... the country said it would favor plans for coal-fired stations when it awarded permits to build new capacity next year because coal plants are cheaper to run and easier to supply than plants fueled by gas.

"It looks like we'll have to rely on coal," Chan Wen-hong, an executive officer at the Bureau of Energy in Taipei, said last week. Taiwan Power spends 1.32 New Taiwan dollars, or 4 U.S. cents, to generate a kilowatt-hour of electricity by burning coal, less than half the 2.94 dollars involved in gas-fired production, according to the company's chief engineer, Tu Yueh-yuan.

Taiwan has invited bids to build power plants to stave off the threat of possible shortages, made worse by a ban on building new nuclear power plants. The island's reserve margin, or spare capacity at times of peak demand, dropped to 6.9 percent last week, less than half of a state target of 16 percent.

... "The choice of coal is pragmatic," Jeffrey Bor, economist at Taipei's Chung-hua Institution for Economic Research, said Friday. "Coal is the only reliable fuel for power in Taiwan." 

... The island wants to add coal-fired capacity at a time when prices are near record levels. Prices for Australian thermal coal, an Asian benchmark for power station fuel, reached $70.88 a ton, the highest ever, at Newcastle last month as port and rail bottlenecks hampered miners' efforts to ship production. Demand from China, which became a net coal importer for the first time this year, is also forcing prices higher.