Resolving Taiwan's Nuclear Power Puzzle: The Economic Impacts of Terminating the Fourth Nuclear Power Plant

The continuing struggle between the ruling DPP and the opposition alliance over the fate of the controversial Fourth Nuclear Power Plant has been a major policy issue in Taiwan since the new anti-nuclear power government took office on May 20, 2000. The purpose of this paper is to evaluate the economic impacts of the termination of the Fourth Nuclear Power Plant under different alternative policy proposals. The proposals considered in this research are 1) the termination of the Fourth Nuclear Power Plant without any alternative undertaken, 2) overall energy efficiency improvement as an alternative policy, 3) thermal efficiency improvement in coal-fired power plant as an alternative power source, and 4) thermal efficiency improvement in natural gas-fired power generation facilities as an alternative power source. The analysis in this paper is based on simulation results from TAIGEM-D (TAIwan General Equilibrium Model-Dynamic), a dynamic, multisectoral, applied general equilibrium model of the Taiwan’s economy, developed specifically to analyze energy and climate change response issues. The findings of this research clearly demonstrated that the Fourth Nuclear Power Plant is not as necessary as is alleged by Taiwan Power Company. Under the worst scenario when no alternative tactics are available, the termination of the Fourth Nuclear Power Plant will only cause medium to small impacts on the Taiwan economy. If the actions of energy efficiency improvement and retrofitting of the existing power plants are undertaken, the Taiwan economy will be better off even though the termination of the project may lead to a shortage of electricity. Moreover, policy simulation results also indicate that the Fourth Nuclear Power Plant shows no supremacy over the power plant retrofitting options when CO2 emissions are a concern.