Legislature Passes Bill to Retire Coal Units Early, Threatening Northern Power Supply

On the 10th, the Kuomintang (KMT) and Taiwan People's Party (TPP) legislative caucuses proposed amendments to Articles 28 and 30 of the Air Pollution Control Act, aimed at strengthening Taiwan's management of coal-fired generators. While the original regulations allowed coal-fired power plants to remain in operation until the end of their legal lifespans provided they met emission standards, the proposed amendments would directly designate coal-fired generators for early decommissioning and restrict their potential to serve as emergency backup power sources. This move reflects the central government's firm commitment to reducing greenhouse gas emissions and improving air quality, while also aligning with the energy mix adjustments required by international climate change agreements.

The Ministry of Economic Affairs (MOEA) issued a statement today regarding the legislative amendments, pointing out that implementing the proposal would reduce Taiwan's electricity generation by approximately 58 billion kilowatt-hours (kWh) this year. This figure not only exceeds the total residential electricity consumption of the entire island last year, but also means that newly added coal-fired generators about to enter the market would be forced to shut down prematurely. As the Central Taiwan Science Park serves as a vital national high-tech industrial cluster, its future industrial electricity demand has already been incorporated into the long-term planning of multiple enterprises. If the power supply capacity of coal-fired units is weakened, it will directly impact the feasibility of electricity use for emerging businesses within the park, and may even compel some industries to relocate to regions with relatively abundant energy supplies.

Additionally, the ministry warned that the early decommissioning of coal-fired units would pose power supply risks to key northern electricity regions, including Taipei, New Taipei, Keelung, and Yilan. Based on current reserve margin calculations, the rate is projected to drop into negative territory in 2027 and 2028, indicating that during peak demand hours, the system would be unable to provide sufficient backup power to cope with sudden demand spikes or generator failures. The reserve margin is a crucial indicator for measuring power system security, and negative values would severely undermine system resilience and increase the risk of blackouts, posing a threat to the stable operations of key industries such as finance, healthcare, and manufacturing.

At the level of energy policy, Taiwan has implemented an "Energy Transition Plan" since 2018, aiming to increase the proportion of renewable energy to 20% by 2025 and achieve carbon neutrality by 2035. Coal-fired power accounts for approximately 30% of Taiwan's energy mix, and its phase-out is viewed as an indispensable component of the decarbonization pathway. However, coal-fired generators are densely distributed in northern Taiwan, and many are aging units. If the electricity deficit following their decommissioning cannot be promptly offset by wind, solar, or energy storage systems, it will impact overall grid stability. To address this, the government has launched a "Reserve Margin Compensation Scheme" to encourage private investment in energy storage and smart grids, thereby mitigating the risks posed by declining reserve margins.

Finally, the advancement of the legislative amendments and the warnings from the Ministry of Economic Affairs serve as a reminder that the energy transition is not merely an environmental issue, but one intimately tied to economic resilience and industrial competitiveness. Failure to simultaneously increase renewable energy installation capacity and upgrade the power grid could lead to short-term electricity supply and demand imbalances, thereby affecting Taiwan's position in the global supply chain. Over the next two years, the Legislative Yuan will further review the details of the relevant amendments and consult with the Energy Administration and the power company on specific plans for reserve margin compensation and energy storage construction, ensuring that the energy transition achieves environmental protection goals without causing major shocks to industry and public livelihoods.