IEEJ：December 2022 © IEEJ2022

Special Bulletin
A Japanese Perspective on the International Energy Landscape (612)November 25, 2022

18th Taiwan-Japan Joint Seminar on Energy Cooperation
Ken Koyama, PhD
Chief Economist, Managing Director
The Institute of Energy Economics, JapanOn November 24, the 18th Taiwan-Japan Joint Seminar on Energy Cooperation took placein Taipei. The basically annual seminar has been held in Taipei and Tokyo alternately since the firstone in Taipei in 2001. After the 15th one in 2019, the seminar was held on an online basis due to theCOVID-19 outbreak in 2020 and 2021. The latest one was the first face-to-face seminar in three years.
Some 30 Taiwanese participants in the 18th seminar included senior officials from the Bureau ofEnergy at the Ministry of Economic Affairs and representatives from national electricity and oilcompanies, as well as the Institutes of Nuclear Energy Research and the Industrial Energy ResearchInstitute. Japanese participants including me numbered nine from the government and the Institute ofEnergy Economics, Japan, led by IEEJ Chairman Tatsuya Terazawa. The seminar consisted of theopening session, the first session on overall energy policies, the second one on the resilience ofelectricity supply, the third one on research and development on renewable energy and otherdecarbonization technologies, and the fourth one on challenges for the liquefied natural gas market. In
the first to fourth sessions, Japanese and Taiwanese presentations were followed by vigorousdiscussions. In the following, I would like to give my personal comments on key points at the seminar.
First, the seminar indicated that Japan and Taiwan face an important challenge of how topromote energy transition from the current heavy dependence on fossil fuels to achieve their common
goal of carbon neutrality or net-zero emissions in 2050. On the path to carbon neutrality, they also
commonly face a grave challenge of how to ensure energy security, which has become a top priority
due to the Ukraine crisis. Regarding overall energy policies, seminar participants cited variousmeasures, technologies and policy options, which are all plagued with great problems that are not easy
to resolve.
As a significant challenge for the promotion of Japan-Taiwan cooperation or dialogue, I
would like to cite how to spread renewable energy. Japan and Taiwan commonly place hopes on greaterroles for offshore wind and other renewable energy sources in their future energy transition and are
endeavoring to overcome relevant problems. When disseminating wind and other naturally variable
renewables, how to address their supply intermittency becomes a challenge. While it is technologicallypossible to address the supply intermittency, a cost is required for integrating intermittent electricity
supply from renewables into the power grid. As variable renewables increase their share of power
generation, the integration cost expands. In this sense, how to develop an optimum energy mix basedon the maximum spread of renewables is a common energy policy challenge for Japan and Taiwanthat have been put into different conditions. The spread of renewables is coupled with the need forelectrification and electricity storage to expand demand for rare earths and other critical minerals,leading to problems such as a tighter supply-demand balance, price hikes and dependence on some
supply sources. The problems will be common to Japan and Taiwan in regard to energy and economic
security. They will have to seek solutions to these problems and consider their cooperation.
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Second, I would like to point out that a difference between Japanese and Taiwanese nuclear
policies may become a new challenge regarding their energy transition and lead to relevant problems.
Taiwan has advocated a nuclear phaseout policy to achieve a nuclear-free homeland goal by 2025,
based on last year’s referendum results, while Japan has been proceeding with initiatives to promote
the restart of idled nuclear power plants, lengthen the service life of nuclear reactors and constructnext-generation reactors to achieve nuclear energy’s target share of the power mix at 20-22% in 2030.
They are now going in contrasting directions regarding nuclear energy. Factors behind these Japanese
nuclear initiatives include globally increasing interest in nuclear energy and changes in domestic
public opinion on nuclear energy as an option that can efficiently contribute to Japan’s 3E’s – energy
security, environmental protection and economic efficiency. As a matter of course, the extent to which
nuclear power plants would be restarted is still uncertain. However, it was interesting that the seminar
indicated Taiwan’s attention paid to Japan’s nuclear initiatives that are expected to be enhanced. On
the other hand, Taiwan’s failure to adopt nuclear energy as a stable zero-emission electricity source
has apparently become a major constraint or challenge regarding the energy mix. For instance, Taiwan
is seeking to increase LNG’s share of the power mix from 37% in 2021 to 50% by 2025. Given thecurrent supply-demand balance in the international LNG market, this may be a tough challenge thatcomes as the option to use nuclear energy has been ruled out, indicating how difficult the developmentof a best energy mix would be in Taiwan.
Third, I would like to note that two major issues regarding stable energy supply were taken
up for discussion at the seminar. One is about stable electricity supply. The importance of stableelectricity supply will grow in Japan and Taiwan as electrification makes progress. Both have beensusceptible to natural disasters such as earthquakes and typhoons. In fact, they have experienced thetightening of the electricity supply-demand balance and large-scale blackouts due to various events inrecent years. At the seminar, it was confirmed that Japan and Taiwan should enhance their respective
power grids while trying to spread naturally variable renewables. Multiplexing is important for
securing stable power supply. Investment is required for multiplexing power supply, leading to higher
costs. How to secure stable electricity supply while minimizing an economic and social cost hike is an
important challenge for Japan and Taiwan. It was interesting that seminar participants pointed to theimportance of preventing electricity supply problems and developing capabilities to quickly restore
power supply in emergency situations.
The other important issue was about stable LNG supply. LNG is an extremely importantenergy source for Japan and Taiwan. As noted above, Taiwan has set a goal of raising LNG’s share of
the power mix to 50% by 2025. Due to the Ukraine crisis, however, the global gas/LNG market has
been destabilized rapidly, leading Europe to become concerned about a serious gas crisis this winter.
As gas inventories have increased due to warmer-than-usual winter weather so far and gas
consumption cuts, any gas supply crisis is expected to be avoided for the immediate future. However,future gas supply remains uncertain, with the supply-demand balance expected to tighten in and after
2023. How to secure stable LNG supply this winter will remain a challenge common to Japan andTaiwan. As for the expansion of LNG supply capacity to secure stable supply, how to secure LNG
investment even amid the decarbonization trend and long-term LNG contracts for such investment
became a controversial topic at the seminar. How to secure the long-term stability and sounddevelopment of the LNG market, including investment, is a challenge common to Japan and Taiwan.
Japan and Taiwan are surrounded by seas, heavily dependent on fossil fuels for energy
supply, poor with domestic energy resources and highly dependent on energy imports. Both have been
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industrialized, occupying key positions in global industrial supply chains. Japan and Taiwan facecommon challenges regarding efforts to achieve carbon neutrality by 2050 while enhancing energy
security. At a time when the international situation is destabilized, deepening divides in the world,
Japan and Taiwan that face common challenges should promote and deepen energy cooperation.

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