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 from 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.

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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 itself 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.

When it comes to construction, Taiwan is more like California than Guangdong.

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.

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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.

The fate of Taiwan’s democracy may rest in its ability to produce and store energy.

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.