As a major energy supplier in Taiwan, CPC has been actively monitoring possible risks and opportunities of climate change in recent years. As a response to the global sustainability development strategies, CPC conducted scenario analyses, quantified financial impacts, and devised response measures using the climate scenarios published by United Nations Intergovernmental Panel on Climate Change (IPCC) and International Energy Agency (IEA), so as to evaluate possible operational impacts as well as physical and transition risks to CPC. CPC also adopts the framework developed by TCFD (Task Forced on Climate-related Financial Disclosures) for disclosure of climate resilience, and thereby ensures the sustainability of its practices.
CPC has been incorporating climate change issues into its risk management system by following the TCFD framework. The risk management team of each department (division and office) first evaluates the potential risks and operational and financial impacts of “Climate and the ecosystem,” and then devises appropriate responses and strategies based on the outcomes of risk assessment and priority determined using the risk matrix. Each of risks identified is tracked using a “Risk Matrix” and an enterprise risk management (ERM) system. Not only are risks reported to the board of directors and the senior management for materiality assessment, they are also raised in Risk Management Committee meetings for interdepartmental discussions about short-, medium-, and long-term climate risks and opportunities. Key resolutions of the committee are reported to the board of directors to enhance climate resilience of the organization.
Note : The carbon dioxide equivalent emissions are calculated on an annual basis. The data for the year 2022 will be provided after the completion of third-party verification by the end of July 2023. This data is for internal auditing purposes.
According to the outcomes of CPC’s climate change risk and opportunity identification exercise, the impact of policy and regulatory risks under transition risk was the highest among all risks, and has been highlighted as a major risk. The government of Taiwan announced its “Taiwan 2050 Net Zero Roadmap and Strategy” in March 2022 that outlined the path to net zero by 2050, and later enacted the Climate Change Response Act in January 2023 that set clear goals to net zero from now until 2050. For this reason, it is mandatory for the organization to observe the Climate Change Response Act and achieve net zero by 2050.
CPC adopted IEA’s Stated Policies Scenario (STEPS), the Sustainable Development Scenario (SDS), and the Net Zero Emissions by 2050 Scenario (NZE) to estimate carbon emission volume from now until 2050. The same foundation is used to further assess how potential carbon credit impacts CPC.
As governments around the world begin to evaluate and adopt the carbon pricing system, CPC took the initiative to analyze the five carbon pricing systems introduced locally and abroad, and applied its own climate model and financial model to identify carbon price trends from now until 2050.
Note 1: Following the enactment of the Climate Change Response Act, CPC expects an increase in carbon exposure as carbon taxing begins in 2024.
Note 2: Because NGFS NDC sets the target to reduce carbon by 50% by 2030 and achieve net zero by 2050, carbon tax surges from 2025 onwards.
Note 3: 2021 and 2022 used real data published by the World Bank, therefore carbon taxes varied significantly and did not exhibit a consistent upward rising curve.
In IEA STEPS, it is assumed that the government of Taiwan accomplishes its provisional carbon reduction target while CPC continues its net zero actions in line with existing goals, and that carbon emission and power usage stay at the 2021 level. After making analyses and estimates, CPC expects to incur additional NT$920 million to NT$111.67 billion in expenses by 2050, based on the different levels of carbon price.
Year/Carbon price scenario
EPA, Taiwan
Green Peace
EU ETS
NGFS 2050 Net Zero
NGFS NDC
2030
$838
$5,880
$12,187
$22,192
$11,989
2050
$922
$39,843
$111,687
$20,642
Unit: million New Taiwan Dollars (NTD)
In IEA SDS, it is assumed that CPC reduces carbon emission progressively year after year, and while emission volume in 2050 is 78.6% less than 2021 (the baseline year), it does not accomplish Taiwan’s carbon neutral goals by 2050. After making analyses and estimates, CPC expects to incur additional NT$260 million to NT$31.08 billion in expenses by 2050, based on the different levels of carbon price.
$718
$5,039
$10,444
$19,019
$10,274
$256,477
$11,088
$31,083
$5,745
In IEA NZE, it is assumed that the government of Taiwan accomplishes its 2050 net zero goal and makes further regulatory amendments to tighten reduction requirements to 42%-45% by 2030, whereas CPC achieves net zero by 2050. Assuming that CPC actively sources renewable energy and purchases carbon credits to offset emission from now until 2050 and ultimately achieves net zero, an additional NT$530 million to NT$13.96 billion will have to be spent by 2030 depending on the carbon price, and since CPC is assumed to achieve net zero emission by 2050, no additional carbon tax will incur at that time.
In support of the government’s energy transformation policy to generate 50% of the nation’s electricity through natural gas by 2025 and as a response to environmental organizations’ call to protecting the algal reef ecosystem and endangered coral (polycyathus chaishanensis), CPC has adopted two priorities to “maximize protection for algal reef and minimize impact of power generation” and proposed a “3rd Receiving Station Extension Plan” in 2021, in which the industrial port is extended 455 meters into the ocean, creating a 1.5 km distance from the shoreline that minimizes impact to algal reefs in the intertidal zone. Furthermore, by eliminating the construction of turning basin and the canal that leads up to it, there is no need to reclaim 21 hectares of land, which therefore leaves the seabed and reefs undisturbed. After taking into consideration the key environmental factors such as geology, hydrodynamic force, marine physics, and the ecosystem, the Extension Plan is deemed to pose less impact on the environment compared to the previous “Detour Solution,” and was approved by EPA on March 25, 2022.
As a show of commitment to protecting the ecosystem, CPC not only assembled an independent organization called “Guantang Industrial Park (Port) Ecosystem Preservation Committee” comprising community residents, experts, scholars, and government representatives to supervise environmental protection tasks, but also contributes manpower and resources persistently into preserving algal reefs. In 2022, CPC adopted the new practice of using UAV to track coverage of crustose coralline algae within the algal reef reserve during the breeding season (from October to December), and increased monitoring frequency for little terns during their breeding season. The data gathered all indicate consistent growth of corals, little terns, and crustose coralline algae, which suggests that the Extension Plan does in fact cater for economic development and ecological preservation.