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Suggestions for MOEA Trial Program of Voluntary Base Green Electricity Framework

On March 6, 2014, The Energy Bureau of Ministry of Economic Affairs has published a pre-announcement on a Trial Program of Voluntary Base Green Electricity Framework （hereafter the Trial Program） and consulted on public opinion. In light of the content of the Trial Program, STLI provide the following suggestions for future planning of related policy structure.

The institution of green electricity as established by the Trial Program is one of the policies for promoting renewable energy. Despite its nature of a trial, it is suggested that a policy design with a more options will be beneficial to the promotion of renewable energy, in light of various measures that have been undertaken by different countries.

According to the Trial Program, the planned price rate of the green electricity is set on the basis of the total sum that the electricity subsidy to be paid by the Renewable Energy Development Fund divided by the total sum of electricity generated reported by Tai Power Company. The Ministry of Economic Affairs will adjust the price rate of the green electricity on the base of both how many users subscribe to the green electricity and the price rate of international green electricity market rate and, then announce the price rate in October of each year if not otherwise designated.

In addition, according to the planned Trial Program, the unit for the subscription of green electricity is 100 kW·h. It is further reported that the current planned price rate for green electricity is 1.06 NTD/ kW·h. And it shall be 3.95 NTD/ kW·h if adding up with the original price rate, with an 37% increase in price per kW·h. In terms of the existing content of the Trial Program, only single price rate will be offered during the trial period.

In this regard, we take the view that it would be beneficial to take into account similar approaches that have been taken by other countries. In Germany, for instance, the furtherance of renewable energy is achieved by the obligatory charge（EEG Umlage）together with the voluntary green electricity program provided by the private electricity retail sectors.

According to German Ministry of Economics and Energy （BMWi）, the electricity price that the German public pays includes three parts: （1）the cost of the purchase and distribution of the electricity, including the margin of the electricity provider（2）regulated network fees, including those for the operation as well as for the measurement works of the meters（3）charges imposed by the government, including tax and the abovementioned obligatory charge for renewable energy（EEG Umlage）, as prescribed by the Act on Renewable Energy （Gesetz für den Vorrang Erneuerbarer Energien, also known as Erneuerbare-Energien-Gesetz - EEG）.

In terms of how it is implemented on the ground, an example of the green electricity price menu program from the German electricity retail company, Vattenfall, is given in the following. In all price menu programs provided by Vattenfall in Berlin, for instance, 29.4% of the electricity comes from renewable energy as a result of the implementation of the Act on Renewable Energy.

Asides from the abovementioned percentage as facilitated by the existing obligatory measures, the electricity retail companies in Germany further provide the price menus that are “greener”. For example, among the options provided by Vattenfall（Chart I）, in terms of the 12-month program, one can choose the menu which consist of 39.4% of renewable energy, with the price of 0.2642 Euro/ kW·h（about 10.96 NTD/ kW·h）. One can also opt for a menu of which the energy supply comes from 100% of renewable energy, with the price of 0.281 Euro/ kW·h（about 11.66 NTD/ kW·h）

Chart I : Green Electricity Price Menus provided by Vattenfall in Berlin, Germany

  Percentage of Renewable Energy Supply

Percentage of Renewable Energy Supply
Electricity Price

12-month program

39.4%

0.2642 Euro/ kW·h（about 10.96 NTD/ kW·h）

All renewable energy program

100%

0.281 Euro/ kW·h（about 11.66 NTD/ kW·h）

Source：Vattenfall website, translated and reorganized by STLI, April 214.

In addition, Australia also has similar programs on green electricity that is voluntary-base and with the goal of promoting renewable energy, reducing carbon emission, and transforming energy economy. Since 1997, the GreenPower in Australia is in charge of audition and certification of the retail companies and power plants on green electricity. The Australian model uses the certification mechanism conducted by independent third party, to ensure the green electricity purchased by end users in compliance with specific standards.

As for the options for the price menu, take the programs of green electricity offered by the Australian retail company Origin Energy for example, user can choose 6 kinds of different programs, which are composed by renewable energy supply of respectively 10%, 20%, 25%, 50%, 75%, and 100%, at various price rates （shown in Chart II）.

 

Chart II   Australian Green Electricity Programs provided by Origin Energy

Percentage of renewable Energy Electricity Price per kW·h

0

0.268 AUD（About 7.52 NTD）

10%

0.274868 AUD（About 7.69 NTD）

20%

0.28006 AUD（About 7.84 NTD）

25%

0.28292 AUD（About 7.92 NTD）

50%

0.2838 AUD（About 7.95 NTD）

100%

0.2992 AUD（About 8.37 NTD）

Source：Origin Energy website, translated and reorganized by STLI, April 214.

