Energy Security in Taiwan Review and Re-examination

Transcription

1 Energy Security in Taiwan Review and Re-examination Shih Mo Lin and Chun Chaing Feng Center for Applied Economic Modeling Chung Yuan Christian University, Taiwan

2 Outline Motivations Objective Economic & Energy Situation in Taiwan Measurement of Energy Security Methodology Results and Analysis Conclusions

3 Motivations Energy is an important input to the economy and Taiwan relies heavily on imported energy. As such, how to maintain a stable supply of energy at a stable price has become an extremely important policy issue in Taiwan. The concept of energy security refers to the loss of economic welfare that may occur as a result of a change in the price or availability of energy (Bohi & Toman, 1996), and thus is frequently used as an indication of the vulnerability of an economy w.r.t. energy shocks.

4 Motivations However, measuring energy security itself constitutes many theoretical and empirical difficulties. How the four dimensions of energy security suggested by APERC: availability (geological), accessibility (geopolitical), affordability (economical) and acceptability (environmental and societal) of energy be appropriately considered? And, are there any other dimensions or factors need to be considered? (For example, the adaptability of the economy, such as energy efficiency improvement, technological change, etc.)

5 Objective Ex-post analysis of the energy security situation of Taiwan between 1991 and 2004, taking into account the adaptability of the economy in responding to external shocks.

6 Overview of energy and economic situation of Taiwan Sources: Directorate General of Budget, Accounting and Statistics, Executive Yuan, R.O.C. Ministry of Economic Affairs, R.O.C. Bureau of Energy, Ministry of Economic Affairs, R.O.C. Ministry of Finance, R.O.C.

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9 Industrial Structure (Current Price) 01/234564/- A-/=23-< #!!" +!" *!" )!" (!" '!" &!" %!" $!" #!"!",-./ #++# #++$ #++% #++& #++' #++( #++) #++* #+++ $!!! $!!# $!!$ $!!% $!!& $!!' $!!(

10 Industrial Structure (Constant Price) #!!" +!" *!" )!" (!" '!" &!" %!" $!" #!"!",-./ 01/234564/- A-/=23-< #++# #++$ #++% #++& #++' The share of energy intensive industries is increasing in recent years. #++( #++) #++* #+++ $!!! $!!# $!!$ $!!% $!!& $!!' $!!(

11 Import of Energy Intensive Products 01*+) *7289:3+6; 01*+) *72<=6:=6; '!"!!# &$"!!# &!"!!# %$"!!# %!"!!# $"!!#!"!!# ()*+ %,,- %,,, &!!! &!!% &!!& &!!' &!!. &!!$ &!!/

12 Export of Energy Intensive Products 01*+) *7289:3+6; 01*+) *72<=6:=6; '!"!!# &$"!!# &!"!!# %$"!!# %!"!!# $"!!#!"!!# ()*+ %,,- %,,, &!!! &!!% &!!& &!!' &!!. &!!$ &!!/

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18 Indicators of Energy Security, 2007 (Bureau of Energy, Taiwan)

19 Framework and Procedures

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21 Measurement of Energy Security

22 Indicators of Energy Security Reserve to production ratio Diversity indices Import dependence Combined measure of diversity and import dependence: The Shannon Index Political stability: Adjusted Shannon-Weiner Index Mean variance portfolio (MVP) theory Market liquidity Demand-side indicators: Energy intensity, energy expenditure

23 Ex-post vs. Ex-ante Analysis Ex-post indicator attempts to answer the question: did the energy system cause any major frictions to the economy in the past? Ex-ante indicator asks the question whether one may expect major frictions to originate in the energy system in the future. Uncertainty involves and needs to project into the future.

24 Dimensions of Energy Security Availability elements relating to geological existence. Accessibility geopolitical elements. Affordability economical elements. Acceptability environmental and societal elements. Adaptability energy efficiency improvement, technological change, inter-fuel substitution, interfactor substitution, productivity improvement, renewable energy development, etc.

25 Methods Static CGE models for Taiwan, 1991, 1996, 2001, 2004 corresponding to the years that I/O tables are available. Typical model with 42 sectors, including major energy sectors Distinguishing sources of primary energy imports Substitution elasticities are econometrically estimated by a comprehensive database system Each model reflects a specific economic structure which has different capacity to adjust to extenal shocks. Principle component analysis (PCA) for determining the weights for aggregating economic indicators.

26 Data Input-output tables for 1991, 1996, 2001, and 2004 Import data for coal, oil, and natural gas for 4 years Political stability index: World Bank (2007) Substitution and transformation elasticities

27 Scenarios: Scenarios and Economic Indicators Supply reduction for each fuel from each supplier country in each year by 50% Price increases by 50% for each fuel in each year Economic Indicators: Real GDP Employment CPI Exports Imports

28 Results and Analysis

29 Supply Disruption -- Oil GDP Loss Rate Year Indonesia Iran Iraq Nigeria Saudi Arabia Kuwait United Arab Emirates Congo Angola Kuwait-Saudi Arabia Neutral Zone Oman

30 Supply Disruption -- Coal GDP Loss Rate Year Indonesia United States South Africa Australia Canada China

31 Supply Disruption Natural Gas GDP Loss Rate Year Indonesia Australia Oman Malaysia

32 Political Stability Index: Oil World Bank (2007) Year Indonesia Iran Iraq Nigeria Saudi Arabia Kuwait United Arab Emirates Congo Angola Kuwait-Saudi Arabia Neutral Zone Oman

33 Political Stability Index: Coal World Bank (2007) Year Indonesia United States South Africa Australia Canada China

34 Aggregate Index Supply Disruption Year GDP loss rate

35 Aggregate Index Price Increase Year GDP loss ra te

36 Aggregate Indices supply Disruption

37 Aggregate Indices Price Increase

38 Comparison of Indicators SW ! ! ! ! ! ! ! SW GMC ! ! ! ! ! ! ! AI-Q AI-P SW ! ! ! ! ! ! ! SW ! ""! ! ""! ! ! ! GMC ! ! ! ! ! ! ! AI-Q AI-P SW: Shannon-Weiner; SW1: SW adjusted for PS GMC: Geopolitical Market Concentration Risk Index

39 Conclusions There is a trend of energy insecurity for Taiwan over the past decade. To improve the situation, Taiwan has to Promote energy conservation Improve energy efficiency Restructure the economy to reduce the share of energy intensive industries Increase the share of renewable energy

40 Work in Progress Dynamic model for ex-ante analysis Features of the model: Several electricity generation technologies and substitution possibilities Changes in preferences Renewable energy development Learning-by-doing Endogenous technical change

41 Thank you for your attention!