NATIONAL ENERGY CONFERENCE LEANS TOWARD NUCLEAR

UNCLAS AIT TAIPEI 000487


SENSITIVE

STATE FOR OES/EGC, OES/ENV, OES/PCI, EPA FOR KASMAN, DOE
FOR INTERNATIONAL, COMMERCE FOR 4431/ITA/MAC/AP/OPB/TAIWAN

E.O. 12958: N/A
TAGS: ENRG SENV PREL KNNP ECON TW
SUBJECT: NATIONAL ENERGY CONFERENCE LEANS TOWARD NUCLEAR
ENERGY

REF: A. 07 TAIPEI 01757

B. 08 TAIPEI 00533

C. 08 TAIPEI 00853

D. 09 TAIPEI 0095


1. (SBU) SUMMARY. Taiwan's April 15-16 third National
Energy Conference ended with an informal consensus on what
direction energy policy will take in the next decade.
President Ma Ying-jeou and Premier Liu Chao-shiuan both
pledged to guide the island toward becoming a "low carbon
homeland" by emphasizing renewable energy, energy efficiency,
and nuclear power. Nobel laureate Lee Yuan-tse also endorsed
nuclear power as an interim solution until viable sources of
renewable energy are found. Environmentalists and NGOs at
the Conference mostly opposed further nuclear energy
development on grounds that Taiwan does not have ideal
conditions for such development. The final Conference
document included recommendations for deregulation of energy
prices, promotion of renewable energy and green industry,
transparency in oversight mechanisms, and passage of the
Renewable Energy Development Act, Energy Tax, and Greenhouse
Gas Reduction acts. Although there was no specific
endorsement of nuclear energy, an informal consensus
prevailed that nuclear energy is the only viable interim
solution for achieving Taiwan,s energy policy goals. END
SUMMARY.


NUCLEAR AS INTERIM SOLUTION
--------------


2. (SBU) Substantial representation from the Atomic Energy
Council (AEC) and Academia Sinica expert
Dr. Lee Yuan-tse,s strong endorsement of nuclear power set
the tone for the opening of Taiwan,s first National Energy
Conference since 2005. Lee said that from the standpoint of
reducing C02 emissions, nuclear energy offers the best hope,
but cautioned about the challenges of nuclear waste treatment
in a small place such as Taiwan. In fact, Taiwan plans to
re-license the existing three operating nuclear plants for an
additional 40 years of operation. Minister of Economic
Affairs Yiin Chi-ming said that due to safety concerns, the
4th nuclear power plant will not be able to start operation
until 2012. During his remarks, President Ma pledged to pass
the Renewable Energy Development Act during the current
session of the Legislative Yuan, where the Act has been
pending for six years. He also said that promotion of energy
conservation and clean energy are the two main goals for the
future. On reducing carbon emissions, the President
reaffirmed the existing goal of reducing emissions to 2008
levels by
2020, and to half of 2000 levels by 2050. Ma also said all
major public infrastructure projects will incorporate an
environmental impact component. He pledged to plant 60,000
hectares of trees, with forest parks planned for Chiayi,
Pingtung and Hualien in southern and eastern Taiwan.

DEREGULATE ENERGY PRICES, IMPOSE ENERGY TAX
--------------


3. (SBU) The Conference reached consensus on the need for
energy prices to reflect global market costs. As some
analysts observed, deregulation will lead to higher energy
costs. There was widespread speculation about how much the
authorities will allow energy costs to rise in the face of
the global economic crisis, including worsening unemployment
and economic growth in Taiwan. The authorities, are
deregulating energy prices to spur conservation and encourage
industry focus on carbon reduction strategies and alternative
energy development. Industry, however, has been slow to
accept carbon-reduction strategies such as clean coal
technology due to concerns about high costs, complicated
maintenance, and unproven effectiveness. There was consensus
for privatizing Taiwan,s oil, electricity and gas companies
to promote fair pricing and increase efficiency. The
strongest advocacy for energy efficiency came from Michael
Nobel, a descendant of the family that established the Nobel
Prize.
Nobel also advocated using tax incentives to save energy and
promote the development of solar and hydrogen technology.
The Ministry of Finance is working on a draft energy tax
bill, which is slated to be submitted to the Executive Yuan
for review in October before it is sent to the Legislative
Yuan for
approval.


