Energy Saving and Carbon Reduction Policy in Taiwan

As the international energy situation undergoes sharp changes, greenhouse gas emissions and the safety of energy supplies become the most pressing challenge of energy supply and demand. In this era of the Kyoto Protocol and high oil prices, all countries in the world have put forward reduction strategies for CO2 emissions, including such as developing highvalue and low-carbon industrial structures, increasing the energy utilization efficiency of various sectors, and constructing reasonable and effective policy tools for the sustainable development of energy sources, environmental protection and the economy.


Introduction
As the international energy situation undergoes sharp changes, greenhouse gas emissions and the safety of energy supplies become the most pressing challenge of energy supply and demand. In this era of the Kyoto Protocol and high oil prices, all countries in the world have put forward reduction strategies for CO2 emissions, including such as developing highvalue and low-carbon industrial structures, increasing the energy utilization efficiency of various sectors, and constructing reasonable and effective policy tools for the sustainable development of energy sources, environmental protection and the economy.
As the post-Kyoto Protocol era looms ahead, even though Taiwan is not yet a signatory and is presently free from the pressure of being subjected to a greenhouse gas reduction time limit, as a member of the global village, it still needs to exhibit a sense of responsibility to the international community in protecting the earth. In recent years, Taiwan has referred to the energy balance sheet and the statistical data in the websites of the Environmental Protection Administration and the Ministry of Economic Affairs under the Executive Yuan, and uses the IPCC method to estimate data on greenhouse gas emissions based on reference and sector methods. The Environmental Protection Administration of the Executive Yuan is the present competent authority for the statistics of greenhouse gas emissions, but the statistics of CO2 emissions derived from energy use are estimated by the industry competent authority, the Bureau of Energy of the Ministry of Economic Affairs before being compiled by the Environmental Protection Administration of the Executive Yuan. Table 1 show that the total greenhouse gas emissions of Taiwan increased gradually from 150 million MT CO2 equivalents in 1990 to 300 million MT CO2 equivalents in 2007, and then decreased to 270 million MT CO2 equivalents in 2009. The CO2 emissions accounted for about 90% which increased from 120 million in 1990 to 270 million MT in 2007. It has been decreasing each year since 2008, and it was 250 million MT in 2009, a decrease of 4.7%. That derived from energy use (fuel combustion) accounted for a large proportion, and the emission was 240 million MT, a decrease of 4.9%. Taiwan 1990  1991  1992  1993  1994  1995  1996  1997  1998  1999  2000  2001  2002  2003  2004  2005  2006  2007  2008  2009 kgCO2/NT dollar year www.intechopen.com

Low-Carbon Policy and Development in Taiwan 6
Although energy use decreased as a result of the implementation of various policies in this period, the outcome was not as good as expected for the following reasons: (1) the energy structure has changed, with the proportion of coal with a high carbon content of the overall energy supply continues to increase; (2) the energy price adjustment and tax review policy failed to be implemented effectively, the industrial energy-saving inducement was reduced, and the improvement of energy productivity was obstructed; (3) with respect to energy use and greenhouse gas emission baseline investigation and verification systems, though expected goals were realized, the overall effect still needs to be improved; (4) due to policies promoting the liberalization of the energy industry during the last two decades, many private enterprises in the oil refining and power generation industries have emerged; these enterprises usually use low-cost coal in consideration of their costs, so that the CO 2 emissions have markedly increased.
The fuel combustion CO 2 emission rates of different sectors of Taiwan in 1990 are shown in Table 3 with the energy sector accounting for 45.74%, the industrial sector for 27.26%, transportation for 17.55%, agriculture for 2.63%, housing for 3.59%, and the service industry for 3.23%. In 2009, the energy sector accounted for 65.94%, the industrial sector accounted for 15.90%, the transportation accounted for 13.96%, the agriculture accounted for 0.41%, the housing sector accounted for 2.07%, and the service industry accounted for 1.72%, with the energy sector having the maximum growth rate of energy consumption. Although the carbon emissions of the other sectors all increased, the carbon emission ratios of the sectors other than the energy sector decreased. Figure 1 shows the data for CO 2 emissions derived from energy consumption in Taiwan for the period 1990-2009. Basically, the emission rate has been increasing linearly since 1990; the annual growth rate is about 11 million MT, even at several key points in time. For example, when the Kyoto Protocol was signed in 1997, and when the Kyoto Protocol went into effect in 2005, the greenhouse gas growth curve of Taiwan continued to develop as before without showing any effect. It is obvious that energy saving and carbon reduction measures undertaken in Taiwan remain inconspicuous.