Given the information above, it can thus be inferred that the international mechanism for the promotion of green electricity often include a variety of price menus, providing the user more options. Such as two difference programs offered by Vattenfall in Germany and six various rates for green electricity offered by Origin Energy in Australia.

It is the suggestion of present brief that the Trial Program can reference these international examples and try to offer the users a greater flexibility in choosing the most suitable programs for themselves.

※Suggestions for MOEA Trial Program of Voluntary Base Green Electricity Framework,STLI, https://stli.iii.org.tw/en/article-detail.aspx?no=55&tp=2&i=168&d=6584 (Date:2024/12/11)
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Previous Israel’s Technological Innovation System Next A Discussion on Introducing the Concept of “Government Procurement Innovation” and Suggestions for Legislation
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After the European Union's Artificial Intelligence Law, the draft of AI Basic Law is announced in Taiwan.

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Introducing and analyzing the Scope and Benefits of the Regulation「Statute for Upgrading Industries」in The Biotechnology Industry in Taiwan

The recent important regulation for supporting the biopharmaceutical industry in Taiwan has been the 「Statute for Upgrading Industries」 (hereinafter referred to as 「the Statute」).The main purpose of the Statue is for upgrading all industry for future economic development, so it applies to various industries, ranging from agriculture, industrial and service businesses. In other words, the Statute does not offer incentive measures to biopharmaceutical industry in particular, but focuses on promoting the industry development in general. Statute for Upgrading Industry and Related Regulations Generally speaking, the Statute has a widespread influence on industry development in Taiwan. The incentive measures provided in the Statute is complicated and covered other related regulations under its legal framework. Thus, the article will be taking a multi-facet perspective in discussing the how Statute relates to the biopharmaceutical industry. 1 、 Scope of Application According to Article 1 of the Statute, the term 「industries」 refers to agricultural, industrial and service businesses. Consequently, nearly all kinds of industries fall under this definition, and the Statute is applicable to all of them. Moreover, in order to promote the development and application of emerging technology as well as cultivating the recognized industry, the Statute provides much more favorable terms to these industries. These emerging and major strategic industries includes computer, communication and consumer electronics (3C), precise mechanics and automation, aerospace, biomedical and chemical production, green technology, material science, nanotechnology, security and other product or service recognized by the Executive Yuan. 2 、 Tax Benefits The Statute offers several types of tax benefits, so the industry could receive sufficient reward in every way it could, and promote a sound cycle in creating new values through these benefits. (1) Benefits for the purchase of automation equipment The said procured equipment and technology over NTD600, 000 may credit a certain percentage of the investment against the amount of profit-seeking enterprise income tax payable for the then current year. For the purchase of production technology, 5% may be credited. For the purchase of equipment, 7% may be credited. And any investment plan that includes the purchasing of equipment for automation can qualify for a low-interest preferential loan. Besides, for science-based industrial company imported overseas equipment that is not manufacture by local manufactures, from January 1, 2002, the imported equipment shall be exempted from import and business tax. And if the company is a bonded factory, the raw materials to be imported from abroad by it shall also be exempt from import duties and business tax. (2) Benefits for R&D expenditure Expenditure concurred for developing new products, improving production technology, or improving label-providing technology may credit 30%of the investment against the amount of profit-seeking enterprise income tax payable for the then current year. Research expenditures of the current year exceeding the average research expenditure for the past two years, the excess in research expenditure shall be 50% deductible. Instruments and equipments purchased by for exclusive R&D purpose, experimentation, or quality inspection may be accelerated to two years. At last, Biotech and New