1. THE LONG-TERM ENERGY SUPPLY AND DEMAND OUTLOOK IN TAIWAN ENERGY COMMISSION MINISTRY OF ECONOMIC AFFAIRS AUGUST 2001 MOEA -15-

2. Contents I. Energy Demand and Supply in Taiwan II. Current Energy Policy III. Key Issues and Challenges IV. Closing Remarks -16-

3. I. Energy Demand and Supply in Taiwan I. Energy Demand and Supply in Taiwan -17-

4. 1. Structure of Energy Supply 106.3 Million KLOE Coal Petroleum Natural Gas Nuclear Hydro *Percentage of Imported Energy in 2000 : 97% *Average Annual Growth Rate from 1980 to 2000 : 5.8% 1980 2000 year Dependence on imports: 86.4% 97.1% 2 7 51 31 9% 58.6 Million KLOE 34.3 Million KLOE 93.4% 1990 6 % 2 6 71 15 14 % 4 55 23 -18-

5. 2. Structure of Energy Consumption - by energy forms 90.9 52 29.6 Million KLOE 1980 2000 year 1990 Coal Petroleum Natural Gas Electricity *Total yearly electricity consumption increases 34 % 6 52 8 40 % 3 44 13 49 3 37 11 % -19-

6. 3. Structure of Energy Consumption - by sectors 90.9 52 29.6 Million KLOE 1980 2000 year 1990 Industrial Transportation Agricultural Residential Commercial Others Non-energy Use *Energy consumption by the industrial, residential, and transportation sectors has increased substantially since 1980. 2% 6 3 2 10 % 12 65 2% 6 3 4 11 6 58 3% 6 2 6 12 16 55 -20-

7. 4. Installed Capacity of Power Stations *1990 - 2000 Average Annual Growth Rate  Total Installed Capacity: 7.3%  Peak Load: 5.9% Reserve Margin: 8.2 % 7.4 % 12.6 % 17,809MW 9,056MW 34,773MW 14% 15 59 11 5 % 29 14 4 27 21 6 % 15 13 15 23 -21-

8. 5. Forecast of Energy Supply Million KLOE year 138.6 106.2 167.1 9.6 2.2 7.1 54.6 32.7 2.3 13.0 2.8 19.6 70.3 30.6 4.3 19.6 2.9 24.0 78.7 37.6 -22-

9. 6. Forecast of Energy Demand Million KLOE 90.9 115.9 150.7 year -23-

10. II. Current Energy Policy II. Current Energy Policy Stabilizing Energy Supply Increasing Energy Efficiency Deregulating Energy Enterprises Enhancing Energy Safety and Environmental Protection Reinforcing Energy Research and Development Promoting Energy Education and Dissemination -24-

11. 1.Intensification of integrated energy planning. 2.Promotion of diversification of primary energy. 3.Construction of energy infrastructure. 4.Maintenance of proper energy security stockpile. 5.Promotion of exploration in energy resources. Increasing Energy Efficiency Enhancing Energy Safety and Environmental Protection Stabilizing Energy Supply Reinforcing Energy Research and Development Promoting Energy Education and Dissemination Policy guidelines Policy contents Deregulating Energy Enterprises Free, Orderly, Efficient, and Clean Energy Demand and Supply System Master goal 1.Promotion of energy education in schools, industry and to the public. 2.Training professional personnel. 1.Enhancement of energy safety. 2.Active introduction of clean energy. 3.Promotion of high- efficiency and low pollution equipment and technologies. 4.Formulation of appropriate strategies to cope with the development of international environ- mental protection. 1.Promotion of R&D in energy conservation technologies. 2.Promoting the application of new and renewable energies. 3.Strengthening international cooperation. 1.Revision of related laws and regulations. 2.Establishment of a fair and competitive environment. 3.Promotion of the liberalization and privatization of energy enterprises. 1.Enhancement of energy productivity. 2.Stress on energy conservation. 3.Laissez faire determination of market mechanism. 4.Reasonable reflection of social cost in energy prices. Change in Energy SituationTrend in Deregulating Energy EnterprisesPressure in Environmental Protection Energy Policy Back-ground -25-

12. III. Key Issues and Challenges -26-

13. 1. Major Conclusions of National Energy Conference o To prioritize the implementation of energy conservation and promotion of energy efficiency, as "no regret strategy", with target of 28% energy saving by year 2020. o To promote the use of LNG, from annual consumption of 3.9 million tons in 1998 to 13 million tons in 2010. The price difference between natural gas and coal will be reduced. o To promote the use of co-generation, renewable energy, hydropower, and also to increase the weight of clean energy in energy portfolio. -27-

14. o Set the structure of the primary energy supply for the year 2020 at * Coal 27-30% * Petroleum 37-40% * National Gas 14-16% * Hydro 1-3% * Nuclear 13-15% * New Energy 1-3%. -28-

15. o Set the structure of the installed capacity for the year 2020 at * Coal-fired 35-37% * Oil-fired 4-5% * Gas-fired 27-29% * Hydro 9-11% * Nuclear 19-20% * New Energy 1-3%. -29-

16. 1. Deregulating Energy Enterprises: *Within three months after the legislature approves the Petroleum Administration Law, all varieties of oil products shall be allowed to import. *The revised draft of the Electricity Law will widely open the operating pattern of power generation. When the legislature approves the draft, the monopoly of Taiwan Power Company will be eliminated. 2. Key Issues and Challenges -30-

17. 2. Augmenting Research & Development on Renewable Energy: *Implementing the Measures for Promoting Solar Water-Heating Systems (15-20% subsidized) *Implementing the Measures for Promoting Solar Photovoltaic Systems (up to 50% subsidized) *Implementing the Measures for Promoting Wind- Power Generators (up to 50% subsidized) *Formulating the law and the program for developing renewable energy respectively -31-

18. 3. Strengthening Energy Efficiency & Energy Conservation: *Establishing an energy efficiency index and auditing system *Implementing an auditing system for energy users *Raising the energy efficiency standards of equipment and revise fuel economy standards for vehicles 4. Establishing a Nuclear-Free Taiwan: *Formulating a statute for the early decommission of the existing three nuclear power plants -32-

19. 5.Promoting Privatization of Electricity Sector : *On September 3,1994, the MOEA published the "Guidelines for the Opening of the Independent Power Generation Industry". *The MOEA then called for IPP projects in January 1995, August 1995, and January 1999, respectively. So far, eight IPP projects with a total capacity of 7,220 MW have begun operation or are under construction. -33-

20. o The energy policy in Taiwan aims at sustainable development through the integration of the 3E (economic development, environmental protection, and energy security). o Our priorities are to promote energy conservation, energy efficiency, and open market, thereby strengthening our international competitiveness. o We welcome international energy cooperation to achieve these common goals. IV. Closing Remarks -34-

21. THANK YOU ENERGY -35-

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