TAIWAN CONSIDERS POST-COPENHAGEN PATHWAY

C O N F I D E N T I A L SECTION 01 OF 04 TAIPEI 000002

SIPDIS

STATE FOR EAP/TC, IO, OES/EGC, OES/ENV, OES/PCI, OES/STC,
EPA FOR KASMAN, TROCHE AND HARRIS, DOE FOR INTERNATIONAL,
COMMERCE FOR 4431/ITA/MAC/AP/OPB/TAIWAN

E.O. 12958: DECL: 12/31/2019
TAGS: SENV ECON ENRG EINV TRGY PREL TSPL TW XE
SUBJECT: TAIWAN CONSIDERS POST-COPENHAGEN PATHWAY

REF: A. TAIPEI 1093

B. TAIPEI 1453

Classified By: AIT Acting Director Eric Madison for reasons 1.4 (b) and
(d).


1. (SBU) SUMMARY: On December 30, Taiwan delegates to the
Conference of Parties (COP) 15 meeting in Copenhagen gathered
to discuss Taiwan's path forward in the fight against climate
change. Although Taiwan authorities were disappointed the
island did not achieve observer status at COP-15, they have
vowed to continue pushing for meaningful participation in
international environmental organizations. Participants at
the December 30 meeting agreed that Taiwan should stick to
its stated greenhouse gas (GHG) reduction goals, find a
suitable mechanism to engage in trading carbon offsets,
rationalize energy prices, and pass the Greenhouse Gas
Reduction Act pending before the Legislative Yuan. Points of
contention included whether Taiwan should use 2008 as a base
year for legislating GHG reductions, whether Taiwan should
move clearly towards measurable, reportable, and verifiable
economy-wide emissions targets, and whether Taiwan Power
Company (Taipower) has hindered progress on alternative
energy development. Industry cooperation will be key to
reaching Taiwan's GHG reduction targets, but debate over the
best policies to reach those targets is likely to continue.
END SUMMARY.

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THE RESPONSIBLE GLOBAL CITIZEN
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2. (SBU) Taiwan's unique political status has prevented the
island from being able to join most international
environmental organizations, especially UN entities such as
the United Nations Framework Convention on Climate Change
(UNFCCC). The Taiwan authorities have nonetheless taken
action to harmonize domestic legislation and policies with a
wide body of international environmental agreements to which
the island cannot formally accede. President Ma Ying-jeou
and ministries charged with environmental management have
taken the position that Taiwan, as a responsible global
citizen, has a duty to address the problem of climate change.
The authorities have in the past argued that taking action
to combat global warming also draws positive attention to
Taiwan, shows the rest of the world that Taiwan is an engaged
and active global partner, and gives Taiwan an issue that can
be used to increase the island's international participation
and assistance to others. In the latter half of 2009, Taiwan
publicly expressed its desire for expanded participation at
the COP-15 meeting in Copenhagen, and enlisted the help of
diplomatic allies to make its case for meaningful
participation. The Ministry of Foreign Affairs (MOFA) also
made overtures to AIT for U.S. assistance and support (ref
A).


3. (C) Although Taiwan's request to attend COP-15 as an
"observer" was ultimately rejected by conference organizers,
Taiwan officials and academics did attend the meeting under
the umbrella of the island's official research incubator, the
Industrial Technology Research Institute (ITRI),which COP-15
organizers listed as an NGO hailing from Hsinchu China, as in
previous years. According to a MOFA official handling the
island's UNFCCC campaign, the authorities here believe
obstacles to Taiwan's participation in UNFCCC meetings are
political rather than legal, and officials have vowed to work
harder in the future to obtain meaningful (i.e., observer
status) participation for Taiwan. AIT has observed that poor
interagency coordination between MOFA, Taiwan EPA, the Bureau
of Energy, and other stakeholders, as well as a late start on

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the application process to attend COP-15, weak organizational
skills among those shepherding the process, and the absence
of outreach to the PRC on this issue, were major factors
hampering Taiwan's ability to make a compelling case for
observer status in this year's meeting in Copenhagen.

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PLANNING THE PATH FORWARD
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4. (SBU) The December 30 meeting was the first time members
of the Taiwan delegation have conferred since returning to
the island. The purpose of the meeting was to discuss the
future path of Taiwan's GHG reduction policies in light of
COP-15. Attendees and speakers at the meeting included
Minister without Portfolio Liang Chi-yuan, an economist who
covers a wide range of energy and climate issues for the
administration, Taiwan EPA Minister Stephen Shen, former
Foreign Minister Eugene Chien, who now operates a sustainable
energy NGO, representatives from the Bureau of Energy, from
Taipower, and prominent academics.


5. (C) Speakers covered a range of topics, and broad
agreement was reached on the following points:

- Taiwan strongly desires meaningful participation in future
UN-related climate discussions. Speakers felt Taiwan has
much to contribute to the global discussion on this issue,
and its exclusion from meetings does a disservice to both
Taiwan and the rest of the world. Speakers suggested better
training for Taiwan negotiators, pointing out that the PRC's
hard-nosed bargaining skills would be a useful model for
Taiwan's MOFA to study. They also urged Taiwan to explore
cooperation with potentially sympathetic groups such as the
UN's Alliance of Small Island States.