Pharmaceuticals Company engages in R&D activities, such as Contract research Organization (CRO), may credit 30% of the investment against the amount of profit-seeking enterprise income tax payable. (3) Personnel Training When a company trained staff and registered for business-related course, may credit 30% of the training cost against the amount of profit-seeking enterprise income tax payable for the then current year. Where training expenses for the current year exceeds the two-year average, 50% of the excess portion may be credited. (4) Benefit for Newly Emerging Strategic Industries Corporate shareholders invest in newly emerging strategic industries are entitled to select one of the following tax benefits: A profit seeking enterprise may credit up to 20% of the price paid for acquisition of such stock against the profit seeking enterprise income tax. An individual may credit up to 10%. As of January and once every year, there will be a 1% reduction of the price paid for acquisition of such stock against the consolidated income tax payable in the then current year. A company, within two years from the beginning date for payment of the stock price by its shareholders, selects, with the approval of its shareholder meeting, the application of an exemption from profit-seeking enterprise income tax and waives the shareholders investment credit against payable income tax as mentioned above. However, that once the selection is made, no changes shall be allowed. (5) Benefits for Investment in Equipment or Technology Used for Pollution Control To prevent our environment from further pollution, the Government offers tax benefits to reward companies in making improvements. Investment in equipment or technology used for pollution control may credit 7% of the equipment expenditure, and 5% of the expenditure on technology against the amount of profit-seeking enterprise income tax payable for the then current year. For any equipment that has been verified in use and specialized in air pollution control, noise pollution control, vibration control, water pollution control, environmental surveillance and waste disposal, shall be exempt from import duties and business tax. And for investment plans that planned implementation of energy saving systems can apply for a low interest loan. (6) Incentive for Operation Headquarter To encourage companies to utilize worldwide resources and set up international operation network, if they established operation headquarters within the territory of the Republic of China reaching a specific size and bringing about significant economic benefit, their following incomes shall be exempted from profit-seeking enterprise income tax: The income derived from provision of management services or R&D services. The royalty payment received under its investments to its affiliates abroad. The investment return and asset disposal received under its investment to its affiliates abroad. (7) Exchange of Technology for Stock Option The emerging-industrycompany recognized by government, upon adoption of a resolution by a majority voting of the directors present at a meeting of its board of directors attended by two-thirds of the directors of the company, may issue stock options to corporation or individual in exchange for authorization or transfer of patent and technologies. (8) Deferral of Taxes on the Exchange of Technology for Shares Taxes on income earned by investors from the acquisition of shares in emerging-industry companies in exchange for technology will be deferred for five years, on condition that the shares exchanged for technology amount to more than 20% of the company's total stock equity and that the number of persons who obtain shares in exchange for technology does not exceed five. 3 、 Technical Assistance and Capital Investment The rapid industry development has been closely tied to the infusion of funds. In addition to tax benefits, the Statute incorporates regulations especially for technical assistance and capital investment as below: (1) In order to introduce or transfer advanced technologies, technical organization formed with the contribution of government shall provide appropriate technical assistance as required. (2) In order to advance technologies, enhance R&D activities and further upgrade industries, the relevant central government authorities in charge of end enterprises may promote the implementation of industrial and technological projects by providing subsidies to such R&D projects. (3) In order to assist the start-up of domestic small-medium technological enterprises and the overall upgrading of the entire industries, guidance and assistance shall be provided for the development of venture capital enterprises.

