Global Energy Sector’s Net Zero Blueprint
In 2021, the International Energy Agency (IEA) released the “Net Zero by 2050: A Roadmap for the Global Energy Sector” report, outlining the pathways for the global energy sector to achieve net-zero emissions by 2050. Achieving this goal requires unprecedented development of clean technologies by 2030. Although the pathway is narrow, it remains achievable through the immediate and large-scale deployment of all available clean and efficient technologies.
A key aspect of achieving net-zero emissions in the global energy sector by 2050 is the realization of a zero-emission power system by 2040, with 70% of energy supply coming from renewable sources. To meet this target, sectors must rely on new infrastructure development after 2030, including carbon capture, utilization, and storage (CCUS), hydrogen, and the integration of electric technologies. Looking ahead to 2050, the focus in the building sector will be on banning the sale of fuel boilers, promoting heat pump technology, and implementing renovations for both new and existing buildings to achieve net-zero emission standards. In the transportation sector, the adoption of electric vehicles or fuel cell vehicles will be crucial, although the electrification of aviation and maritime transport still faces significant challenges.
NDC Outlines a More Ambitious Blueprint
The UAE consensus reached at COP28 outlines a more ambitious blueprint for future generations. This blueprint aims to achieve decarbonization goals and sends a clearer political signal to reshape and enhance the ambition of Nationally Determined Contributions (NDCs) for the next round until 2035. NDC 3.0 will mark a transformative shift, shaping economic transformations and national investment plans for the planet’s overall future.
2050 Net-Zero Pathway Promotion Process
On April 22, 2021, President Tsai Ing-wen announced Taiwan’s 2050 net zero transformation target. Subsequently, on August 23, 2021, the Executive Yuan initiated amendments to the “Greenhouse Gas Reduction and Management Act” and incorporated the 2050 net zero emission target into the new “Climate Change Response Act.” On March 30, 2022, Taiwan began planning its pathway to achieve net zero emissions, and by the end of 2022, the Executive Yuan officially released 12 key strategies to achieve the 2050 net zero transformation goal, adopting these strategic action plans in April 2023.
Planning a practical and feasible pathway to achieve net zero emissions by 2050 is a significant challenge for Taiwan. The government aims to establish a clear and comprehensive decarbonization pathway and strategies to promote green growth. Taiwan’s 2050 net zero pathway requires promoting transformations in four key areas: energy, industry, lifestyle, and society. Achieving these transformations relies on two foundational governance pillars: technological development and climate legislation.
Taiwan’s 12 Key Strategies for Net Zero
Based on Taiwan’s 2050 net zero pathway, the government has proposed 12 key strategies, including the promotion of advanced energies such as wind power, solar power, hydrogen, geothermal, and biomass energy; power system and storage; energy conservation; carbon capture, utilization, and storage (CCUS); electrification and decarbonization of transportation; resource recycling; natural carbon sinks; green lifestyle; green finance; and just transition. Nearly half of these strategies are related to energy.
Taiwan’s Long-Term Roadmap for GHG Reduction
Taiwan’s annual greenhouse gas emissions are approximately 300 million tons CO2e, accounting for about 0.5% of global emissions. According to Taiwan’s updated NDC, the 2030 target is to reduce greenhouse gas emissions by 23% to 25% compared to 2005 levels, aligning closely with the reduction trends of advanced Asian countries. Taiwan has made significant progress in managing greenhouse gas emissions, with recent data showing a gradual decoupling of emission growth rates from economic growth rates.
However, the energy transition remains crucial. With 83% of Taiwan’s electricity generated from fossil fuels, of which over 90% is imported, promoting low-carbon and non-carbon energy sources while ensuring a stable power supply and maintaining energy security presents a significant challenge.
Development of Renewable Energy
Following the outcomes of COP28, achieving a threefold increase in renewable energy capacity and doubling energy efficiency by 2030 has become a global priority. Taiwan has also achieved rapid development in renewable energy, particularly solar power. In 2023, Taiwan’s installed solar capacity reached 3.8 times that of 2005. Additionally, Taiwan leads the development of offshore wind power in Asia, with nearly 300 offshore wind turbines installed in the Taiwan Strait by April 2024, accumulating a total installed capacity of 2.25GW.
