Taiwan’s energy landscape is constrained by the typical limitations of a “small nation,” yet its economic profile operates on a “large-nation” scale. Advanced industries, notably semiconductors, heavily rely on high-quality power that is uninterrupted year-round, stable in voltage and frequency, and increasingly low-carbon. Jong-Shun Chen, Associate Research Fellow of the Center for Green Economy (CGE) at the Chung-Hua Institution for Economic Research (CIER), notes that Taiwan’s energy transition over the past decade has concentrated its power structure heavily on Liquefied Natural Gas (LNG)—a fuel characterized by low strategic reserves and high vulnerability to international price volatility.
By 2025, natural gas is projected to account for 47.8% of Taiwan’s power generation, with 85.7% of total LNG imports dedicated to power generation and cogeneration. A unilateral non-nuclear policy, combined with the large-scale grid integration of intermittent renewable energy, has eroded the strategic buffer against geopolitical risks. Furthermore, frequent freezes on electricity and fuel prices have caused energy risks to spill over, morphing into a structural fiscal burden.
Chen argues that heavy reliance on natural gas exposes Taiwan to systemic risks across various timeframes. If international shipping lanes (such as the Strait of Hormuz) are obstructed, delivery delays and severe price fluctuations would occur within two to four weeks, rapidly driving up domestic energy costs. If specific long-term contract facilities are damaged, access to cheap gas could vanish for a prolonged period, with shocks lasting one to three years or longer. In the most extreme scenario, a de facto blockade of the Taiwan Strait disrupting shipping and unloading could cause the power system to fail within seven to 14 days, rendering market prices and supply contracts meaningless.
Given the reality of an insufficient strategic buffer, it is imperative to redefine the acceptable risk threshold for natural gas and confront the necessity of a diversified, stable baseload. Within acceptable margins, coal should be maintained as a backup defense line for grid resilience. Meanwhile, nuclear power—which possesses the strategic advantages of being quasi-domestic, low-carbon, and highly stable—should be accelerated for restart. Restoring four nuclear generating units to operation could reduce LNG consumption for power generation by approximately 23%, significantly bolstering national energy security.
On the pathway to net-zero, Chen cautions that technological choices must remain pragmatic. Since natural gas, coal, and critical heavy industries cannot be phased out in the short term, Carbon Capture, Utilization, and Storage (CCUS) represents a viable and necessary shared decarbonization solution at this stage. Regarding renewable energy, the policy focus should shift from merely pursuing raw installed capacity to enhancing dispatchable capabilities—such as solar-plus-storage, wind-plus-storage, and virtual power plants—transforming green energy into a manageable system resource.
Constrained by current regulations, enterprises struggle to secure a stable supply of recognized green power, even if they are willing to pay above-market premiums. Chen points out that nearly 90% of renewable energy is concentrated in the Taiwan Power Company (Taipower) ’s feed-in tariff system, leaving a severely limited supply for direct corporate procurement. Simultaneously, the overly rigid time-matching and settlement rules of existing Corporate Power Purchase Agreements (CPPAs) mean that enterprises often pay for green power but fail to receive the corresponding environmental certificates due to chronological mismatches. This systemic design completely transfers the intermittent risks of renewable energy onto critical demand-side industries, suppressing corporate appetite for green power procurement and weakening the foundation for renewable energy investment and financing.
Chen reminds policymakers and consumers alike that they must dispel the myth of “cheap energy” and confront the reality that prices cannot be subsidized indefinitely. Under normal circumstances, price mechanisms should be actively used to incentivize energy conservation. Orderly subsidies should only be triggered during genuine crises, replacing the market distortions caused by prolonged price freezes. Meanwhile, transparent and institutionalized protocols for prioritized power supply, rolling blackouts, and wartime demand management must be established in advance. Honestly disclosing high-risk scenarios will equip society and industry with the preparedness needed to weather potential shocks.
Ultimately, Taiwan’s energy mix, which is critical to national survival, must be codified into law. Considering the island’s innate energy conditions and unique industrial structure, the long-term energy trajectory should undergo review by the Legislative Yuan or be confirmed via a national referendum, ensuring maximum social consensus and a solid legal foundation. In execution, market mechanisms must be prioritized, allowing prices to reflect scarcity and costs, thereby guiding society to make the most efficient adjustments and choices.
Source: Jong-Shun Chen (April 22, 2026). Legalizing Taiwan’s Energy Mix with Market Mechanisms Given Priority. Commercial Times. https://www.ctee.com.tw/news/20260422700076-439901