By Eric Vandenbroeck and co-workers
Taiwan’s Achilles’ Heel
In May, Taiwan
shuttered its last nuclear reactor, completing a process of denuclearization
that had unfolded over four decades. In the mid-1980s, the island generated
half its electric power from nuclear energy, an enterprise undertaken by the
dictator Chiang Kai-shek in response to the oil shock of the 1970s. But once
military rule ended in 1987, antinuclear sentiment began to take hold. Taiwan’s
early democratic activists feared that they could have a Chernobyl disaster of
their own and associated nuclear power with Taiwan’s authoritarian past.
The 2011 Fukushima
nuclear accident in Japan added to nuclear fears.
In the following years, Taiwan’s government let licenses lapse for six
functioning nuclear reactors—all with good track records—and halted the
construction of two more. In doing so, they inadvertently undermined the
island’s energy security. Today, the island imports 98 percent of its energy in
the form of oil, liquefied natural gas (LNG), and coal. This reliance on energy
imports could easily be exploited, especially by China, which has its eyes on
unifying with Taiwan. The Chinese navy and coast guard routinely rehearse
cutting off the island’s ports, including for energy tankers.
Such a scenario would
be a disaster not just for Taiwan but also for the United States. Taiwan
supplies nearly all the advanced logic chips that U.S. technology firms use to
power artificial intelligence. Chipmakers, both from Taiwan and elsewhere, are
now trying to set up more advanced chip factories within the United States. But
the trillions of dollars in capital and know-how already invested in Taiwan
mean that, for the foreseeable future at least, the United States’ AI success
or failure runs directly through the island.
Taiwan is, in some
ways, already facing an energy crisis: Taiwan’s overtaxed electricity
infrastructure is struggling to keep up with roaring AI chip production. The
Taiwan Semiconductor Manufacturing Company alone now uses eight percent of
Taiwan’s power, almost half the amount consumed by all the island’s homes. If
the United States wants to ensure it has access to the leading AI chips—and if
it wants to avoid a messy geopolitical crisis in which China holds Taiwan’s
energy imports captive—it should shore up Taiwan’s energy security by helping
to improve its energy storage and encouraging the island to embrace nuclear
power.
Taiwan’s President William Lai is visiting an airbase
in Taipei.
Gridlock
Taiwan has spent
years preparing for the threat of Chinese
harassment. Taipei, for example, has doubled its defense spending over the past
decade and now requires young men to serve a year of military service. It is
surprising, then, that Taiwan has pursued energy policies that make it so
vulnerable to disruption. But the Taiwanese people, like those in many other
democracies, see themselves as part of a global commons and have thought about
their energy system largely through an environmental lens.
The island’s energy
policy is aimed at moving away from nuclear and coal in favor of renewables and
natural gas. In 2022, the government even set the ambitious goal of reaching
net-zero emissions by 2050. Such shifts were underscored by international pressure,
especially from many of the U.S. companies that buy chips and other components
from Taiwan; Apple, for instance, increasingly demands that local suppliers
limit emissions.
Unfortunately,
Taiwan’s green energy transition is faring poorly. Just 12 percent of Taiwan’s
electricity mix came from renewables in 2024, falling short of the government’s
intention to hit 20 percent by 2025. The culprits are varied: onerous
local-content requirements, land use limitations, and broader rising costs.
When it comes to construction, Taiwan is more like California than Guangdong,
with many people objecting to having new energy infrastructure built in their
backyards.
As a result, the
island has been pushing much of its existing infrastructure to the brink. The
utilization ratio for Taiwan’s two current LNG import terminals—in other words,
the proportion of the facility that is used relative to its capacity—is over 90
percent, compared with 50 percent for the region’s average. That leaves Taiwan
little flexibility to surge imports or repair facilities. A third terminal is
set to come online this summer, but it is years behind schedule because of
environmental protests.
Adding to Taiwan’s
energy insecurity is the fact that its power grid, while cost-effective, is
also brittle. The grid must shift power generated in the less-populated south
to demand centers in the north through three mountainous transmission lines. In
normal operating conditions, the power grid’s reserve margins—that is, its
buffer to generate extra electricity to meet unexpected shocks—regularly fall
below ten percent, levels that would be concerning in the United States. The
island struggles with blackouts, and the periodic threat of losing power
stresses Taiwan’s high-tech manufacturers. For example, half of Taiwan’s
chipmaking science parks faced rolling outages in May 2021.
Taiwan’s insecurity
is also exacerbated by its limited capacity to store energy. The United States
and Europe can, thanks to their geology, stockpile months’ worth of natural gas
in depleted underground caverns, but the islands of East Asia—Japan, Korea, and
Taiwan—must use tanks, which are much more costly. Taiwan’s neighbors have
taken steps to address this issue. Japan, for instance, spent the past 50 years
bolstering its energy security by building extensive storage and creating its
own LNG tanker fleet, now the world’s largest, which both transports gas and
acts as a form of floating storage. South Korea, meanwhile, maintains
a 30-to-40-day supply of LNG to last through its cold winters. Taiwan, by
contrast, can store enough for just ten days. With one LNG tanker unloading in
a Taiwanese port every day and a half, a naval blockade, or even back-to-back
typhoons, could quickly exhaust normal supplies.
