Greenhouse Gas (GHG) emissions decoupling from economic growth are imperative goals for sustainable development. This study combines decoupling index and Log Mean Divisia Index (LMDI) to study which major transformation is required in the way energy is produced, delivered and consumed in order to achieve decoupling in Taiwan. The results indicate that a high-energy price can improve the energy structure by inciting energy efficiency use and result in decoupling CO2 emissions from economic growth. Targeting CO2 emissions through early action is the best approach to acquire decoupling. An annual energy intensity decrease of 2.4% is key for Taiwan to achieve absolute decoupling by 2020. The study suggests that the Taiwan government should focus on energy efficiency through investing in clean energy innovation at an early phase. Taiwan should consider national policies that are sensitive to effective economic strategies that enhance research and development and also invest in promoting energy efficiency in the economy-wide.