Net-zero Transition to a Circular Economy

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Interview with Tseng Wen-sheng, Deputy Minister of the Ministry of Economic Affairs

The average global temperature has only risen by 1°C since the Industrial Revolution; however, even this has triggered extreme climate change that has seriously threatened countries around the world. In response, the United Nations drafted the Sustainable Development Goals (SDGs) in 2015, a proposal consisting of 17 targets for climate change mitigation and energy sustainability. This past month, the 26th  United Nations Climate Change Conference (UNFCCC COP 26) was held in Glasgow, United Kingdom. The conference included the reaffirmation of the Paris Agreement and setting targets to limit global temperature rise between 1.5°C - 2°C. Countries were also called to reduce the use of coal and to control emissions.

Upon taking office in 2016, President Tsai Ing-wen stated, "We must not endlessly expend natural resources . . . as we have done in the past. Therefore, we will strictly monitor and control all sources of pollution. We will also bring Taiwan into an age of circular economy, turning waste into renewable resources." At present, the Taiwanese government is promoting the Green Energy Technology Industry Innovation and Promotion Action Plan under the Five Plus Two Industry Innovation Plan. The action plan will focus on the development of solar and wind power as well as the formation of a national team to link with international industry chains and drive the development of Taiwan’s green energy industry.  Additionally, up to NT$60 billion has be invested in the construction of Shalun Smart Green Energy Science City, which serves as a hub for both the country's industry innovation ecosystem and green energy industry network.

The Circular Economy Leads to Innovative Business Models

The rapid worldwide development of science, technology, and the economy has resulted in spiking demand for resources, making it difficult to balance economic development with the available natural resources and the environment. As the global impact of climate change intensifies, identifying the means to realign this balance between economy and ecology has become a pressing issue. This is evident in the formulation of the UNSDGs, which have moved countries to set emission reduction targets. Tseng Wen-sheng, Deputy Minister of the Ministry of Economic Affairs (MOEA), pointed out that a circular economy greatly differs from a linear economy. The past method of “take, make, use, dispose” is being transformed into new economic and industrial systems whereby resources can be recovered or renewed. Such systems consist of three indispensable elements: natural resources, circulation, and the economy.

According to the 2020 Germanwatch Global Climate Risk Index and the Four Twenty Seven Report on assessing sovereign climate risk, Taiwan is classified as a high-risk country vulnerable to hazards related to climate change. Therefore, the implementation of energy transition is of the utmost priority. To this end, the Executive Yuan passed the Green Energy Technology Industry Innovation and Promotion Action Plan in 2016 with the goal of promoting the green energy tech industry as a new driver of domestic energy transition and economic development. 

Tseng remarked that Taiwan's energy transition will focus on three core areas: the development of green energy technology, increasing gas-fired power generation, and reducing coal consumption. This three-pronged approach echoes global trends to reduce carbon emissions, ensure power supply stability and sustainability, and increase energy efficiency. In line with these targets, it is hoped that by 2025, Taiwan's power generation ratio will consist of 20% renewable energy, 50% gas-fired power, and reduced use of coal-fired power.

In 2018, the Taiwanese Ministry of Foreign Affairs (MOEA) installed the Circular Economy Promotion Office to comprehensively implement the Circular Economy Promotion Plan. The plan was enacted to resolve the dilemma of sustainable industrial development by way of cross-sector integration. More specifically, the plan would provide the necessary R&D talent and production technology to create an environment conducive to developing new materials industries.

Tseng noted that the drivers of the Circular Economy Promotion Plan are "circular industrialization" and "industrial circulation." These two principles guide the assistance offered to key material industries such as metals and petrochemicals. It also supports the R&D of innovative material technology and pushes to increase the value of renewable resources. Industry-government-academia resources have also been utilized to construct and open a new circular demonstration center, where integration and planning experiences are promoted to enterprises, industries, industrial parks, and international exports.

Developing Green Energy for Energy Transition by 2025

To reach the target of 20% renewable power generation by 2025, the government has actively developed renewable energy since 2016, focusing on solar energy and offshore wind power. The development of solar energy has prioritized the popularization of new devices and the expansion of energy capacity. Offshore wind power development has adopted a three-stage strategy. The first stage saw the establishment of a demonstration wind farm to encourage investments from manufacturers. The second stage announced potential wind farm sites and selected manufacturers to invest in early development. The third stage of block development will provide offshore wind power with long-term market stability by driving the development of local supply chains.

