REVIEW AND NOTES ONTAIWAN 2050 NET-ZERO PATHWAYSHIH-MO LINCHUNG TUAN CHRISTIAN UNIVERSITY, TAIWANPRE-CONFERENCE OF SOCIETY FOR ENVIRONMENTAL ECONOMICS AND POLICY STUDIES 2021
SEPTEMBER 24, 2021

INTRODUCTION• THIS PRESENTATION PROVIDES INFORMATION ABOUT THE MOST RECENT DEVELOPMENT OFTAIWAN’S NET-ZERO POLICY FORMULATION, AS WELL AS THE MOST UP-TO-DATE ANDCOMPREHENSIVE ANALYSIS ON TAIWAN’S 2050 POTENTIAL NET-ZERO PATHWAYS.
• THE RESEARCH TEAM LED BY PROFESSOR DAI-GEE SHAW OF THE ACADEMIA SINICA, TAIWANIS ONE OF THE MAJOR RESEARCH GROUPS FOCUSING ON MODELING AND POLICY ANALYSISOF 3E ISSUES IN TAIWAN.
• TWO RECENTLY COMPLETED REPORTS：1) TAIWAN 2050 NET-ZERO PATHWAY; AND 2) THEIMPACTS OF EU AND US CBAM ON TAIWAN’S ECONOMY AND ENVIRONMENT.

SUMMARY OF THE PRESENTATION BYPROFESSOR SHAW (1)• NET ZERO ECONOMY WILL NOT BE SUFFICIENT TO PREVENT FURTHER WARMING AFTER 2050,MOVING ON TO NET NEGATIVE ECONOMY IS REQUIRED.
• NEGATIVE EMISSION RELIES ON CARBON REMOVAL, AND THE THREE CARBON REMOVAL METHODSARE：1) INCREASED BIOLOGICAL UPTAKE; 2) NATURAL INORGANIC REACTIONS; AND 3)
ENGINEERED REMOVAL.
• IN TAIWAN, PRESIDENT ING-WEN TSAI ANNOUNCED THAT “THE 2050 NET-ZERO TRANSFORMATIONIS THE GOAL OF THE WHOLE WORLD, AND IT IS ALSO THE GOAL OF TAIWAN!”• EXECUTIVE YUAN ORGANIZES THE NET-ZERO PATHWAY TASK FORCE IN 2020, AND IS EXPECTED TOFINALIZE THE NET ZERO PATHWAY BY NOVEMBER 2021.

SUMMARY OF THE PRESENTATION BYPROFESSOR SHAW (2)• IN AUGUST, PRIME MINISTER SU ASKED TO AMEND THE GREENHOUSE GAS REDUCTION ANDMANAGEMENT ACT：
• THE TARGET OF 2050 NET-ZERO SHOULD BE SPECIFIED IN THE ACT• CARBON PRICING POLICY TO BE ADOPTED IN THE ACT• POLICY CHOICES FOR NET-ZERO PATHWAYS• TAKING INTO ACCOUNT TWO MAJOR APPROACHES TO MITIGATING THE CLIMATE CRISIS：• EMISSION REDUCTION• GHG REMOVAL (GGR) - USING NEGATIVE EMISSIONS TECHNOLOGIES (NETS)SUMMARY OF THE PRESENTATION BYPROFESSOR SHAW (3)• AVAILABLE STRATEGIES AND POLICIES• PROACTIVE GHG REDUCTION AND REMOVAL POLICIES• R&D OF LOW-CARBON AND GGR TECHNOLOGIES• TRANSFORMING TO BECOME A NET-NEGATIVE ECONOMY AND SOCIETY• ECONOMIC STRATEGIES AND POLICIES• CARBON PRICING AND TAX-FUND SYSTEM (GGR FUND)• USING THE INTERESTS OF THE GGR FUND TO PAY THE CARBON REMOVAL PRICE (AN IDEAPROPOSED BY BEDNAR ET AL., 2021)• OTHERS…

SUMMARY OF THE PRESENTATION BYPROFESSOR SHAW (4)• METHODOLOGY USED FOR ANALYZING TAIWAN’S 2050 NET-ZERO PATHWAY• E3ME MODEL (CAMBRIDGE ECONOMETRICS)• INTEGRATED TREATMENT OF THE WORLD’S ECONOMIES, ENERGY SYSTEMS, EMISSIONS AND MATERIALDEMANDS, WHICH CAN CAPTURE TWO-WAY LINKAGES AND FEEDBACKS BETWEEN THESE COMPONENTS• SCENARIOS：• BASELINE• DIFFERENT COMBINATIONS OF 1) CARBON TAX; 2) RENEWABLE TARGETS; 3) REGULATION ON FOSSIL
FUELS; 4) EV MARKET SHARE; 5) TRANSFORMATION OF ENERGY INTENSIVE INDUSTRIES; 6) PAYMENT FORNETS (NET EMISSION TECHNOLOGIES)• CARBON TAX REVENUE RECYCLING IS CONSIDERED FOR SOME SCENARIOSMAJOR FINDINGS• CARBON TAX WITH LUMP-SUM REVENUE RECYCLING WILL INCREASE CONSUMPTION ANDINVESTMENT, AND HAVE POSITIVE EFFECTS ON GDP• CARBON REMOVAL PRICE PAID BY CARBON TAX REVENUE (AS COMPARED TO PAID BYGOVERNMENT BUDGET) IS BETTER FOR GDP• OVERALL, BY ADOPTING ALL POSSIBLE AND ECONOMICALLY CORRECT POLICIES ANDSTRATEGIES, TAIWAN CAN MEET THE TARGET OF 2050 NET-ZERO, AND RESULT IN A WIN-WINSOLUTION IN TERMS OF NET-ZERO EMISSIONS, ECONOMIC GROWTH, AND SOCIAL EQUITYNOTES ON METHODOLOGY• THE CURRENT MODEL CAN SOLVE UP TO 2050, HOWEVER FOR MODELING NET NEGATIVEECONOMY BEYOND 2050, AN EXTENDED-PERIOD MODEL IS REQUIRED.
• MORE POSSIBLE TECHNOLOGIES (FOR EXAMPLE, TRANSPORTATION TECHNOLOGIES) SHOULD BEADDED TO THE FTT MODULE OF THE E3ME MODEL.

