Strengthening Taiwan’s Deterrence: The Importance of Energy Transition

In the wake of the Russian invasion of Ukraine, a new concern for energy security has emerged. Whereas energy transitions were previously viewed primarily through the lens of climate change, they have now become a matter of national security. For instance, Germany, which had shut down its nuclear plants after the Fukushima disaster in 2011, is now reconsidering nuclear energy. Taiwan, long known for its public opposition to nuclear energy, is also reevaluating its energy strategy due to rising security concerns.

This article is part of a series of articles authored by young, aspiring China scholars under the Future CHOICE initiative.

A New Paradigm

The Russian war in Ukraine has expanded the focus of energy transitions – from enlarging cooperation on climate goals, to reducing cooperation in energy trade with certain actors, as exemplified by sanctions and purchase limits on Russian oil and gas. The Russian invasion has also highlighted the critical role of energy in deterrence. Before the invasion, over 40 percent of Europe’s imported natural gas came from Russia, with some countries like Austria and Latvia relying on Russia for more than 80 percent of their gas supplies. As a result, Russia anticipated that Europe’s dependence on its energy would deter a strong response to its invasion. The degree of dependency matters as well. For example, taking a strong stance against Russia would be more difficult for Hungary, which imported 95 percent of its gas from Russia in 2021, than for Spain, which imported only 10 percent.

For Taiwan, the lesson is clear: China could exploit Taiwan’s energy dependencies to undermine its position. A successful energy transition – characterized by reducing reliance on external sources and developing resilient energy systems – could enhance Taiwan’s deterrence posture. This would involve diversifying energy suppliers, strengthening energy security, and investing in alternative energy sources to mitigate the risks associated with external dependencies.

Taiwan’s Energy Vulnerabilities

Currently, Taiwan imports 98 percent of its energy through three ports, all of which face China. Taiwan’s energy imports are heavily dependent on maritime shipping routes, with 99.75 percent of its petroleum imported this way, while it possesses no strategic reserves or secure storage facilities.

As a result, China could potentially weaken or subdue Taiwan without a full-scale invasion. Instead, it could launch a blockade of Taiwan’s key ports or convince its allies to reduce energy exports to Taiwan. Most experts agree that Taiwan could not withstand a Chinese blockade for more than three months without a US intervention. Therefore, undergoing a successful energy transition is crucial for Taiwan’s deterrence, as it would increase its resilience and thereby the perceived costs for China. After all, China does not want a prolonged conflict akin to the war in Ukraine.

The global consequences of a Taiwan Strait blockade would be severe. Any disruptions to Taiwan’s energy supplies would have far-reaching consequences, especially for its ability to produce advanced semiconductors, a sector in which Taiwan accounts for 90 percent of the global production. Moreover, the Taiwan Strait is a vital shipping route with about half of global trade and 88 percent of the world’s largest ships by tonnage passing through it. The estimated cost of a Taiwan Strait disruption is around $10 trillion, equivalent to about 10 percent of the global GDP. While China would itself be affected by disruptions to this trade route – facing a potential blow of 16.7 percent to its GDP – it could, nevertheless, use the threat of such disruptions to deter foreign interference in the Strait.

Another critical issue relates to Taiwan’s reserves. The island produces 80 percent of its energy from imported gas and coal. Its reserves for gas and coal are estimated to last 11 and 39 days, respectively, with 146 days for oil reserves. Following Nancy Pelosi’s visit to Taiwan, the Taiwanese Ministry of Economic Affairs released a statement citing the above figures, aiming to provide reassurances about its energy reserves. However, Taiwan’s semiconductor industry relies heavily on electricity produced mainly from gas and coal. And, despite its relatively significant oil reserves, Taiwan lacks Strategic Petroleum Reserve bases and secure oil storage facilities. This vulnerability extends to coal and gas reserves, which are not strike-resistant either.