The existing circumstances of energy consumption of various industries in Taiwan
The economic development trend in Taiwan of recent years shows the structural changes of tertiary industry, with the gross product of the industrial sector decreasing year after year, uniting for only 31% of gross product of Taiwan in 2008, whereas the proportion of the service industry has increased continuously, rising to 68% in 2008.

The structure of energy consumption in Taiwan
The structure of energy consumption in Taiwan is as follows: 98% of Taiwan's energy is imported. Imported petroleum is higher than 99.9%. The energy consumption ratios of different sectors in 2009 are: industry 52.5%, service industry 11.5%, transportation 13.2%, housing 11.6%, energy 7.2%, agriculture 0.9% and non-energy use 3.1%. Figure 5 illustrates the structure of total domestic consumption.

Energy consumption structure by sectors
Energy-intensive industries in the sectoral structure of the manufacturing industry still occupy an important position: energy-intensive industries have a high industry correlation effect, and support the development of other middle and downstream knowledge-intensive industries; they represent a stable raw material supply source for various industries, so they profoundly influence the development of Taiwan

Current problems in various sectors of Taiwan
International reduction strategies and high oil prices promote energy saving and carbon reduction. A number of advanced countries have developed national reduction strategies based on international commitments since the Kyoto Protocol went into effect. A consensus on reducing at least fifty percent of global greenhouse gas emissions by 2050 was reached at the G8 Summit in July 2008. The international consensus on carbon reduction applies www.intechopen.com Taiwan   11 pressure on Taiwan. Taiwan shares the responsibility for reducing emissions and has take position actions in this regard. Furthermore, international oil prices have risen sharply in recent years, and high oil prices have become a long-term trend, making energy efficiency an indicator of inter-industry competitive power. The implementation of measures for energy saving and carbon reduction has come under internal and external pressures.

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The industrial sector has the maximum energy consumption ratio.  Since the industrial sector has promoted energy saving for a long time, the energysaving potential of existing equipment is limited.  The inducement of a voluntary energy conservation agreement is not enough as energy prices are low.  There are no energy conservation standards of design, construction and the use of business sites and factory buildings.  There have been no energy efficiency standards of important power equipment (e.g., air compressors, fans, pumps, et al.).

Energy efficiency improvement problems in the transportation sector 
Transportation demand increases continuously with economic development and population growth.  Green energy is not yet popular; fuel alternatives are limited.  Low-carbon transport is difficult to implement in the short term due to high costs.  The external cost of private transport has not been sufficiently disclosed; the inducement of cost differentials between private transport and public transport remain insufficient.  The quantity and quality of public transport service still need to be improved.

Energy efficiency improvement problems in residential and commercial sectors 
Power demand increases continuously with economic development and population growth.  The energy efficiency of electrical equipment is not clearly indicated.  The standby power of electrical equipment lacks effective management.  There is no inducement to invest in green buildings.  Making energy conservation improvements in old buildings is lacking in incentives.

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No energy conservation standards exist for the design and construction of new buildings.  High costs make it difficult to equip buildings with renewable energy.  Inducements for buying energy-saving building materials and appliances still need to be increased.  The low recovery rate of building materials influences source-reduction performance.

