Abstract This study sought to evaluate newly introduced energy policies with regard to economic development and environmental preservation by analyzing carbon dioxide emissions and the costs associated with various electrical power generation schemes. Nonlinear regression was used to measure the efficiency of technology aimed at CO2 emission reduction and the Morris method was employed for sensitivity analysis. Our results indicate that new Taiwanese energy policies represent the lowest possible cost and the lowest possible CO2 emissions per kWh currently possible. However, total CO2 emissions under this plan fail to meet emissions targets established in 2000. This paper outlines a long-term plan for the transformation of the Taiwanese power generation industry from a major contributor of pollution into a largely green entity through the replacement of coal with renewable energy sources.