Taiwan Has a Big National-Security Risk: It Imports 97% of Its Energy
Experts in Washington are beginning to fret about the island democracy’s ability to keep the lights on in a conflict with China
July 7, 2023, The Wall Street Journal
SINGAPORE—When Beijing effectively cordoned off Taiwan and conducted four days of live-fire exercises in response to a visit last year by then-U.S. House Speaker Nancy Pelosi, it offered a preview of the tactics that China would likely employ in a future conflict around the island.
It also raised questions about Taiwan’s energy supplies and the unique vulnerabilities of an island lacking indigenous resources and relying on sea shipments for 97% of its energy.
Even without the risk of military conflict, Taiwan’s energy security is precarious, given rapidly growing demand from its booming manufacturing sector, including Taiwan’s energy-intensive semiconductor factories, which produce more than 90% of the world’s most advanced chips. Despite these known vulnerabilities, Taiwan has been slow to expand its renewable and natural-gas capacities, falling far short of its own benchmarks.
Taiwan’s predicament has attracted increasing attention in Washington as the island’s critical role in global technology supply chains becomes more apparent, and as the prospect of conflict looms.
China’s Communist Party regards Taiwan as part of its rightful territory, to be taken by force if necessary. Despite China’s decadeslong military buildup, however, many defense analysts think Beijing lacks the capacity to launch an outright invasion in the near term. Instead, it is more likely to attempt a selective blockade or quarantine, squeezing rather than flattening Taiwan into submission.
While total energy self-sufficiency is out of reach, analysts say mitigating some vulnerabilities in the case of a potential quarantine, blockade or invasion could help buy time.
A study published Friday by the Atlantic Council, a Washington-based think tank, recommends that Taiwan expand its domestic renewable-energy power generation to lessen import dependency and increase its purchases of fossil fuels from aligned countries to deter harassment from China’s People’s Liberation Army Navy.
In a crisis, Taiwan would likely need roughly one-quarter of the energy it currently consumes to keep the bare minimum of its critical infrastructure and services running, Joseph Webster, a senior fellow at the Atlantic Council, concludes in his new report.
But Taiwan’s efforts to adopt more domestic sources of power such as solar and wind, which don’t need to be imported during a conflict, have run into local opposition and struggled to meet requirements mandating that local companies supply as much as 60% of the materials.
Last year, Taiwanese President Tsai Ing-wen’s administration lowered its target for the proportion of electricity generated by renewable sources in 2025 to 15.1%, from an earlier goal of 20%; renewables currently account for 8.3%.
Critics say Taiwan’s government hasn’t taken energy security seriously enough. “It’s a manifestation of Taiwan’s lack of preparedness in face of threat of invasion,” says Elbridge Colby, a deputy assistant secretary of defense in former President Donald Trump’s administration and co-founder of the Marathon Initiative, a Washington-based political advisory firm.
Taiwan is particularly susceptible to maritime disruptions of natural-gas shipments, which account for 39% of the island’s electricity generation. A partial or full blockade would inflict severe damage on the economy after just a few days, according to Jordan McGillis, an analyst at the Manhattan Institute for Policy Research, a conservative think tank, who recommends Taipei increase its stockpiles of energy, including natural gas.
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Taiwan’s current reserve stockpile is paltry for the island of 24 million people, with only two terminals capable of collectively storing less than two weeks’ worth of natural gas—eight days’ worth during the air-conditioning-powered summer months. New gas facilities have been delayed by environmental protests.
To ensure that Taiwan won’t be cut off in a geopolitical crisis, the Atlantic Council’s Webster recommends that Taipei buy more liquefied natural gas from the U.S. If China’s navy were to interdict a U.S.-flagged ship, the U.S. Navy would almost certainly intervene, though that wouldn’t likely be the case with vessels bearing flags from non-Western-allied countries.
The U.S. and its allies could also step in with crude-oil shipments in the event that Middle East suppliers, under pressure from Beijing, curtail or even cut off shipments to Taiwan, where oil accounts for 44% of its total energy needs, said Webster.
Tsai effectively cut off another energy option when she pledged in 2016 to phase out Taiwan’s nuclear plants by 2025—responding to public sentiment after the then-recent Fukushima nuclear catastrophe in nearby Japan.
Liang Chi-yuan, a management professor at Taiwan’s National Central University, says Taiwan should reconsider nuclear power in the name of energy security. He noted that nuclear power plants usually store 18 months’ worth of fuel on site, which could be tapped in the event of a conflict. A power plant could also pose a threat during a conflict, as with Ukraine’s nuclear plant in Zaporizhzhia.
Taiwan’s failure to offset the looming nuclear-energy void with renewable energy means that power shortages are likely to plague the island in the coming years, even without the threat of military conflict.
Taiwan Semiconductor Manufacturing Co., the world’s most advanced chip maker and the island’s most valuable company, accounts for more than 6% of Taiwan’s total energy consumption. Its energy consumption surged 34% between 2020 and 2022, the company says.
Since 2017, three power outages in Taiwan exposed the vulnerability of the grid. In March last year, the last of those three outages caused traffic lights to stop working and left nearly 40% of households on the island for hours without electricity.
One potential solution, analysts say, is offshore wind power, which faces fewer domestic political constraints.
But many of the planned wind farms are off Taiwan’s west coast, in the Taiwan Strait that separates the island from mainland China. And so far, Taiwan has set up less than one-third of the 5.7 gigawatts of offshore wind capacity that it has planned to install by 2025.
Greater reliance on offshore wind would need to take military security into consideration, since turbines and transmission cables could easily come under attack in a conflict.
Ultimately, argues Webster of the Atlantic Council, there are no easy answers for Taiwan in the event of conflict—even if it were to lessen its dependency on energy imports and boost its supplies of natural gas and renewable energy.
“If the United States and its allies and partners cannot deter a PRC military invasion or naval blockade of Taiwan,” Webster said, referring to the government in Beijing by its official name, the People’s Republic of China, “disaster will likely result.”
Write to Sha Hua at sha.hua@wsj.com