Taiwan has also dependencies on certain energy-exporting countries that China could exploit to harm Taiwan before initiating a blockade or invasion. China’s strong and growing relationships with Middle Eastern countries such as Qatar, Saudi Arabia, and Kuwait – key exporters of crude oil and LNG to Taiwan – could be leveraged against Taiwan. China’s growing ties with Russia and Indonesia could also pose challenges. Indonesia supplies 24 percent of Taiwan’s coal and 6 percent of its LNG. Given Indonesia’s significant involvement in the Belt and Road Initiative (BRI), it could be influenced to constrain energy exports to Taiwan. While alternative suppliers like Australia and the US could provide Taiwan with LNG, it would take approximately 30 days for LNG shipments to reach Taiwan from these countries, thus enhancing vulnerabilities in Taiwan’s energy security.

Bolstering Taiwan’s Deterrence Posture

To address these challenges, Taiwan is pursuing a multifaceted strategy. This includesdiversifying energy import sources to reduce dependencies on countries with strong ties to China, such as increasing LNG imports from the United States and Australia, despite longer shipping times. Taiwan is also enhancing its strategic reserves of critical energy supplies like oil, coal, and LNG, and developing more strike-resistant facilities. Additionally, it is investing in renewable energy sources, particularly offshore wind and solar power, and reconsidering nuclear energy.

However, the strategy is facing significant political obstacles. In July, Taiwan shut down its second-to-last nuclear reactor, with the final reactor expected to follow suit next year. The broader public still rejects nuclear energy, and it may be politically difficult for the ruling Democratic Progressive Party (DPP), which in 2016 campaigned on the promise of shutting down Taiwan’s nuclear reactors, to reverse its stance. Additionally, environmentalists oppose nuclear energy due to safety concerns following the Fukushima disaster, and past issues with nuclear waste, which had been dumped on the Orchid Island populated by the Tao group of Indigenous peoples, have made the topic even more contentious.

Renewable energy presents a less politically charged alternative. Taiwan has substantial potential for solar and wind energy, with ambitious targets to increase solar capacity to 20 GW and install 5.7 GW of offshore wind power by 2025. The government is promoting rooftop solar installations and large-scale solar farms, as well as offshore wind projects that attract foreign investment. Additionally, small-scale hydropower, biomass, and waste-to-energy projects are being developed to complement the energy mix.

However, expanding renewable energy capacity has proven challenging. For instance, the offshore wind industry, a cornerstone of Taiwan’s renewable strategy, faces setbacks due to geopolitical risks and legislative inefficiencies. These challenges complicate Taiwan’s efforts to reduce its reliance on fossil fuels and have rendered it unable to meet its renewable energy targets, which is further complicated by Taiwan’s rising energy consumption. The Taiwan Semiconductor Manufacturing Company (TSMC) is projected to increase its electricity consumption by 267 percent by 2030, and overall energy demand in Taiwan is expected to rise by 2.5 percent annually until 2027. This puts further strains on Taiwan’s energy infrastructure while increasing its vulnerability to energy imports.

Navigating Geopolitical Climate Change

As noted by the president of the German Federal Office for the Protection of the Constitution: “Russia is the storm, but China is the climate change.” The challenges posed by Russia are merely a precursor to the broader impact of China’s rise. In this context, the imperative for an energy transition extends beyond environmental concerns. It becomes a strategic imperative to mitigate the rising influence of China.

As a critical player in global semiconductor production that is highly vulnerable to China-induced supply-chain disruptions, Taiwan must strengthen its deterrence posture against China – including its potential invasion by 2027 – by addressing its energy vulnerabilities. It is of utmost importance for Taiwan to reduce energy imports from China-aligned countries, build strike-resistant reserves, restart nuclear plants, and accelerate the development of renewable energy by identifying and removing legislative roadblocks.

Despite its challenges, nuclear energy remains crucial for strengthening Taiwan’s deterrence posture. Political parties need to abandon their moralized and emotionally charged discourses around nuclear energy and focus on Taiwan’s strategic needs. A sustainable solution for the disposal of nuclear waste must be found and the licenses of the existing reactors must be extended – that is, if they are still found to be secure. Amid ongoing supply-chain disruptions and the diversion of resources to Ukraine, Taiwan must recognize that its deterrence posture is weakening and must be fortified from within.