Energy transition requires perspective, not just focus

Unless aliens land tomorrow and deliver us magical new technology, electricity will still be the future of vehicle transport. But is it also the immediate future?

Taiwan is betting everything on electrification as the only solution. Yet only 12% of its electricity currently comes from renewables. The reality is that an electric vehicle in Taiwan still runs on around 88% dirty fuels - remotely burned coal and gas. It's cleaner - but not really clean.

There is no solid plan to scale this up. More green electricity will be hard to come by in Taiwan in the coming years. The existing supply has already been contracted to major users: chippie giant TSMC will gobble up all of Ørsted's major wind farm output for the next twenty years. If you're an SME looking for some left-over green juice, get in line.

Expansion of offshore wind has been slowing down at an alarming rate due to the government's mishandling of planning and policy, and major international developers are pulling out. In addition, Taiwan has serious electricity grid and network issues. The overextended grid simply cannot handle major increases in both input and output. Even if Taiwan could magically farm all the wind it would need from its offshore area, getting it to an exponentially larger number of users would remain a huge challenge.

Another prickly question: what about the vehicles? Simply throwing away a few million perfectly working diesel trucks and replacing them with brand-new expensive electric ones would be financial suicide. Taiwan's economy is driven by SME, and most small companies do not have any budget for such a drastic change of hardware.

Purchasing electric vehicles at this scale will be neither cheap or easy – perhaps even impossible. Taiwan's two domestic truck builders CMC and Foxconn are producing anywhere between zero and a couple of hundred e-trucks this year. For scale: Taiwan's logistic giant TJ Kerry alone would require 4,500 new e-trucks to meet its published 2027 ESG targets. Scarcity will drive up the price of electric vehicles to new heights and make Taiwan almost completely dependent on China for vehicle deliveries and spare parts.

Then there is the question of where to plug in. Building the massive new charging/swapping infrastructure to manage the demand will shred budgets more ways than one: going electric also means accommodating for charging downtime and all the carefully fine-tuned route optimization software that are the pride of every annual ESG report can be relegated to the scrap heap as well.

So why is Taiwan so obsessed with a single solution to its complex problem? Part of the answer: China. We have been staring at a single bright light, ignoring the shadows.

Electrification in China is happening at breakneck speed. It looks to be a major success story. That does not mean its strategy can be transplanted "as-is" to other countries.

Chine has scale. It has the brutal enforcement power of a non-democratic entrepreneurial nation. It has production capacity. It has the power to scrub the numbers and delete bad results: what you see is what China wants you to see.

If you do not have all of these powers, consider your options carefully.

One solution: don't rush blindly into the promised Green Electricity/Hydrogen paradise. Use what you have but use it wisely. Start by running your existing fleets on Renewable fuels and build up your e-strategy step by step: scalable, affordable, sustainable and above all: realistic.