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By Mark Montgomery and Jack Burnham
The war in Iran indicates that the fight over controlling global energy flows is far from over.
A close partner of Tehran, Beijing is no doubt factoring lessons from the conflict into its designs to target Taiwan.
Throughout the initial stages of the war against Iran, uncertainty reigned, maritime insurance markets froze, ships ceased sailing, allied convoys failed to materialize and regional energy shortfalls expanded.
Beijing is likely betting that the same dynamics — causing chaos in the nation’s energy imports and grid systems — would help to establish the conditions for Taipei’s capitulation. However, Taiwan is preparing to weather such a potential storm, building out its energy infrastructure and making investments to counter coercion by bolstering Taipei’s hand via resilience rather than rigidity.
Taiwan predominantly powers its grid with liquefied natural gas (LNG), much of which still transits the Strait of Hormuz.
Moreover, much of Taiwan’s supply of LNG comes from Qatar, a country with close ties to China whose energy infrastructure has been significantly degraded by Iranian strikes and is subject to blockage in the strait.
Throughout the war between the US, Israel and Iran, Beijing has attempted to use its significant fuel reserves to win favors with Taiwan’s regional partners.
Despite an official ban on exports, Beijing has reportedly delivered fuel to Vietnam, one of Taipei’s largest recipients of foreign direct investment, and the Philippines, a key potential partner in any contingency due to its proximity to the nation and a growing US military presence.
Taiwan’s energy infrastructure was already under strain. As the nation’s economy has grown dramatically over the past two decades, its power grid has failed to keep pace — Taiwan’s grid utilization rate is the highest among Organisation for Economic Co-operation and Development countries. This dynamic, combined with limited storage, leaves an ever-shrinking margin for error among Taiwan’s grid operators while magnifying the impact of any potential energy shortfall.
These strains are amplified by Chinese cyberattacks targeting Taiwan’s energy grid while conducting low-grade psychological warfare against it.
The National Security Bureau said that Chinese-linked hackers have increasingly targeted grid infrastructure, including industrial control systems, while spreading aftificial intelligence-generated disinformation such as deepfakes.
China has also expanded its coast guard and military deployments around the nation over the past several weeks, signaling its potential to further interrupt energy flows as supply chain disruptions mount amid an unstable ceasefire in the Middle East.
However, Taipei has strengthened its hand by reforming its supply chains. In diversifying its suppliers, expanding backup sources of power and improving economic ties to the US, Taiwan has embraced an unorthodox deterrence-by-denial strategy: The nation’s resilience forces Beijing to move out of the shadows to continue its coercion campaign, raising the prospect of drawing Washington’s and the region’s ire.
Prior to the conflict, Taiwan had pledged to increase its purchases of US LNG to lessen its reliance on imports from Qatar while investing in another terminal to offload and store the gas, as well as an Alaska-based pipeline project.
Since the war began, Taipei has further ramped up its commitments to lessen its dependence on Persian Gulf energy imports, including signing new agreements for LNG from the US and Australia, a key regional supplier.
As a result, Taiwan has effectively positioned itself to weather the burgeoning energy crisis. While other countries have struggled to fuel factory floors and keep everyday life well lit, the nation is increasingly capable of countering potential disruptions to its energy lifelines, practicing escorts of LNG and oil vessels in preparation to potentially disrupt seaborne blockades.
Along with responding to initial supply shocks, Taiwan has also moved to shore up its long-term baseload energy supply by beginning the process of restarting several of its nuclear reactors.
While Taiwan’s nuclear industry once provided nearly a fifth of its electricity, the last unit at the Ma-anshan plant was closed in May last year.
However, Taiwan Power Co announced plans last month to restart both Guosheng and Ma-anshan by the end of 2029 — should the plants pass rigorous safety inspections, the restart could offer a viable domestic power source that cannot be matched by others such as wind or solar power.
The announcement would also forge closer commercial ties between the nation and US firms such as Westinghouse and GE Aerospace, open a pathway for further cooperation on emerging technologies such as small modular reactors and build on the bilateral trade deal signed by Washington and Taipei in January.
Amid a bruising energy shortage gripping the region, Taiwan might have already seized the initiative.
Rear Adm. (Ret.) Mark Montgomery is a senior fellow and a senior director at The Center on Cyber and Technology Innovation at the Foundation for Defense of Democracies (FDD). Jack Burnham is a senior research analyst at FDD’s China Program. FDD is a Washington-based, nonpartisan research institute focusing on national security and foreign policy.