In many ways, Germany
serves as a useful cautionary tale for Taiwan: both closed well-functioning
nuclear reactors, doubled down on a fragile natural gas import strategy, and
hoped that renewables would grow fast enough to fill the gaps. In Germany’s case,
it grew reliant on Russian fuel, and when Russia invaded Ukraine in 2022,
Berlin had to scramble to divest and find other sources. Taiwan, by contrast,
still has time to adjust. Investments in grid resiliency and energy storage
would help, as would restarting recently closed nuclear reactors.
A nuclear power plant in Pingtung, Taiwan, May 2025
Phone-a-Friend
Since Russia’s
invasion of Ukraine, the people of Taiwan have begun to understand that they
must take their own security—including energy security—more seriously. They
identify with Ukraine, which endures nightly assaults on its power grid. They
also see that Ukraine, and Europe more broadly, has suffered economic costs
because of energy disruptions. People in Taiwan seem to be changing their
minds. According to a poll conducted in August 2024 by Taiwan’s CommonWealth Magazine, for example,
nearly 70 percent of Taiwanese now wish to preserve nuclear power.
Yet in Taiwan’s
spirited democracy, the antinuclear minority remains powerful and well
organized. And there are few outside technical experts that Taiwan can turn to
for advice on how to change course, in part because it is not a member of the
Organization for Economic Cooperation and Development’s International Energy
Agency, whose remit is to analyze and mitigate energy security risks.
Given the importance
to the United States of Taiwan meeting emerging power needs, the U.S.
government should step in to help Taiwan reconsider its energy options. Despite
its extensive work in international energy affairs, for instance, the U.S.
Department of Energy has largely ignored Taiwan because of its diplomatic
status and Washington’s bureaucratic inertia. The U.S. Energy Information
Administration, the agency responsible for energy statistics, last published a
review of Taiwan’s energy system nine years ago. A more formal analysis of
Taiwan’s energy tradeoffs, using the same sorts of sophisticated models the
U.S. government uses for itself, would help Taiwan’s Energy Bureau assess risks
and opportunities for changing its system.
Taiwan can also learn
from the U.S. example. President Donald Trump has supported a revival of civil
nuclear power by signing executive orders that aim to simplify nuclear
permitting and reestablish the country “as the global leader in nuclear
energy.” Congress has furnished subsidies and grants to keep older nuclear
plants operating. And the United States’ Nuclear Regulatory Commission has
extended licenses of nearly all operating reactors from 40 years to 60 years,
and in some cases, even 80 years. The U.S. technology sector is also
resuscitating nuclear power to meet AI energy needs: Microsoft has signed a
contract with Constellation Energy, an electric utility company, to reopen a
reactor at Three Mile Island.
Taiwan could
similarly restart the reactors it has closed over the past few years, including
those at Maanshan and Kuosheng.
Current and retired leaders of Taiwanese technology firms, such as Pegatron and
United Microelectronics Company, have advocated for doing so. At the same time,
the U.S. Department of Energy should hold technical talks with its Taiwanese
counterparts on relicensing closed reactors, assessing seismic risks to nuclear
plants, and managing spent fuel. And as the United States deploys its own
third- and fourth-generation small modular reactors, which are safer and may be
cheaper than earlier models, it should invite Taiwanese officials to witness
the process so they can evaluate the technology’s suitability for the island.
Cooperation over
energy security should go beyond the nuclear realm. The United States and
Taiwan should jointly evaluate the possibility of starting new LNG export
projects. They could also establish a working group, made up of people from the
public and private sectors, to propose ways to speed up the development of gas
storage and handle disruptions to LNG shipping.
The fate of Taiwan’s
democracy may well rest in its ability to produce and store energy. If the
island can stockpile more of it and resurrect its nuclear reactors, it would be
in a much better position to withstand invasion or disruption. The United States
should help Taiwan improve its energy security, not just for the island’s sake
but for its own. Nuclear power could be key to keeping the lights on at the
world’s chip factory.
Cooperation over
energy security should go beyond the nuclear realm. The United States and
Taiwan should jointly evaluate the possibility of starting new LNG export
projects. They could also establish a working group, made up of people from the
public and private sectors, to propose ways to speed up the development of gas
storage and handle disruptions to LNG shipping.
The fate of Taiwan’s democracy may well rest in its
ability to produce and store energy. If the island can stockpile more of it and
resurrect its nuclear reactors, it would be in a much better position to
withstand invasion or disruption. The United States should help Taiwan improve its
energy security, not just for the island’s sake but for its own. Nuclear power
could be key to keeping the lights on at the world’s chip factory.
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