Current policy measures in Taiwan
The Executive Yuan of Taiwan adopted the "Sustainable Energy Policy Convention" on June 5, 2008 to construct a "high efficiency", "high value", "low emission" and "low dependence" energy consumption pattern and supply system, so as to realize the three-win vision of www.intechopen.com energy, environmental protection and economy. The specific measures cover energy saving and carbon reduction of the five major sectors of energy, industry, transportation, environment and life. Regulations and relevant supporting mechanisms have been completed in the hope of attaining the following goals of energy conservation: an increase in the energy efficiency by more than 2% annually to reduce energy use in 2015 by more than 20% from levels in 2005. In terms of carbon reduction the goal is to reduce CO 2 emissions in Taiwan between 2016 and 2020 to levels in 2008, and reduce the levels of emissions in 2025 to those in 2000.
Generally speaking, the energy supply side works on "clean sources" and the energy consumption side works to "reduce expenditures." Energy conversion efficiency must be stressed on the energy conversion side, such as the generating efficiency of power plants and the oil refining efficiency of oil refineries. Higher energy conversion efficiency means "cleaner sources." Regarding the energy supply side, Taiwan's primary energy supplies are derived mainly from coal, crude oil, natural gas, nuclear energy, and renewable energy. Coal and crude oil are high-carbon energy, whereas natural gas, nuclear energy and renewable energy are classified as low-carbon energy. In terms of clean sources, the ratio of low-carbon energy in the overall primary energy structure must be increased.
Secondly, energy conversion efficiency must be increased, such as increasing the generating efficiency of power plants. High efficiency means using the least primary energy (e.g., coal) to yield the most end-use energy (e.g., electricity) for consumption. Increasing energy conversion efficiency is one of means of developing "clean sources." Energy consumption is closely related to the daily lives of ordinary people (consumers); it is the starting point from which the general public practices energy saving and carbon reduction, which are the ultimate goals of the "ten major measures for energy saving and carbon reduction" promoted by the government. We usually divide energy consumption into sectors such as transportation, and residential, commercial and industrial sectors for convenience in applying data statistics and policy implementation. This part of energy saving and carbon reduction starts with "reducing expenditures."

Item
The following table summarizes initiatives in carbon reduction and the implementation of primary measures with respect to energy supply, conversion and consumption.

For "clean sources," reconstruct the energy structure and improve efficiency 
Develop carbon-free renewable energy sources; make effective use of renewable energy development potential, in order to accounts for more than 8% of the generating system by 2025. Biodiesel: the estimated annual reduction of CO 2 emission is about 330 thousand MT, equivalent to the CO 2 volume absorbed by about 343 Daan Forest Parks; as for the industrial benefit, there were 10 qualified biodiesel plants up to December 2010, the total annual output is 130 thousand Kl., the accumulated industrial investment of about 1 billion NTD has been driven, when 2% biodiesel is added in, the estimated annual output value is about 3 billion NTD.

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Reduce the carbon footprint of electric power: in order to reduce the CO 2 emissions resulting from the power consumption of other sectors, low-carbon and non-carbon energy generation shall be a primary objective in short-term planning; the efficiency of existing power plants shall be increased in medium-term planning, and the structure of power-generating resources shall be adjusted in long-term planning.  Improve the overall energy efficiency and energy conservation: energy use was 8.47 liter oil equivalent/thousand NTD in 2010; it was reduced by 3.97% (8.82 liter oil equivalent/thousand NTD) from 2009. Taiwan l energy conservation goal to increase its energy efficiency by more than 2% annually has been attained.

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Accelerate the renewal of power plants; improve the overall efficiency of power plants, and require new power plants to reach an optimal feasible power generation conversion efficiency level consistent with world standards.  Introduce clean coal technology and developing carbon capture and storage through international research and development; reducing the carbon emissions of generating systems.  Rationalize energy prices; short-term energy prices reflect internal costs external costs are adjusted progressively in the medium and long term.

