Taiwan is striving to reduce energy costs for consumers by allocating $13 billion to the state-owned power generation company Taipower and the CPC refinery. This decision has been made to counter the significant increase in costs resulting from the war in the Middle East. Taiwan is currently subsidizing energy costs for consumers to prevent sudden increases in bills, while many other countries have passed these costs onto consumers and businesses.
Challenges Facing CPC and Taipower
The Ministry of Economic Affairs of Taiwan has stated that the situation for the CPC refinery is particularly difficult, and the company cannot absorb the difference between the adjusted and unadjusted prices of oil and gas. The ministry has also warned that without supplemental budgets, CPC and Taipower may continue to face issues as price stabilizers, which could lead to price volatility.
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Taiwan's High Dependence on Energy Imports
Asian countries, particularly Taiwan, have been affected by rising oil and gas prices. Taiwan, as one of the import-dependent countries in Asia, sources between 94% to 97% of its energy consumption through imports. This country is particularly reliant on liquefied natural gas, which is typically supplied from Qatar and the United Arab Emirates. Natural gas accounts for over 23% of the island's electricity generation, while 36% comes from oil and nearly 32% from coal.
Considering that Taiwan is one of the largest electronics producers, the demand for electricity in this country is higher than in other import-dependent countries. For example, the major semiconductor company TSMC alone consumes about 8% of Taiwan's electricity. Increased imports of liquefied natural gas from the United States have reduced the risk of shortages, but these imports come with high costs that must be at least partially compensated for Taiwan's industry to remain competitive.
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