Monday, March 26, 2012

Taiwan's high-tech firms goes for green...

Taiwan's high-tech firms goes for green...
By Jens Kastner

TAIPEI - As low-carbon certification for consumer electronics come increasingly in vogue, high-tech manufacturers in Taiwan are feeling uneasy. Renewable energy is used scantily on the island, and firms such as Acer, AU Optronics and the Taiwan Semiconductor Manufacturing Company stand to lose out against key rivals.

Taiwan's presidential candidates found a memorandum penned by Acer Chairman JT Wang in their letter box shortly before the January elections that explained what the local electronics sector is seeking. At the very top of Wang's wish list - next to stable cross-strait relations - was a demand that the industry be given the option to buy green energy.

Wang has argued that if "socially responsible companies choose to pay a different price for renewable energy, the society will follow suit". However, he likely has another motivation: only about 1% of Taiwan's energy supply is categorized as "green", and nuclear power accounts for a small share, giving the island's high-tech manufacturers a carbon footprint that is 50% larger than their Korean, Japanese and Singaporean rivals.

The Taiwanese firms fear that industrialized countries buying electronics will protect manufacturing industries and job markets by imposing non-tariff trade barriers in the name of environmental protection. In absence of any indication that Taiwan will reduce carbon emissions in the power sector, the island's environmentalists have thus found themselves an unlikely ally.

"The electronic industry and industrial associations worry about their carbon footprint", said Jay Fang, chairman of the Green Consumers' Foundation. "Customers such as Philips and Apple are demanding carbon emission records, and manufacturers dread that carbon taxes will be imposed in the next few years."

Fang points out that renewable energy use is a cooperate social responsibility requirement and that the ISO14064 certificate, which confirms the compliance of international standards for environmental management, is becoming more of an issue.

Taiwan relies on imports for more than 98% of its energy. In 2010, oil accounted for 49% of total energy consumption, coal came next with 32.1%, followed by nuclear energy with 8.3%, natural gas with 10.2% and energy from renewable sources was at under 1%.

The electronics sector is Taiwan's most important industrial export sector. Orders hit a historical high of US$406.72 billion in 2010 on the back of strong demand for computers, smartphones and other products.

Three nuclear power plants are running but these are scheduled for decommissioning in 2018, 2019 and 2025 respectively, while fourth has been under construction for close to 15 years and has a predicted price tag of $10 billion, possibly the most expensive plant on the planet. The future construction of a fifth plant was always unlikely as Taiwan is prone to earthquakes and tsunamis, with the Fukushima disaster in Japan underlining related concerns.

However, the prospects are hardly brighter in regards to green energy. Wind power presently accounts for 75% of green energy, biomass for 25%, and solar power for almost nothing.

Although the subtropical island seems ideal for wind and sun power, the Kuomintang government has been accused of being stingy with subsidies and criticized for refusing to categorize hydropower as "green", which has distorted the production price of renewables on the whole.

People living along the coast complain of the low-frequency noise the windmills make, and building them offshore is much more expensive. Taiwan's industrial heartland along the west coast seems plagued by the extremes of at some times being windless and the next having typhoons, making the area not ideal for the generation of wind power.

Solar power is mainly a victim of political flip-flopping. Because investments in large-scale renewable energy installations have notoriously high capital requirements and long waits for returns, investors are inherently wary of any signs of instability in government policy. But over the past few years, Taiwan's government has tinkered with regulations more than once and in particular with the all-important feed-in tariff system.

Making matters worse is Taiwan's isolated grid. This significant shortcoming rules out emergency purchases from foreign countries, a measure green role-model Germany, for instance, is forced to carry out every now and then.

Taiwan's high-tech manufacturers have good reason to pay close attention to how the European Union (EU) airline carbon tax emission system develops. The Chinese government has threatened to cancel a sizable Airbus order in response to the EU airline carbon emissions tax. If the EU caves in, any further attempts at carbon taxation - at least in the short-term - should be off the table. The tendency towards low-carbon certificates for consumer products and buildings, by contrast, is unlikely to go away.

In an interview with Asia Times Online, Hu Sheng-Cheng, an economist at Academia Sinica, Taiwan's most renowned research institution, agreed that Taiwan's lack of low carbon emission energy could impact electronics manufacturers but also identified a way forward for the sector and for the government.

"Taiwan's south has abundant sun. TSMC, Delta Electronics, Yuda, etc, all produce solar equipment. Solar panels and flat panels are similar, both need many semiconductors for control", Hu said. "But what Taiwan lacks is system integration. If this can be overcome, the high-tech manufacturers will gain much competitiveness."

Jens Kastner is a Taipei-based journalist.

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