- Taiwan will continue to pursue the GHG reduction targets
already proposed by the administration (i.e. reduce to 2008
levels between 2016-2020, to 2000 levels by 2025, and to 50
percent of 2000 levels by 2050).

- By January 31, 2009, Taiwan will detail nationally
appropriate mitigation actions (NAMAs) that it will take to
reduce GHG emissions. This is in line with COP-15
requirements for non-Annex I countries. At the same time,
however, the Executive Yuan will ask each ministry to propose
measures for moving Taiwan towards fulfilling "economy-wide
emissions targets for 2020" that are measurable, reportable,
and verifiable, as required of Annex I countries.

- Taiwan must engage in international cap and trade programs
in order to meet its GHG reduction targets. U.S. and other
foreign experts visited Taiwan this year to provide training
and case studies on their own experiences developing
emissions trading programs. Taiwan's inability to
participate in UN trading platforms was a serious concern to
the participants, who proposed alternatives that would have
Taiwan choose one or multiple UNFCCC Annex-I countries as
operational bases, and then establish proxy organizations to
open accounts registered in those countries to acquire and
manage carbon credits. U.S. experts have criticized this
plan as unwieldy and open to fraud (ref A).

- The administration must rationalize Taiwan's artificially
low energy and gasoline prices, and bring them in line with
prices dictated by market forces. Speakers noted that
passing energy or carbon taxes would be difficult in Taiwan,
and any such legislation would have to provide subsidies for
low-income individuals and families. (Note: Taiwan's
legislature shelved a proposed Energy Tax this past October

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in the face of stiff corporate opposition. Premier Wu
Den-yih noted there was no "timetable" for an energy tax, and
the central authority would not institute any such tax until
the economy had "recovered." End Note.)

- The Legislative Yuan (LY) should pass the Greenhouse Gas
Reduction Act (GHGRA),which was initially proposed in 2006
and has languished since then due to corporate opposition.
The GHRA would codify emissions reduction targets, as well as
a domestic reporting and verification system. The LY was
expected to pass the GHGRA in early 2010, after taking COP-15
developments and mandates into account.


6. (C) Three further points, which highlight areas of
contention or disagreement between the participants, were
raised:

- Some proposed reconsidering the use of 2008 as a base year
for Taiwan's first GHG reduction target. Because of the
global financial crisis, energy usage and GHG emissions in
2008 were artificially depressed, and 2008 is therefore not a
fair baseline for making future reductions.

- Taiwan is moving to position itself between Annex I and
non-Annex I criteria, as described in the third bullet point,
above. Some participants, however, notably from Taipower and
academia, argued that Taiwan should steer clearly towards
non-Annex I criteria, and should put its own interests first,
take advantage of its unique status as a non-UNFCC member
unbound by international agreements, and avoid agreeing to
measurable, reportable, and verifiable targets that could
hamstring the island into undertaking costly GHG reduction
actions without international support or participation (for
instance in carbon trading programs).

- Taipower took the strongest position against aggressive
action to meet GHG reduction targets, which was not
surprising considering Taipower's reliance on fossil fuels to
generate electricity and earn money. Taipower also operates
the island's nuclear power plants, and clearly supported
expanding nuclear power. In fact, increasing the use of
nuclear power received general support from all participants,
but was not a focus of discussion at the meeting. Taiwan EPA
Minister Shen concluded the meeting by jokingly announcing
that Taipower should be "disbanded" for being so unhelpful in
promoting alternative energy development and carbon reduction
policies. He then struck a serious note and said that
Taipower must take fresh view of energy production
emphasizing GHG reductions.

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COMMENT
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7. (C) Although some meeting participants asserted that
Taiwan should not implement aggressive carbon reduction
policies, EPA Minister Shen and Minister without Portfolio
Liang came down on the side of those who advocated moving
from NAMAs towards measurable, reportable, and verifiable
economy-wide emissions targets (i.e., from non-Annex I
criteria to Annex I criteria). These two ministers' views
will be influential as the administration moves forward on
its GHG reduction agenda. However, both Shen and Liang
asserted that economic development remains Taiwan's top
priority, and GHG reductions should not impede GDP growth.
Considering that Taiwan's industrial sector accounts for 50.1
percent of energy end-use in Taiwan (compared to 22.7 percent
in the OECD and 27 percent globally),industrial buy-in will
have to be a key component of a successful GHG reduction
policy in Taiwan. This reality is likely behind the Ma

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administration's strong support for a cap and trade program,
which would help industry meet capped emissions targets.
Environmental NGOs and a growing number of academics here
have begun criticizing cap and trade programs as little more
than speculative bubbles, and maintain the administration
should instead focus on implementing meaningful energy and
carbon taxes, aimed primarily at industry. The debate over
how Taiwan should achieve its GHG reduction targets will
continue, but for now the targets themselves are unlikely to
change.
MADISON