one adopted in Taiwan, and natural gas is seen as the one with the most consensus until 2050, followed by renewable energy. To ensure more stability in the renewable energy system, the MOEA will develop energy storage solutions, and look into implementing different renewable energy methods which could work in conjunction to allow for energy production to be more evenly distributed over the day.
Morning Session: Discussion Panel
During the morning panel discussion, Mr. Huang continued to emphasize on the possibility for Taiwan to take the lead in the implementation of the circular economy. While Taiwan adopted the Original Equipment Manufacturer (OEM) business model under the old economic model, Mr. Huang believed that the circular economy would enable Taiwan to make breakthroughs. The government should also adopt a humbler approach by involving businesses in the implementation of the circular economy, given that businesses would be best-positioned to do so, he said. His view that the government should not take on the full responsibility for the implementation of the circular economy and that the implementation should be decentralized, is also shared by Mr. Lee, who suggested that the government should not hold onto power, but be willing to share the power and engage the public in decision-making, so as to develop the direction for Taiwan's future together. The implementation of the circular economy should not be restricted to a select group of individuals but should involve all Taiwanese, Mr. Lee emphasized.
Mr. Huang also took issue with the demands made by Taiwanese businesses returning to Taiwan due to the United States-China trade war. He pointed out that these businesses have demanded the government provide resources like land, water, and power on the basis of a lack of supply. But he questioned if there is a really a lack of supply, and that the government should not keep mollycoddling these businesses with an oversupply of resources. A better way to engage businesses would be to encourage businesses to develop along the lines of the circular economy model, and provide tax incentives for them to do so, he said.
Deputy Minister Tseng also responded to a question on the value-added production that returning businesses provide to Taiwan and pointed out that businesses which invest in low-end products have moved to other overseas destinations instead of Taiwan, and the government is trying to attract higher-value businesses. A 19-year-old youth also pointed out that there is a lack of trust among the Taiwanese on the effectiveness of Taiwan's regulatory system, to which Deputy Minister Tseng explained that laws and regulations are only one part of the solution in which to promote the circular economy model, and that the government has also sought to strengthen collaborations with other groups to do so.
The event summaries of the other sessions can be found in the links below:
Part 1: Opening Address and Keynote Speech
Part 3: Early Afternoon Session – Taiwan's Progress in Greening Financial Flows and Energy Transition
Part 4: Late Afternoon Session – Policies and Strategies for the Internalization of External Costs