In order to optimize the ecosystem for renewable energy, the government passed amendments to the Renewable Energy Development Act in 2019. Advancing the development of renewable energy jointly with private sectors has improved the efficiency of promoting renewable energy. Actions include actively incentivizing small hydropower plants, streamlining application procedures for renewable energy power generation equipment, and advising large electricity users with the installation of renewable energy sources. Such measures have been effective in terms of raising the overall proportion of green electricity usage in Taiwan. According to reports from the MOEA in 2020, namely the “Statistics and Analysis of CO2 Emissions in Taiwan from Fuel Combustion,” “Electricity Carbon Emission Factor,” and “Statistics of Energy Efficiency Indicators in Taiwan,” domestic greenhouse gas emissions and electricity emission factors have declined for three consecutive years, with greenhouse emissions in 2020 down by 4.3% and electricity emission factors down by 9.4% when compared to levels in 2017. Energy intensity also decreased from 2016 to 2020 at an average annual rate of 2.65%, indicating that the promotion of energy transition and improvement of energy efficiency has borne fruit.

Uniting Research for a Green Energy Tech Talent Pool

Implementing a circular economy in the face of global warming and energy shortages, reducing dependence on imported energy, striving towards carbon reduction through energy transition policies, and driving the green energy tech industry—all these efforts have made talent cultivation in energy transition and related fields all the more urgent. The MOEA and the Ministry of Science and Technology (MOST) have actively pooled research momentum and results to form industry-academic research clusters that link research results to industries and enhance talent competitiveness. In 2017, the MOEA founded the Kaohsiung Maritime Technology Innovation Center (MTIC) and installed the Maritime Technology Industry Talent Training and Certification Center and the Maritime Innovation R&D Center. The purpose of the MTIC is to promote international industry-academic research linkage and cultivate talent by utilizing developmental experience in offshore wind power and maritime technology.

The Talent Training Center was approved to offer Global Wind Organization-certified courses this year. The courses integrate colleges and universities, public sector resources, and industry experts to introduce the professional wind power industry and also includes industry forums. Since it began offering courses, the Talent Training Center has actively cultivated talent in offshore wind power and maritime technology with the goal of becoming a training hub for the Asia-Pacific region. With an occupancy rate of about 80% in 2021, the Maritime Innovation R&D Center has supported diverse offshore engineering and underwater technology research and development. The center is anticipated to drive the development of surrounding industries and local economies, thereby creating sustainable value for Taiwan’s offshore wind power and maritime technology industries.

The MOST has promoted the Green Energy Technology Joint R&D Program since 2019 in response to the strategies listed in the Executive Yuan's Green Energy Technology Industry Innovation Promotion Plan. These strategies include energy creation, energy efficiency, energy storage, and systems integration. This cross-sector promotion has actively linked forward-looking green energy technology with industrial development. To date, the program has led to the cultivation of more than 1,000 master's and doctoral-level researchers, 42 independently patented technologies, and 13 technology transfers. These results have accelerated the development of industry-academia collaborative research technology.

In addition, 136 companies have participated in R&D projects, further consolidating industry-academia research collaboratives and energizing the clustering effects of green energy technology. Innovative green energy technology development, joint initiatives on the application of green energy technology, and strategic promotion and coordination will serve as the focus of future measures. This will expand the talent pool for innovative green energy technology ecosystems and promote collaborative research between industries and academia.

Creating Green Energy Innovation Ecosystems through Industry-Government-Academia Integration

To create a sustainable win-win situation for the economy and the environment as well as fostering global connections, the Taiwanese government plans to create an innovative ecosystem for the green energy technology industry. Since the announcement of the Green Energy Technology Industry Innovation and Promotion Action Plan, the cumulative capacity of Taiwan's solar power industry has reached 6,903.6 MW as of August 2021. Growing market demand, rapid industry restructuring, and active investments in innovative R&D have pushed output values in 2019 and 2020 past NT$60 billion.