ONLY DPP LEGISLATOR ACTIVE IN DISCUSSIONS
--------------


4. (SBU) While there was consensus on the need to develop
alternative energy, participation from LY members was notably
lacking for such an important conference. Only a few LY
members were present at all sessions, notably DPP legislator
Tien Chiu-chin, who fought any attempt at citing nuclear
energy as a clean technology, as well as designation of
nuclear energy as an interim energy before renewable energy
is fully developed. Tien questioned the safety of nuclear
plants given that Taiwan is prone to periodic
earthquakes and has very limited land available on which to
build nuclear plants and deposit nuclear wastes. KMT
legislator Ting Shou-chung, however, emphasized that Taiwan
only has a 7.7-day liquid natural gas reserve, and needs a
steady source of energy. The conference chair and panelists
finally gave in to the demands of anti-nuclear advocates, and
agreed to postpone a final decision on the future of nuclear
power in Taiwan. At the end of the conference, Premier Liu
reiterated his commitment to nuclear energy by pledging to
inform the public about nuclear waste treatment, and to
foster public involvement in
nuclear oversight institutions.

SOLAR INVESTOR CRIES FOUL
--------------


5. (SBU) Two days before the Conference started,
German-owned solar energy company Infravest CEO Karl-Eugen
Feifel held a news conference at which he blasted Taiwan's
lack of commitment to
passing the Renewable Energy Development Act. Feifel
threatened to pull his company out of Taiwan if prompt action
was not taken. Infravest has a 41% stake in Taiwan's solar
market, and has installed windmills all along the west coast
of Taiwan. Feifel said the state-owned Taipower utility pays
only
NT$ 2.00 (about USD 0.06) per kilowatt-hour of
windmill-generated electricity, compared with NT$ 2.7 (about
USD 0.08) per kw/hr for coal-fired plants and NT$ 4.00 (about
USD 0.12) for natural gas plants. Taiwan energy experts tell
us that in reality, Infravest obtained choice locations for
its windmills, and due to the high efficiency of its
windmills, the NT 2.00 per kilowatt-hour paid by Taipower is
quite reasonable. In fact, they asserted that Infravest's
problems stem more from its inability to get German bank
loans during the current credit crunch, rather than from the
alleged low rates Taipower is
paying for Infravest's wind-mill generated electricity.

LOW CARBON HOMELAND VS. NON-NUCLEAR HOMELAND?
--------------


6. (SBU) The Conference leadership, headed by MOEA Minister
Yiin, originally tabled a proposal for
reconsidering Taiwan,s "non-nuclear homeland" policy and
"using nuclear energy for the interim." These plans were
dropped after heated discussion and objections from
anti-nuclear groups. Compromise language for a "low carbon
homeland" was adopted instead. Premier Liu said this new
goal will mark the beginning of a low-carbon power grid,
including more sophisticated energy-use measuring devices,
and will encourage the development of green industry.
However, given the persistence of anti-nuclear interests,
dropping the "non-nuclear homeland" policy, which became part
of the Environmental Basic Law in 2002, will likely face a
heated battle in the LY. Policymakers may therefore skirt
the issue altogether. Privately, AEC experts told us that
the ultimate fate of the non-nuclear homeland law is unlikely
to affect the future course of nuclear energy development in
Taiwan, since the existing three nuclear power plants are
slated to extend operation and the fourth nuclear power plant
is on track to start operating in 2012.

FULL BACKING FOR GREEN ENERGY
--------------


7. (SBU) Just one week after the conclusion of the energy
conference, the Executive Yuan approved an ambitious project
to pump NT$ 25 billion (USD 757 million) over the next 5
years to develop renewable energy and to subsidize the cost
of installing energy-saving devices, as proposed by the MOEA.
It will also fund the research and development of green


energy technologies to the tune of NT$20 billion (USD 606
million) in hopes of attracting up to NT 200 billion (USD 6
billion) in private investment in the industry. It is hoped
that private investment will help create 110,000 jobs in the
renewable energy sector by 2015. Long term goals are for
Taiwan to become the world's largest supplier of LED modules,
a top manufacturer of solar cells and a major producer of
electric vehicles in Asia.


TAIWAN IS AN ISLAND AFTER ALL
--------------


8. (SBU) COMMENT. The National Energy Conference succeeded
in reaffirming the authorities, commitment to enact the
Renewable Energy Development Act, to seriously fund renewable
energy, to push for renewable energy, and to deregulate the
energy sector. However, the authorities, have neglected to
provide a timetable for passage of other pending energy
legislation, including the Greenhouse Gas Reduction Act, the
Energy Management Law, and the Sustainable Energy Basic Law.
The strong anti-nuclear stance taken by many NGOs cannot
change the fact of Taiwan's heavy reliance on imported energy
(99.3 percent) and the long lead-time needed to bring
renewable energy sources on-line. As a commentator noted at
the conference, Taiwan cannot latch on to another country's
power grid in an emergency since it is an island with a
self-contained power grid. Given the island,s reliance on
imported energy, Taiwan energy planners do not have the
luxury of dreaming about renewable energy as a short-term
solution for Taiwan,s energy needs. As the only energy
source that offers both low carbon emissions and a steady
supply of power for Taiwan in the coming decade, nuclear
energy looks increasingly attractive to many Taiwan
policymakers and energy experts.
END COMMENT.

YOUNG