Escalating geopolitical risks in the Middle East and recent shipping disruptions in the Strait of Hormuz have triggered volatility in global energy markets, once again exposing the structural challenges of Taiwan’s heavy reliance on imported energy. Addressing public concerns over the security of the natural gas supply, the Executive Yuan stated that natural gas dispatching arrangements have been deployed, ensuring no short-term supply shortages. However, Jong-Shun Chen, Associate Research Fellow of the Center for Green Economy at the Chung-Hua Institution for Economic Research (CIER), pointed out that from the perspective of long-term energy security and industrial competitiveness, Taiwan’s energy structure must be reexamined to accelerate a more resilient energy transition.
Overreliance on Natural Gas Challenges Energy Resilience
According to statistics from the Taiwan Power Company (Taipower), natural gas accounted for 53.3% of Taiwan’s power generation mix in 2025, topping all energy sources, followed by coal at 26.6% and renewable energy at 12.7%. With the gradual phase-out of nuclear power, natural gas has become the primary source of electricity.
Chen noted that Taiwan’s energy transition policy originally centered on “phasing out nuclear, reducing coal, increasing natural gas, and expanding green energy.” However, developments in recent years have revealed a structural deviation: natural gas has gradually transitioned from a bridging fuel to the de facto baseload power. This overreliance on a single energy source amplifies supply risks and cost pressures.
Geopolitics and Supply Concentration Magnify Energy Security Risks
Chen analyzed that while natural gas boasts lower carbon emissions, it remains fundamentally a fossil fuel. Furthermore, Taiwan relies almost entirely on imports for its natural gas, with a high concentration of supply sources making it heavily vulnerable to international political and economic fluctuations. From the Russia-Ukraine war to the recent Middle East conflicts, the fragility of the natural gas supply chain and the risks of price volatility have been repeatedly demonstrated.
Taiwan faces the dual pressures of a “low energy self-sufficiency rate” and “rapidly growing industrial power demand.” As the semiconductor and AI industries continue to expand, an overreliance on thermal power will not only drive up carbon emissions but could also undermine future export competitiveness.
Green Power Imbalance Mounts Decarbonization Pressures on Enterprises
Amid the global trend toward decarbonization, corporate demand for low-carbon electricity is surging. Yet, Taiwan’s green power supply remains relatively insufficient, and its institutional mechanisms require further refinement. Chen stated that in light of the EU’s Carbon Border Adjustment Mechanism (CBAM) and the decarbonization mandates of international supply chains, securing a stable supply of green power has become a critical prerequisite for enterprises to maintain global competitiveness.
Although some companies are eager to procure green power, they are hindered by supply shortages, high prices, and complex trading systems. This underscores that the energy transition is not merely a power supply issue; it is intrinsically linked to industrial strategy and export competitiveness.
Three Strategies for a Pragmatic Transition and Diversified Energy Portfolio
Charting the course for the future energy transition, Chen proposed three key recommendations. First, rebuild a diversified baseload power structure by prudently evaluating the role of various energy sources to reduce overreliance on any single fuel. Second, accelerate the dispatchability of renewable energy by promoting the integration of energy storage, virtual power plants, and smart grids to enhance the stability of green power. Third, reform the energy market mechanisms by rationalizing electricity rates and optimizing the green power trading system. This will ensure that prices reflect true costs while improving the ability of enterprises to acquire low-carbon electricity.
Facing profound uncertainties in global energy markets and mounting international decarbonization pressures, Taiwan’s energy policy must balance security, stability, cost, and emission reduction goals. Only by establishing a more flexible and resilient energy structure can Taiwan support long-term industrial development and sustain its economic competitiveness.
Author: CIER Editorial Team
Date: May 8, 2026