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September 26, 2017

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Scooter subsidy guidelines

As a champion of green energy, President Ma Ying-jeou has spoken many times about his determination to cut carbon emissions. Just like many countries around the world, Taiwan has implemented policies to subsidize renewable energy to make a greener island while opening green business opportunities.

The Ministry of Economic Affairs (MOEA, 經濟部) was given the responsibility of pushing the development of electric scooters. As a result, the ministry made implementation guidelines for Taiwan Electric Scooter (TES) subsidies. The guidelines, however, do not live up to their purpose of assisting the development of scooters relying on renewable energy, and to some extent twist the market instead.

In the guidelines, the MOEA defines TES as scooters using lithium batteries. Companies producing scooters powered by any other energy source are therefore excluded from the subsidies.

According to the government, the reason to define TES in this way is to exclude the use of environmentally harmful lead-acid batteries. This argument is flawed in several ways.

First of all, if the government is really concerned about the environment, there is an alternative to ensure it is protected by the guidelines. The government could set a standard for protecting the environment and stipulate that scooters receiving subsidies must meet it.

Furthermore, although narrowing the subsidies for scooters to a single category may be the simplest way to avoid subsidizing lead-acid batteries, this method comes at a cost.

Since the green industry is in its early stages of development, its prosperity still depends mostly on government subsidies. Thus, subsidy policies can easily change the way companies invest. The guidelines for subsidizing TES force manufacturers to allocate most of their resources to scooters powered by lithium batteries. While the government is unlikely to have a clear vision about the future of renewable energy, this investment focus is risky. If lithium batteries prove not to be the energy that can best compete with fossil fuel then not only will such government subsidies, but also a significant amount of private investment, have been in vain.

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