7  Conclusion

This study asked whether renewable energy development has reduced Taiwan’s fossil fuel import dependence. Using monthly data from 2000 to 2026 and an ARDL bounds testing framework, it finds a stable long-run relationship in which the elasticity of power-sector fossil fuel imports with respect to renewable generation is \(-0.039\). The sign is correct and consistent across every specification estimated, but the magnitude is negligible: renewable generation tripled over the transition period while power-sector fossil fuel imports rose by 6.3%.

The decomposition identifies why. Dispatchable renewables displace imported fossil fuel; variable solar and wind, the technologies driving Taiwan’s transition, show no measurable displacement effect. In an island grid without cross-border balancing, intermittent output must be backed by fossil-fuelled reserve capacity, and that reserve requires imported fuel regardless of how much solar and wind capacity is installed. The rolling-window evidence shows displacement emerging only after approximately 2022, with renewable expansion before then representing energy addition rather than substitution.

Taiwan’s transition is therefore not on the trajectory its capacity targets imply. The gap is not primarily a shortfall in renewable deployment but a shortfall in the demand-side and flexibility infrastructure required to convert that deployment into displaced imports. Capacity targets measure inputs; import dependence measures outcomes, and the two have not yet been connected.

The full methodological detail, the complete diagnostic battery, and the bibliography in full are in the paper.

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