Taiwan LNG project approval triggers backlash

Taiwan’s latest move came in December when the country’s environment ministry approved state-owned CPC’s plan to construct an LNG receiving terminal, called Yung-An LNG, in the port city of Kaohsiung, in the country’s south.

CPC claimed that it will help Kaohsiung, Taiwan’s second largest city, move away from coal for its power sector, and improve its air quality. It added that by substituting gas for coal the plant would produce around 95,000 metric tonnes less sulphur oxide, 50,000 tonnes less nitrogen oxide, and 6.26 million tonnes less CO2 annually.

However, serious questions remain over the approval. Soon after the project received clearance, two local environmental groups pushed back. The Taiwan Association of Healthy Parents criticised the terminal as potentially impacting air safety, while the Government Watch Alliance also raised a red flag over the potential impact on ocean waters in the area.

Added to the fray, some local residents will also need to be relocated for the project.

The dispute is now playing out on a national level, with the country’s two most powerful political parties, the Beijing-friendly KMT and the DPP, taking opposite sides of the issue in order to seek political retaliation and win favour with the populace. Taiwan’s president Lai Ching-te leads the DPP.

Domestic energy sources

Taiwan, for its part, has few domestic energy sources to fuel its power sector. Despite a population of just over 23 million people, the country remains the world’s fifth largest LNG importer, just behind India. It imports nearly 98 percent of the energy it needs to produce electricity.

In 2024, Taiwan’s energy mix  primarily consisted of fossil fuels, with low-carbon energy sources making up a much smaller portion. Gas (LNG imports) made up some 40 percent of its energy mix, with coal making up nearly 40 percent. Solar made up 5 percent, nuclear power 5 percent (though nuclear will be completely phased out by May), wind 3 percent and hydropower 2.5 percent.

Though China, Japan and India are developing more nuclear power plants to increase energy security, reduce fossil fuel imports and offset CO2 emissions, Taiwan turned against nuclear as far back as 2011 in the wake of Japan’s Fukushima nuclear plant meltdown. Soon after, the government put in place a then-popular anti-nuclear policy. In 2010, nuclear power made up nearly 20 percent of Taiwan’s energy mix.

However, there’s been growing discussion about restarting nuclear power in Taiwan as policymakers take a fresh look at the option due to energy security concerns, including China possibly blocking LNG shipments in case of hostilities in the Taiwan Strait.

“Taiwan is highly vulnerable to LNG supply disruptions in the event of a maritime blockade due to its heavy reliance on LNG for power generation, storage constraints, and a policy to dial back on domestic nuclear power generation,” a recent S&P Global report said.

Some are also urging Taiwan to reconsider nuclear power to meet increased electricity demand from its thriving semiconductor industry, notably Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest chip maker, with a market capitalisation over US$1 trillion. By 2030, TSMC will consume almost one-quarter of the country’s power to drive its operations.

Chia-Wei Chao, Research Director at Taiwan Climate Action Network, told Gas Outlook that there’s still a chance that nuclear power could be re-instated. “The opposition parties that control the majority in the Legislative Yuan just announced that they will try to delete all the requirements of the nuclear phase out in the coming congressional session,” he said.

“But it is too late to keep the last reactor online after May.” Still, for nuclear to come back a lot has to happen between the political parties and that won’t be a smooth process, he added.

Public trust remains one of the main hurdles for re-starting nuclear power in Taiwan. Last March, a CNA report said that Taipower had not meet its responsibilities as outlined by the Nuclear Materials and Radioactive Waste Management Act. The government found low-level nuclear waste being stored in corroded, rusted, and otherwise damaged barrels and containers at one of Taipower’s storage facilities, it added. 

On the question of safety, “the Taiwanese electorate still seems unsure – and the government has done little reason to reassure,” Taipei-based writer Jenna Lynn Cody said. To date, the government’s non-nuclear policy remains.

NDCs at risk

There’s also concern over how more LNG usage in Taiwan could impact its nationally determined contribution (NDC). NDCs are national climate action plans made by each country under the Paris Agreement. A country’s NDC specifies how it plans to reduce greenhouse gas emissions to help meet the global goal of limiting temperature rises to 1.5C and adapt to the impacts of climate change.

Taiwan initially set its NDC target to reduce net emissions by 23-25 percent against the reference year (2005) by 2030. Its updated NDC aims to enhance the reduction target further to 23-25 percent by 2030. It also endeavours to reach its net zero emissions goal by 2050.

Chao said that the government still views the continuing growth of LNG as inevitable.  “According to the net zero pathway proposed by the government, the share of LNG with carbon capture storage technology will account for 20-27 percent and hydrogen co-firing will account for 9-12 percent by 2050, he said. “That’s the argument they use to justify the expansion of LNG infrastructure and the net zero target.”

“From our perspective, we argue that LNG’s share has to be reduced to 30 percent by 2035, and less than 8 percent by 2050. We also point out the environmental side-effects, high cost, and crowding out effect of CCS and  hydrogen co-firing,” he added.

Chao also pointed out that more LNG project development could lead to a “severe stranded asset risk for the recent LNG terminal build up.”  

Taiwan’s LNG sector however remains resilient. Not only does the government see the fuel as part of a successful energy transition, it’s keen on importing LNG from new sources, including the proposed Alaska LNG project.

Jyh-Huei Kuo, Taiwan’s trade minister, said on February 10th, that the government would assess the feasibility of purchases as the government looks to narrow the trade surplus with the U.S. and head off pending Trump Administration tariffs. Taiwan mostly imports LNG from Australia and Qatar. U.S. imports make up around 10 percent of its supply.

The government and CPC has proposed that LNG terminals can convert to hydrogen import terminals, especially the proposed Kaohsiung terminal to alleviate the possibility of stranded assets. However, there’s no concrete hydrogen ready design requirement in the recent LNG environmental impact statement.

“CPC only said that they will explore the possibility,” Chao added.