# Energy profile of Taiwan

Source: Eia
 Topics:

## Introduction

Map of Taiwan. (Source: EIA)

Taiwan’s economic growth slowed in 2005, with real gross domestic product (GDP) expanding at 4.1 percent, down from the 2004 rate of 6.1 percent. The slowdown was largely due to weakness in the export sector, particularly consumer electronics, and rising oil import costs. Real GDP growth for 2006 is forecast at 3.8 percent.

After coming to power in 2000, Taiwan’s President Chen Shui-bian of the Democratic Progressive Party (DPP) became the country’s first democratically elected leader that was not from the Kuomintang (KMT) party. Taiwan’s citizens reelected President Chen in March 2004 by a slim margin of 0.2 percent. In June 2006, President Chen survived calls for his resignation when an opposition-initiated motion to recall him failed to receive the required two-thirds vote in the legislature to be put to a national referendum.

Taiwan has very limited domestic energy resources and relies on imports for most of its energy requirements. Taiwan has encouraged investment in domestic oil and natural gas projects, including partnerships with mainland Chinese companies. However, these efforts are unlikely to yield sufficient energy resources to reverse the island’s import dependence.

Taiwan was admitted to membership in the World Trade Organization (WTO) in November 2001, concurrently with China's admission. Unlike China, Taiwan was admitted to the WTO as a "developed country," which imposes more stringent requirements for reducing barriers to foreign competition. Taiwan recently has lifted some restrictions on direct trade with and investment in mainland China, which is expected to increase cross-strait commercial ties.

## Oil

Taiwan's Oil Consumption by Sector. (Source: Taiwan Ministry of Economic Affairs, Bureau of Energy)

According to Oil and Gas Journal (OGJ), Taiwan had 2.4 million barrels of proven oil reserves in January 2006. During the first half of 2006, Taiwan produced 7,910 barrels per day (bbl/d) of oil, of which only 800 bbl/d was crude oil. Almost 90 percent of Taiwan’s oil production comes in the form of refinery gain, resulting from the country’s large petroleum refining sector. The Energy Information Administration (EIA) forecasts that Taiwan will consume 973,000 bbl/d of oil in 2006, virtually all of which will come from imports.

## Coal

Taiwan's Coal Imports by Sector, 2004. (Source: Taiwan Ministry of Economic Affairs, Bureau of Energy)

Taiwan has very limited coal resources, and domestic coal production stopped in 2000. In 2004, Taiwan consumed 62.9 million short tons (Mmst) of coal, up 27 percent since 2000. According to Taiwan’s Ministry of Economic Affairs, 77 percent of the coal Taiwan consumes is for power generation purposes. Taiwan meets all of its current coal consumption with imports, primarily from Indonesia, Australia, and China.

## Electricity

In 2004, Taiwan had 33.3 gigawatts (GW) of installed generation capacity, from which it generated 173 billion kilowatt-hours (Bkwh) of electricity. During 2004, 74 percent of Taiwan’s electricity generation came from conventional thermal sources, while 22 percent was nuclear and 4 percent hydroelectric. In the mid-1980s, nuclear power comprised roughly half of the total electricity generated in Taiwan. However, the growth of fossil fuel-based power stations has decreased the share of nuclear power in Taiwan’s energy mix.

### Sector Organization

Taiwan's Electricity Generation by Sector, 1994-2004. (Source: EIA International Energy Annual)

Taiwan Power Company (Taipower), the state-owned electric power utility, currently dominates Taiwan's electricity sector. Taipower's monopoly status technically ended after 1994, when the Taiwanese government encouraged the formation of independent power producers (IPPs). Today, IPPs own roughly one quarter of Taiwan’s generating capacity, although independent producers are required to sign power purchase agreements with Taipower, which maintains a monopoly in transmission and distribution activities. After joining the WTO in 2001-2002, foreign firms were permitted 100 percent ownership of firms in the sector.

The Taiwanese government plans to carry out a full or partial privatization of state-owned Taipower. Under the basic framework envisioned, Taipower would retain a monopoly on transmission and distribution networks, while its generation assets would be split into several firms. Taipower would also retain exclusive control over nuclear and hydropower plants. However, poor financial results over the last several years have delayed plans for privatization until some period in the future. Part of Taipower’s poor financial performance stems from a freeze on energy rate hikes that has been in place since 1983. In July 2006, Taipower raised electricity rates for the first time in more than 20 years in an effort to bring prices in Taiwan more in line with international levels.