• THREE MAJOR MODELING APPROACHES ARE CURRENTLY USED IN TAIWAN TO EVALUATE THE NETZERO PATHWAY：1) E3ME GLOBAL MACRO-ECONOMETRIC MODEL; 2) SINGLE-COUNTRY CGEMODEL; AND 3) ENERGY SYSTEM MODEL (TIMES MODEL) + ECONOMIC MODEL. COMMUNICATIONAND COLLABORATION AMONG THE MODELING GROUPS ARE CALLED FOR TO MORE CORRECTLYAND EFFICIENTLY PROVIDE EFFECTIVE POLICY SUGGESTIONS TOWARD NET-ZERO PATHWAY.

NOTES ON SCENARIOSFUTURE SCENARIOS CAN TAKE THE FOLLOWING INTO ACCOUNT：• THE DEVELOPMENT AND WORKING OF RENEWABLE POWER STORAGE• UNCERTAINTY ABOUT RENEWABLES DEPLOYMENT• FOR EXAMPLE, THE GOVERNMENT’S PLANS FOR OFFSHORE WIND FARMS TO HAVE 2.6GW OFPOWER TO JOIN THE GRID BY THE END OF THIS YEAR ARE FACING NUMEROUS DELAYS. THE COVID19 OUTBREAK HAS CAUSED MAJOR DISRUPTION FOR THE WIND FARM PROJECTS.

• UNCERTAINTY ABOUT THE POLICY PROCESSESNOTES ON PRIVATE SECTOR INVOLVEMENT• IN SEPTEMBER, 27 COMPANIES ESTABLISHED THE NET ZERO ACTION ALLIANCE, COMMITTING TOBRINGING TAIWAN'S CARBON EMISSIONS DOWN TO ZERO BY 2050. THE ALLIANCE INCLUDESCOMPANIES IN FINANCE, MANUFACTURING, AND THE SERVICE SECTOR.
• THESE 27 COMPANIES ACCOUNT FOR AROUND 40% OF TAIWAN'S GDP AND 20% OF ITS CARBONEMISSIONS. THEREFORE, THE SUCCESS OF THE 2050 ZERO CARBON TARGET WILL DEPEND IN ALARGE PROPORTION ON THE PERFORMANCE OF THESE COMPANIES.
• THE ALLIANCE'S GREENHOUSE GAS PLAN INVOLVES TWO PHASES. THE FIRST WILL SEE BUSINESSOFFICES STOP ALL CARBON EMISSIONS BY 2030, AND THE SECOND WILL SEE MANUFACTURINGBASES MEET THE SAME GOAL BY 2050.

NOTES ON PRIVATE SECTOR INVOLVEMENT• AMONG THE 27 COMPANIES, TSMC’S ZERO-CARBON STRATEGY CONSISTS OF TWO MAINELEMENTS: USING RENEWABLE ENERGY FOR A QUARTER OF THE ELECTRICITY CONSUMED BYITS WORLDWIDE MANUFACTURING FACILITIES BY 2030 AND PARTNERING WITHMULTINATIONAL CORPORATIONS ON RESEARCH INTO CARBON CAPTURE AND STORAGETECHNOLOGIES.
• IN JULY 2020, TSMC ALSO SIGNED A 20-YEAR CORPORATE POWER PURCHASE AGREEMENTWITH ORSTED (沃旭能源) TO BUY POWER FROM THE OFFSHORE WIND FARM PROJECT THEDANISH COMPANY IS DEVELOPING OFF THE COAST OF CHANGHUA COUNTY.

INSTITUTION AND THE EPA• ITRI (INDUSTRIAL TECHNOLOGY RESEARCH INSTITUTE) LAUNCHED A NET ZERO ANDSUSTAINABILITY STRATEGY OFFICE IN MARCH AND ANNOUNCED THAT IT WOULD ACHIEVENET-ZERO EMISSIONS BY 2050. THE OFFICE WILL HELP PROMOTE AND INTEGRATETECHNOLOGY R&D ACROSS INDUSTRIES AND WILL ASSIST TAIWAN IN DRAWING ITSSTRATEGIC BLUEPRINT TO MEET THE 2050 NET-ZERO TARGET.
• IN JULY 2021, THE EPA ANNOUNCED THE OFFICE OF RECYCLING AND THE OFFICE OF CLIMATECHANGE, THROUGH WHICH THE EPA WILL THOROUGHLY REVIEW POLICIES AND
REGULATIONS, INTEGRATE ADMINISTRATIVE RESOURCES, AND EFFECTIVELY PROMOTERECYCLING AND CARBON REDUCTION MEASURES.

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