Taiwan Planed Major Promoting Program for Biotechnology and Pharmaceutical Industry

Taiwan Government Lauched the “Biotechnology Action Plan” The Taiwan Government has planned to boost the support and develop local industries across the following six major sectors: biotechnology, tourism, health care, green energy, innovative culture and post-modern agriculture. As the biotechnology industry has reached its maturity by the promulgation of "Biotech and New Pharmaceutical Development Act" in July, 2007, it will be the first to take the lead among the above sectors. Thus, the Executive Yuan has launched the Biotechnology Action Plan as the first project in building the leading industry sectors, to upgrade local industries and stimulate future economic growth. Taiwan Government Planed to Promote the Biotechnology and Other newly Industries by Investing Two Hundred Billion To expand every industrial scale, enhance industrial value, increase the value around the main industrial field, and to encourage the industrial development by government investments for creating the civil working opportunities to reach the goal of continuous economic development, the Executive Yuan Economic Establishment commission has expressed that, the government has selected six newly industrials including "Biotechnology", "Green Energy", "Refined Agriculture", "Tourism", "Medicare", and "Culture Originality" on November 19, 2009 to promote our national economic growth. The government will invest two hundred billion NT dollars to support the industrial development aggressively and to enhance the social investments from year 2009 to 2012. According to a Chung-Hua Institution for Economic Research report, the future growth rate will reach 8.16% after the evaluation, Hence, the future of the industries seems to be quite bright. Currently, the government plans to put money into six newly industries through the existing ways for investment. For instance, firstly, in accordance with the "Act For The Development Of Biotech And New Pharmaceuticals Industry" article 5 provision 1 ",for the purpose of promoting the Biotech and New Pharmaceuticals Industry, a Biotech and New Pharmaceuticals Company may, for a period of five years from the time it is subject to corporate income tax, enjoy a reduction in its corporate income tax payable for up to thirty-five percent (35%) of the total funds invested in research and development ("R&D") and personnel training each year; provided, however, that if the R&D expenditure of a particular year exceeds the average R&D expenditure of the previous two years or if the personnel training expenditure of a particular year exceeds the average personnel training expenditure of the previous two years, fifty percent (50%) of the amount in excess of the average may be used to credit against the amount of corporate income tax payable. Secondly, according to same act of the article 6 provision 1 ", in order to encourage the establishment or expansion of Bio tech and New Pharmaceuticals Companies, a profit-seeking enterprise that (i) subscribes for the stock issued by a Biotech and New Pharmaceuticals Company at the time of the latter's establishment or subsequent expansion; and (ii) has been a registered shareholder of the Biotech and New Pharmaceuticals Company for a period of three (3) years or more, may, for a period of five years from the time it is subject to corporate income tax, enjoy a reduction in its corporate income tax payable for up to twenty percent (20%) of the total amount of price paid for the subscription of shares in such Biotech and New Pharmaceuticals Company; provided that such Biotech and New Pharmaceuticals Company has not applied for exemption from corporate income tax or shareholders investment credit based on the subscription price under other applicable laws and regulations. Thirdly, to promote the entire biotechnological industry development, the government has drafted the "Biotechnology Takeoff Package" for subsidizing the startup´s social investment companies which can satisfy the conditions to invest in "Drug discovery", "Medical Device" or other related biotech industries up to 5 billion with the capital invest in domestic industry over 50%, , with operating experience of multinational biotech investment companies with capital over 150 million in related industrial fields, and with the working experiences of doctor accumulated up to 60 years. Additionally, the refined agriculture industry field has not only discovered the gene selected products, but also combined the tourism with farming business for new business model creation. According to the "Guidelines for Preferential Loans for the Upgrading of Tourism Enterprises" point 4 provision 1, the expenditure for spending on machine, instruments, land or repairing can be granted a preferential loan in accordance with the rule of point 6, and government will provide a subsidy of interest for loaning Tourism Enterprises with timely payments. At last, Council for Economic Planning and Development also points out because most of technology industry has been impacted seriously by fluctuation of international prosperity due to conducting the export trade oriented strategy. Furthermore, the aspects of our export trade of technology industry have been impacted by the U.S. financial crisis and the economic decay in EU and US; and the industrial development seems to face the problem caused by over centralization in Taiwan. Hence, the current framework of domestic industry should be rearranged and to make it better by promoting the developmental project of six newly industries. Taiwan Government Had Modifies Rules to Accelerate NDA Process and Facilitate Development of Clinical Studies in Taiwan In July 2007, the "Biotech and New Pharmaceutical Development Act" modified many regulations related to pharmaceutical administration, taxes, and professionals in Taiwan. In addition, in order to facilitate the development of the biotechnology and pharmaceutical industries, the government has attempted to create a friendly environment for research and development by setting up appropriate regulations and application systems. These measures show that the Taiwanese government is keenly aware that these industries have huge potential value. To operate in coordination with the above Act and to better deal with the increasing productivity of pharmaceutical R&D programs in Taiwan, the Executive Yuan simplified the New Drug Application (NDA) process to facilitate the submission that required Certificate of Pharmaceutical Product (CPP) for drugs with new ingredients. The current NDA process requires sponsors to submit documentation as specified by one of the following four options: (1) three CPPs from three of "ten medically-advanced countries," including Germany, the U.S., England, France, Japan, Switzerland, Canada, Australia, Belgium, and Sweden; (2) one CPP from the U.S., Japan, Canada, Australia, or England and one CPP from Germany, France, Switzerland, Sweden, or Belgium; (3) a Free Sale Certificate (FSC) from one of ten medically-advanced countries where the pharmaceuticals are originally produced and one CPP from one of the other nine countries; or (4) a CPP from the European Medicines Agency. Thus, the current NDA process requires sponsors to spend inordinate amounts of time and incur significant costs to acquire two or three FSCs or CPPs from ten medically-advanced countries in order to submit an NDA in Taiwan. According to the new rules, sponsors will not have to submit above CPPs if (1) Phase I clinical studies have been conducted in Taiwan, and Phase III Pivotal Trial clinical studies have been simultaneously conducted both in Taiwan and in another country or (2) Phase II and Phase III Pivotal Trial clinical studies have been simultaneously conducted both in Taiwan and in another country. Besides, the required minimum numbers of patients were evaluated during each above phase. Therefore, sponsors who conduct clinical studies in Taiwan and in another country simultaneously could reduce their costs and shorten the NDA process in Taiwan. The new rules aim to encourage international pharmaceutical companies to conduct clinical studies in Taiwan or to conduct such studies cooperatively with Taiwanese pharmaceutical companies. Such interactions will allow Taiwanese pharmaceutical companies to participate in development and implementation of international clinical studies in addition to benefiting from the shortened NDA process. Therefore, the R&D abilities and the internationalization of the Taiwanese pharmaceutical industry will be improved.

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