Enhancing Energy Efficiency
Enhancing energy efficiency is another key task. The IEA identifies improving energy efficiency as the “first fuel,” a priority measure equivalent to the most important energy resource. Since the early 1980s, Taiwan has implemented the “Energy Management Act” to guide industries in gradually improving their energy-consuming equipment, ranking Taiwan eighth in international energy efficiency rankings. The new “Climate Change Response Act,” as part of overall climate governance, further regulates energy efficiency improvements, covering buildings and household appliances and encouraging nationwide behavioral changes.
Innovation and Green Competitiveness
As previously mentioned, NDC 3.0 aims to encourage transformation plans, with the turning point for achieving transformation being the development and widespread application of innovative technologies. Taiwan’s “green competitiveness” will be defined by low-emission industries, including the application of advanced technologies and support from green finance. Proper management will promote all emission scopes and value chain industries towards low-carbon production modes, contributing to global greenhouse gas reduction. For example, TSMC’s dominance in global semiconductor production highlights Taiwan’s industrial contribution and the potential for reducing global scope 3 emissions. Given the energy efficiency improvements brought by chips, each kilowatt-hour of electricity used in chip production by TSMC can help save 6.8 kilowatt-hours globally. Additionally, Taiwan is actively expanding new energy sources, collaborating with domestic and international academic and research institutions, and investing in geothermal, biomass, and ocean energy deployment opportunities.
Climate Legislation Strengthens Greenhouse Gas Reduction Management
As previously mentioned, climate legislation is one of the two foundational supports for Taiwan’s transformation. The “Climate Change Response Act” (the Act) delineates the responsibilities of different government agencies and levels, focusing on both mitigation and adaptation.
Regarding mitigation, the Act strengthens the promotion of greenhouse gas reduction management. Notably, the Act provides two carbon pricing tools: carbon tax (i.e., carbon fee) and an emissions trading system. In the short term, priority will be given to implementing the carbon fee, with the emissions trading system possibly being introduced in the long term.
Carbon Pricing Instrument: Carbon Fees
Taiwan is currently drafting the implementation details of the carbon fee. The carbon fee will be gradually introduced in stages, initially targeting the manufacturing and power sectors with emissions exceeding 25,000 tons CO2e, including direct and indirect emissions. This threshold will gradually be lowered to expand the coverage. The rate of carbon fee will be determined by a carbon fee rate review committee composed of various stakeholders, and the revenue will be included in the “Greenhouse Gas Management Fund” for legally specified uses, including developing low-carbon and negative emission technologies, subsidizing and incentivizing investments in greenhouse gas reduction technologies, promoting climate change adaptation efforts, carbon footprint management mechanisms, education and outreach, and supporting a just transition.
Voluntary Reduction Mechanism
The “Climate Change Response Act” also establishes a voluntary reduction mechanism, allowing for voluntary reduction projects to apply for and be reviewed for carbon credits based on project baselines. These approved carbon credits can be used to offset carbon fee obligations. To ensure the quality of carbon credits, the government is referencing the “Core Carbon Principles” (CCP) proposed by the Integrity Council for the Voluntary Carbon Market (ICVCM) and amending relevant regulations to ensure the promotion of carbon credit projects aligns with environmental sustainability goals.
Climate Change Adaptation
In promoting climate change adaptation, the Executive Yuan approved the “National Climate Change Adaptation Action Plan” in 2023. In summary, Taiwan’s climate change adaptation focuses on three strategic areas: (1) Capacity Building: Developing industry risk assessment guidelines and collecting necessary adaptation information, (2) Identifying Risks: Assisting industries in identifying climate risks, including state-owned enterprises and the private sector, and (3) Adaptation Measures: Proposing adaptation strategy guidelines and a database of related measures for public use. Through these tools, the government aims to strengthen communication and coordination with various groups, helping Taiwan smoothly progress towards the goal of net zero emissions by 2050.