This year marked the opening of the Shalun Smart Green Energy Science City promoted by the MOEA and MOST. The industrial park is expected to create 2,500 jobs in 2022 and drive NT$7 billion in private investments. The MOST Green Energy Technology Joint Research Center and the MOEA Green Energy Technology Demonstration Field are also located within the park. Among them, the Green Energy Technology Demonstration Field will establish supply chains for energy supplies, energy storage, and energy regulation and use. These will then be promoted in the international market. The Green Energy Technology Joint Research Center will serve as a value creation platform for industries and academia as they collaborate to commercialize R&D results. In addition, research units such as the National Applied Research Laboratories, Industrial Technology Research Institute, Academia Sinica, and the Institute of Nuclear Research will also be stationed in the special zone to drive green energy industry developments with R&D results in science and technology. Shalun Science City also connects neighboring science parks, develops the Southern Taiwan science and technology corridor, and supports national green energy teams to showcase Taiwan's one-stop international green energy industry to the world. This will allow Taiwan to become a relay station before it enters the global supply chain.

Shalun Science City will connect upstream, midstream, and downstream green energy industries to form a sustainable and circular green energy industry innovation ecosystem as well as a low-carbon community. Tseng remarked that the industry and energy sector has already launched a net-zero transition plan under the oversight of the Executive Yuan. At the same time, expert cooperation and industry dialogue are being utilized to join a variety of sectors with industries, academia, and the government to discuss the blueprint for the future development of decarbonization technology. In addition to assessing technology development conditions, processes, and supporting measures (such as capital and resource requirements, regulations, infrastructure, etc.), such measures will develop Taiwan’s international competitive edge. In this manner, related technologies will be able to link with domestic industries to create new momentum for the net-zero economy.

Tseng pointed out that the MOEA has set up a carbon-reduction working group platform to provide industry guidance together with the Chinese National Federation of Industries, industry associations, and other related industries. This collaboration will place research and business on the path to net-zero emissions by 2050 and assist the industry in setting reduction goals. The platform also handles communication seminars for the service industry. In the future, the trend and mindset of net-zero emissions will continue to be promoted through the board of directors and supervisors of public associations. In this way, sectors and industries can join hands to find feasible solutions for net-zero emissions.

The Fourth Industrial Revolution: Taiwan's Net Zero Transition

Advanced countries regard net-zero transition as the key to launching the fourth Industrial Revolution. Taiwan’s industrial system is also facing the heat with global trends towards high performance, low energy consumption, non-toxic, and zero waste mindsets. The government will continue to promote innovation within green energy technology industries. It also plans to promote the development of related industries and attract both international investments and talent. In the process of energy transition, it is hoped that these areas will all be accomplished while taking into account energy security, the green economy, and environmental sustainability. Tseng commented that a circular economy that emphasizes the recycling and recovery of resources, energy efficiency and carbon reduction, and the protection of ecological resources will mitigate the impact of the global warming crisis on mankind.

Reaching net-zero emissions by 2050 has become a global mindset. Governments are actively encouraging industries to fulfill their corporate social responsibility through commitments, actions, third-party verification, information transparency, negotiation, education, and active investments towards resources and transformation. In 2021, the Taiwan Institute for Sustainable Energy (TAISE) initiated the establishment of the Taiwan Alliance of Net Zero Emission with 27 domestic and foreign companies including China Steel Corporation, Chunghwa Telecom, and CTCI. The alliance works towards promoting the trend of net-zero emissions in Taiwan and pledges to achieve net-zero emission business offices by 2030. The alliance's ultimate goal is to achieve 100% net-zero emissions in both business offices and manufacturing bases across Taiwan by 2050, in line with the UNSDGs.

Through the circular economy created under the Five Plus Two Industry Innovation Plan, the Executive Yuan plans to establish a circular economy model consisting of arterial industries (manufacturing and consumption) and venous industries (resource recovery and reuse). Efforts to strengthen the solar power industry and establish an independent domestic supply chain include plans to build a power supply of 20 GW (1 billion watts) by 2025, which will drive a total investment of NT$1.2 trillion.

Taiwan's wind farms have come to gain international fame. It is estimated that annual offshore wind power generation will reach 19.8 billion kWh by 2025, which will drive investments of over NT$962.5 billion and create 20,000 jobs. To date, the Green Energy Technology Industry Innovation and Promotion Action Plan, Green Energy Roofs project, a two-year solar energy program, a four-year program to promote wind power, an advanced metering infrastructure (AMI) demonstration project, and the construction of the Shalun Smart Green Energy Science City have all been launched. The initiatives are expected to create a combined total of 32,000 jobs and to attract investments of over NT$1.817 trillion. 

Energy transition will lead a new wave of economic growth in Taiwan. These efforts will not only take environmental sustainability into account, but also allow the country to swiftly ascend and become the green energy hub of the Asia-Pacific region.

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