### Conventional Thermal

Conventional thermal sources comprise the bulk of Taiwan’s installed generating capacity. The fastest growth has been in natural gas-fired electricity generation, owing to government incentives that encourage new projects to use natural gas. The Democratic Progressive Party (DPP) government came into office in early 2000 promising to approve only natural gas-fired power projects in the future, and to increase natural gas' share of Taiwan's power generation to roughly one-third by 2010. Still, natural gas-fired plants only account for about 15 percent of Taiwan’s total share. Taipower is currently building a large 4,300-megawatt (MW) natural gas-fired power station at Tatan. When completed in 2008, the facility will be the largest cogeneration plant in the world. The first two of eight generating units began operations at Tatan in mid-2006. The system will initially be powered by diesel, but will switch to natural gas when Qatari LNG shipments to Taiwan begin.

Taiwan’s first IPP, the 1,800-MW coal-fired power station at Mailiao owned by Formosa Plastics Group, opened in 1999. Another 1,320-MW coal-fired IPP plant began commercial operations in mid-2002. Other IPP projects that utilize natural gas have been constructed or approved, but several others have been delayed or scrapped altogether because of rising LNG costs and slow Taiwanese government approval of IPP plans.

### Nuclear

Taipower operates three nuclear power plants with a total capacity of 4,900 megawatts (MW). The construction of Taiwan’s fourth nuclear plant has been controversial. After coming into office in 2000, President Chen canceled the construction of the 2,700-MW Kungliao nuclear reactor at Lungmen. However, in February 2001, the legislature overturned this decision and called for the project to resume. Currently, the Kungliao project is scheduled to start commercial operations at its first unit in 2009, with the entire plant to be completed by 2012. The uncertain future of the fourth nuclear reactor project, which would add a sizable amount to Taiwan’s current generating capacity, has caused hesitation in other power plant construction plans.

### Other Sources

Hydroelectric power accounts for 13.6 percent of installed generating capacity, although in 2004 only 4 percent of Taiwan’s total electricity generation came from hydroelectric sources. Several new and ongoing hydroelectric plants are expected to come online in the next few years, including the 210-megawatt (MW) Kukuan Hydroelectric Power Plant Rehabilitation (June 2007), the 60-MW Bihai Power Project (December 2007), and the 75-MW Hsibao Power Project (January 2009).

The government of Taiwan encourages the use of renewable energy sources, including wind power, solar energy, and biomass. It expects these sources to account for 10 percent of the country's generation capacity by 2010, although these sources contributed less than one percent toward Taiwan’s electricity generation in 2004.

## Environmental

Per Capita Carbon Dioxide Emissions in Select Asian Countries, 1984-2004. (Source: EIA International Energy Annual)

Taiwan is grappling with the environmental ramifications of building one of Asia's richest economies through a decades-long commitment to economic growth. Per capita energy use in Taiwan is on par with several of its neighboring countries in Asia. However, energy intensity levels in Taiwan compared to other developed countries tend to be relatively high, owing primarily to the country's heavy concentration of energy-intensive manufacturing industries. Taiwan's per capita carbon dioxide emissions have been increasing, and in 2004 represented more than four and a half times the amount of per capita carbon dioxide emissions in China.

Although Taiwan did not sign the Kyoto Protocol, the government is working to reduce carbon dioxide emissions. In June 2005, the Ministry of Economic Affairs (MOEA) announced plans to cut carbon dioxide emissions by 170 million metric tons per year by 2025. The MOEA plans to impose restrictions on emissions from Taiwan's top 200 energy consumption enterprises, including the Formosa Plastics Group and the China Petroleum Corporation.

 Disclaimer: This article is taken wholly from, or contains information that was originally published by, the Energy Information Administration. Topic editors and authors for the Encyclopedia of Earth may have edited its content or added new information. The use of information from the Energy Information Administration should not be construed as support for or endorsement by that organization for any new information added by EoE personnel, or for any editing of the original content.

Glossary