Industrial sector 
Strengthen energy management and increase energy efficiency: according to the "Energy Management Law" passed on July 8, 2009, large-scale productive investment production plans shall be managed in advance, and a mandatory energy label system shall be established.  Expand energy conservation services: a "comprehensive energy conservation center" is to be established; provide 4,712 energy users with energy conservation guidelines between 2009 and 2012; assist in industrial energy conservation of 525 thousand Kl. oil equivalents (equivalent to reducing energy costs by 10.7 billion NTD).  Promote voluntary energy conservation in the service industry: a convention at which telecom and communication producers and 3C household appliance groups signed a voluntary energy conservation agreement was held on August 9, 2010. The goal of energy conservation through 2012 is set at 5%. Estimated energy conservation potential is 50 million kWh. Convenience stores, hypermarkets, hospitals, hotels, department stores, supermarkets, shopping centers, telecom and communication producers and 3C household appliance groups of ten major industries (102 group enterprises) signed a voluntary energy conservation agreement effective between 2006 and 2010; the signed groups reduced energy use by 11.9% on average from 2006 to 2009, for a total reduction of 717 million kwh.  Urge the industrial sector to develop high-added value and low-energy consumption; reduce the carbon emission intensity of unit output value by more than 30% by 2025.  Check and allocate enterprise carbon credits; assign responsibility for carbon reduction; urge enterprises to promote production and sales systems for energy saving and carbon reduction. Promote voluntary greenhouse gas reduction plans in the energy industry: 33 plants, including Tunghsiao Power Plant of Taiwan Power Co., Ltd. were given assistance in devising voluntary reduction plans up to December 2010; 20 plants were given assistance in gaining approval of their reduction plan designs; 17 plants were given assistance with "ISO 14064-2" verification. Total reduction was more than 6.48 million MT CO2 equivalents, which shall be used as reference for emission offset or trading of total greenhouse gas control and protecting the preliminary efforts of firms.
 Help small and medium-sized enterprises strengthen their ability to save energy and reduce carbon emissions. Establish inducement measures and management systems and encourage clean production. Energy-saving technology service was provided to 997 enterprises through December 2010. The energy conservation potential of 151.8 thousand Kl. oil equivalent was explored; it was estimated that 80 thousand Kl. oil equivalent could be conserved.  Encourage popularizing energy saving and carbon reduction and renewable energy and other green energy industries; create a new energy economy.

Transportation sector 
Build seamless urban public transport services; strengthen the accessibility of township public transport systems; take care of remote places. Accelerate the promotion of green buildings; establish systems to encourage their design; assist in providing existing buildings with green building features; provide incentives and rewards.

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Stipulate energy conservation standards of shell energy consumption, air conditioning and lighting systems in the design or construction of new buildings.  Accelerate the promotion of voluntary agreement of large congregated residential houses; meet the energy conservation potential of the residential sector.  Provide financial and tax incentives for buying and using green buildings, green building materials and recycled building materials.  The regulations of buildings shall specify that buildings above a certain scale shall be equipped with renewable energy consuming facilities to increase the use ratio of renewable energy in buildings.

Government sector 
Promote energy conservation in government offices and schools: implement "overall energy saving and carbon reduction measures for government offices and schools"; set negative growth targets for annual power and oil consumption; the overall reduction for 2015 should be 7% of the 2007 figure; help government offices and schools introduce an "energy technology service industry" to improve energy conservation. The energy-saving technology service was implemented in 168 government offices and schools from January to December 2010; the energy potential of 23 thousand Kl. oil equivalents was conserved.  There shall be a "carbon neutral" concept in policy planning; carbon is to be controlled by putting into practice precautionary, pre-warning and screening principles.

The public
 Promote a nationwide energy saving and carbon reduction movement; encourage the public to "reduce 1 kg carbon footprint per day."  Promote the policy "discounts for electricity costs for encouraging energysaving measures": 6,452 households received discounts for electricity costs from July 2008 to January 2011; a total of 10.54 billion kWh was conserved; it was 44% higher than the total power consumption (7.3 billion kWh) of all the households in Taipei City in 2009. The total electric cost deduction was 17.52 billion NTD; CO2 reduction was about 6.70 million MT. The "county-city electricity saving competition" was carried out three times in 2010 since its implementation on July 1, 2010. The first-place winners of the three competitions were Hsinchu City, Chiayi City and Kaohsiung County, respectively. The electricity saving rates was 4.48%, 7.16% and 4.58%, respectively.

