Politics

Taiwan's Election Result has Consequences for Energy Security

Monday, January 18, 2016

By Tom O'Sullivan

Tokyo - (PanOrient News)Yesterday's election in Taiwan marked a monumental day in its history that may have important regional implications for energy markets.

The election of the LSE and Cornell educated legal academic Dr. Tsai Ing-wen, of the Democratic Progressive Party, as the first female president of a Chinese-speaking country with 56% of the popular vote and 60% seats in the legislature may be a ground-breaking development that may cement Taiwan's credentials as a free and democratic country.

Dr. Tsai will replace the Kuomintang Party's Ma Ying-jeou in May 2016 whose popularity had plummeted attributable partly to a weakening Taiwanese economy.

President-elect Tsai has committed to end Taiwan's dependence on nuclear power by 2025, the last licensing year for the youngest Maanshan reactor, and close its six operating nuclear reactors at the Chinshan, Kuosheng, and Maanshan plants. The six reactors comprise four GE BWRs ( similar to Fukushima) and two Westinghouse PWRs. Nuclear power supplied 16% of Taiwan's electricity requirements.

Taiwan is overwhelmingly dependent on energy imports for 95% of its energy requirements and over 90% of its energy imports enter the country via the South China Sea. Taiwan was also a Japanese colony for over 50 years until the end of WWII.

Dr. Tsai is expected to face significant geopolitical challenges to its west with China around its own sovereignty, and separately because of territorial issues to its south in the South China Sea specifically with regard to the Spratly Islands, Paracel Islands and the Scarborough Reef. Taiwan also has a territorial dispute to its north east in the East China Sea with Japan with regard to the Senkaku Islands.

Oil, coal and natural gas made up 40%, 30% and 17% of Taiwan's total primary energy consumption in Y2014. Its oil consumption is around 1 mbpd (Japan : 4 mbpd) ; coal consumption is 40 m tonnes/annum ("mpta") (Japan : 200 mtpa); and LNG (liquified natural gas) is 13 mtpa (Japan : 87 mtpa).

Twenty five per cent Taiwan's coal comes from China and other major suppliers are Australia and Indonesia. Over 80% of Taiwan's oil comes from the Persian Gulf. Qatar, Malaysia and Indonesia are Taiwan's main LNG suppliers. Taipower and CPC, both state-owned, dominate Taiwan's power and fuel sectors.

Meanwhile, Taiwan has committed to reduce its CO2 emissions, which were 330 millions tons (25% of Japan's), by 30% versus BAU mainly through increased penetration of renewable energy and energy efficiency efforts. Taiwan consumes about 110 million tons of oil equivalent ("mtoe") fuels on an annual basis which is about one quarter of Japan's total fuel consumption of 440 mtoe. Taiwan's GDP is around 15% of Japan's and its per capita GDP is around 2/3s of Japan's.

Over the coming days, weeks, and months in the run-up to the handover of power in May, China's reaction and the reaction of the international community to Taiwan's election outcome will be very important given the existing tense geopolitical situation in East Asia, and specifically in the South China Sea.

Tom O'Sullivan is the Founder of Mathyos Japan a Tokyo based independent energy consultancy.

Photo: Dr. Tsai Ing-wen-- Courtesy of Taiwan Today



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