The Need for Industrial Transformation and Energy Efficiency: By Implementing the Industrial Energy Efficiency First Principle


Current Challenges

Taiwan relies on imports for 98% of its energy needs, and the industrial sector has consistently been the largest source of energy consumption and carbon emissions. In 2018, the energy consumption of the industrial sector accounted for 32% of the total energy consumption in Taiwan. When including for the industrial use of fossil raw materials, the industrial energy consumption accounted for more than 50% of the total national consumption, in the broad sense. In 2018, the value of energy imports per capita amounted to NT$63,650. If industrial energy efficiency policies can be effectively planned and implemented, it would then be possible to reduce Taiwan's expenditure on imported energy. At the same time, the industrial sector would be able to increase its profits due to energy savings, which could then be invested in research and development in energy efficiency, and to enhance competitiveness. There are currently four main challenges in promoting industrial energy efficiency policies in Taiwan:


1. A Lack of Incentive to Invest in Energy Efficiency due to Low Energy Prices

  • Due to the current low energy prices in Taiwan, it has been difficult to motivate companies to embark on energy efficiency.


2. An Unclear Roadmap in Promoting Supporting Tools for Energy Efficiency

  • The current implementation for energy efficiency-related regulations (such as a greenhouse gas cap-and-trade scheme and energy tax), has been slow and unclear. In addition, current energy-efficiency solutions have been focused mainly on the short-term (up to 2025) or have been based on amending existing programs, but there have been no major innovations in regulatory approaches or economic incentive tools, which have therefore not provided any impetus for industries to adopt energy efficiency or carbon reduction initiatives.


3. A Lack on Medium-Term and Long-Term Planning for Energy Transition

  • At present, there have been no high-level policies, such as a national carbon reduction plan or an energy transition blueprint, that have been developed, and the subsequent plans and implementations of relevant industrial policies by the Ministry of Economic Affairs have therefore often neglected energy-efficiency, which has not been conducive for cross-ministerial policy integration.


4. A Lack of Information Transparency Pertaining to Corporate Climate and Energy Performance

  • As there has been a lack of information pertaining to corporate energy use and climate action, it has been difficult to evaluate and compare the climate and energy performance across companies, as well as to monitor their climate action.


Proposed Action Plans

The design of industrial energy efficiency policies should involve economic incentives and the establishment of regulatory tools, such as energy tax, in order to spur companies into adopting the following four strategies:


1. Tighten Energy Efficiency Regulations

  • The Bureau of Energy should strengthen energy efficiency obligations, as well as expand equipment energy efficiency coverage and standards, and using the regulations for energy conservation and efficiency as the basis, strengthen the obligations for energy efficiency and green energy use for the electronics, petrochemical and steel industries. At the same time, companies should be encouraged to adopt digital technologies and enter into voluntary long-term agreements on energy efficiency, as well as strengthen their resource management capabilities, and upstream and downstream integration in the industrial chain, to collectively improve industrial energy efficiency results.


2. Undergo a Decarbonization Processes

  • The government should accelerate the implementation of energy efficiency supporting tools, such as a greenhouse gas cap-and-trade scheme, energy tax, and tax incentives for low-carbon research and development, as well as promote the low-carbon transformation of energy-intensive industries by the adoption of process conversion, product structure adjustment and talent cultivation. Considering that carbon capture, storage and utilization technologies will reach commercialization potential by 2030, the government should also introduce relevant technologies for energy-intensive industries in the future, as well as develop phased targets and corresponding supporting measures to enable industries to adopt these technologies.


3. Develop Circular Economy Synergies

  • The various government ministries should enhance cooperation to evaluate the legal, administrative, technical, economic and information issues faced by the industrial and science parks in their energy resources integration, to overcome these inefficiencies. In addition, the government should also implement phased-in regulations on single-use products, advanced strategies for external cost internalization and material substitution, massive data analysis applications, and the development of reverse logistics infrastructure, in order to promote a service-oriented manufacturing industry and achieve a balance in the production and demand of products, so as to maximize the use of energy and resources.


4. Corporate Energy Performance Disclosure

  • The Financial Supervisory Commission, Bureau of Energy, and the Environmental Protection Administration should jointly evaluate the disclosures made by large energy users, as well as set up a common disclosure platform and identify the disclosure items and data formats required, to facilitate energy performance disclosures. It is also necessary to improve the quality of corporate climate information to the public, enhance the climate risk perception of businesses and stakeholders, to strengthen participation in climate action.