China Power | Environment | East Asia

Amid Iran War Energy Crunch, Taiwan Turns Back Toward Nuclear Energy

With energy security back in the spotlight, the Lai administration has scrapped a longstanding plank of the DPP platform: opposing nuclear power.

The Maanshan Nuclear Power Plant was Taiwan’s last operational nuclear power station before ceasing operations in 2025.

In early March, China made an unusual offer to Taiwan – promising energy security in return for acquiescing to Chinese rule. 

It surprised few, then, that the offer was quickly turned down by the Lai administration. With the Democratic Progressive Party (DPP) in power, China would not expect Taiwan to agree. The offer was only for optics, so that Beijing could frame the Lai administration as unwilling to engage in dialogue with China, even if this puts Taiwan’s energy security into crisis. 

China is, of course, playing on global anxieties after the outbreak of hostilities in Iran. Shipments through the Strait of Hormuz, a key chokepoint for energy supply chains, have stalled, and the global impact is enormous, with oil and gas shortages in other countries in the region. Natural gas constituted around half of Taiwan’s energy generation in 2025, with one-third of  liquified natural gas (LNG) shipments coming through the Strait of Hormuz from Qatar. 

Although Taiwan has not yet seen such shortages, the Taiex, the Taiwan Stock Exchange’s benchmark index, tumbled 594.43 points, or 1.80 percent, earlier this week due to rising crude oil prices. Taiwan’s major tech companies, such as TSMC and Hon Hai, were among the hardest hit. 

Still, Beijing’s offer was unusual. In the past, China has not made many specific offers to Taiwan about what it would gain in return for ceding sovereignty, aside from vague promises that Taiwan would benefit from China’s economic growth. It is also of note that through this offer, China is attempting to position itself as a security guarantor for Taiwan – a role traditionally played by the United States, in terms of defending Taiwan from Chinese military threats. It is to be seen if the Chinese Communist Party (CCP) continues to lean into this narrative of framing itself as an alternative security guarantor for Taiwan, in light of continued global instability. 

Taiwan’s dependence on energy imports has come into focus as of late, with tensions in the Middle East only one factor that concerns policymakers and analysts alike. In the event of a Chinese invasion, Taiwan would be cut off from shipments of LNG needed to keep society running. Likewise, Taiwan’s economy is currently buoyed by the semiconductor industry and AI boom, which also requires stable energy. 

Taiwan largely takes the view that its present dominance in semiconductors keeps the world invested in Taiwan’s defense – and dissuades China from a military assault, since it is also dependent on Taiwanese semiconductors. This view is often referred to as the “Silicon Shield.” As such, energy security is considered vital for Taiwan’s geopolitical security. 

It is in this context that the Lai administration reversed course on nuclear energy, which the DPP has historically been opposed to. On March 22, Lai stated that Taiwan’s state-run energy utility, Taipower, would submit plans to restart the Guosheng No. 2 nuclear plant in Wanli, New Taipei, and the Maanshan No. 3 nuclear plant in Hengchun, Pingtung before the end of the month. 

Lai had previously hinted at an openness to nuclear energy, stating that nuclear energy could be used to fuel the AI boom. In 2024, Lai had expressed interest in small-scale modular reactors (SMRs). In this framing, SMRs are framed as free from the safety concerns that the DPP has long had about nuclear energy, due to being a newer and more advanced technology. 

Yet considering the use of SMRs proved very different from restarting nuclear reactors that had previously been decommissioned. The Lai administration, following in the footsteps of the previous Tsai Ing-wen administration, allowed the licenses of existing nuclear reactors to expire, rather than extending them – something the Kuomintang (KMT) had pushed for.  

In May 2025, the last of Taiwan’s nuclear power plants – the Ma-anshan plant – ceased operations. 

When questioned by the opposition KMT, the Lai administration denied that its shift on nuclear energy is due to the Strait of Hormuz........

© The Diplomat