Taxation tools for energy saving and carbon reduction in Taiwan
There have never been taxes such as a "carbon tax", an "energy tax" or a "green tax" in Taiwan. Taxes related to the environment or energy sources have been levied for the existing policy purposes of energy conservation, environmental protection, maintaining health and rectifying external effects, including an energy tax, a transportation tax, a pollution tax and a tax on resources.
Natural resources may be put in production for economic development, or the manufacturing process may produce wastes or emissions; if the waste of resources and the creation of emissions are not suppressed properly, environmental resources will be exhausted and the environmental quality will deteriorate. For a sustainable utilization of environmental resources, the government can adopt direct administrative control measures for environmental protection and resource management and utilization, and can use economic tools such as an environmental tax, environmental fees, tradable emission permits or quotas, a deposit system and environmental subsidies for environmental protection, so as to carry out the principle by which the environmental media or resource users, or polluters are required to pay fees.
Since the use of environmental taxes tends to be diversified, such taxes benefit both the environment and economy, making it an important policy tool. Acquiring environmental tax data and making comparisons with other countries are feasible steps to take. International organizations are currently discussing the issue of environmental taxes. For example, the OECD makes use of basic statistics; the EU has a statistical handbook; the EU and SEEA have 2003 manuals which define environmental taxes as taxes levied on physical units which have been proved harmful to the environment in a statistical structure. The definition of "tax" is similar to the concept of national income statistics in referring to compulsory and voluntary payments to individual governments.
Environmental tax statistics are divided into four major types in the world, including an energy tax, a transportation tax, a pollution tax and a tax on resources. An energy tax base includes the energy products of transportation and fixed use. A transportation tax is based on the possession and use of motorized vehicles. A pollution tax aims at the discharge of air and water and the management of solid waste and noise. A resources tax aims at water extraction, sandstone, primary raw materials and the exploitation of forest resources; it excludes natural gas and petroleum exploitation (which is regarded as resource rent instead of tax).
Statistical items of the environmental tax in Taiwan include an energy tax, a transportation tax and a pollution tax, but no resources tax. The energy tax includes an energy tariff, oil and gas excise tax and a petroleum fund of energy resources. The transportation tax includes a transport tariff, a vehicle excise tax, a vehicle license tax and a charge for use of automobile fuel. The pollution tax includes air pollution prevention and control fees, soil and ground water contamination regulation fees and recovery and treatment fees.
The present environment-related tax items, competent authorities, sources of law, taxpayers and coverage of taxation in Taiwan are shown in Table 5. Table 6 illustrates the environmental tax rates in Taiwan. Taiwan's taxation policies for various environment-related taxes in the future: The "Regulation for Energy Tax (draft)" is being scheduled for legislative review.
The fundamental aspects of the Energy Tax are as follow:  Implement an energy tax to maintain a financial balance.

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According to the conclusions of the Tax Reform Committee, Executive Yuan, the implementation of a green tax system will integrate the present oil gas excise tax, automobile fuel fee and petroleum fund. The increased tax revenues after implementation will be used to subsidize low-income households and public transport first; untimely items of excise tax, stamp duty and amusement tax systems will be reformed to reduce their impact on the public.

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As the energy tax system will exert a significant influence on industry and the economy, the Ministry of Finance will study the influence of the energy tax on the economy, industry and the environment as well as the opinions of all circles of society before drafting and planning the tax system, which will be implemented at a proper time. The import tariff rate is divided into three columns. The first column applies to goods import from countries or areas that have reciprocal agreements with the Republic of China. The second colum imported from specific underdeveloped or developing countries or areas, or from countries or areas Trade Agreement with the Republic of China. When the rates in the first and second column are not third column shall apply.

Conclusion
Taiwan is encountering the global environmental crises related to global warming and faces continuing challenges from the environmental deterioration stemming from economic development. Taiwan is deficient in conventional energy resources and highly dependent on energy imports, with nearly 90% of its greenhouse gas (GHG) emissions coming from carbon dioxide emitted from energy use. The annual growth of GHG emissions has been slowing in recent years, with negative growth reported for the first time in 2008. Taiwan is currently not a signatory to the United Nations Framework Convention on Climate Change; however, as a member of the global village Taiwan has committed itself to sharing the obligations of common but differential responsibility in accordance with the basic principles of the UNFCCC. In order to maintain national competitiveness and limit the consumption of high-priced energy, the government will continue to implement energy conservation and carbon reduction measures for national sustainable development.
But if we truly want to reshape the nation's industrial structure through imposed controls, effective means should include both the imposition of energy taxes and the passing of a Greenhouse Gas Emissions Reduction Act. Energy conservation and carbon reduction in Taiwan will never be just a slogan, but a new lifestyle in action.