30 PERSPECTIVES ON BUSINESS AND ECONOMICS | VOL 43 | 2025 cal tensions. Following Chinese aggressions, Taiwan has encountered supply chain disruptions critical to the equipment required to build offshore wind farms. With each military drill, Taiwan has become more adamant in reducing dependency on China for equipment supply chains (Yin, 2024). Taiwan’s energy system faces significant vulnerability with its lack of storage. Current stockpiles are a scant 39 days of coal and 11 days of natural gas (Kucharski, 2022). Supply disruptions would cause severe economic impacts within two weeks without contingency measures for consumption sources or stockpile management. Recent expansions in storage solutions remain inadequate. Taipower in 2022 completed construction of Taiwan’s first solar energy storage facility—now its largest energy storage facility of any type. It can store just 20 MW, only enough electricity for 40,000 households for one hour (Taiwan Power Company, 2023). While construction of new energy storage facilities is promising, the scale of potential capacity falls far short of compensating for the intermittencies associated with renewable sources, or for other supply disruptions. The combination of insufficient storage, thin supply margins, and geopolitical tensions is a perfect storm threatening Taiwan’s energy security. Energy security requires an approximately 25% buffer between supply and demand (Hilton, 2024), but Taiwan’s buffer shrank to 5% in 2024, making the system particularly vulnerable to disruptions. This creates a strategic dilemma: Taiwan seeks less economic dependence on China yet relies on Chinese suppliers for solar and wind infrastructure. To develop renewable energy, Taiwan must balance longterm energy security against short-term economic independence from China. Geopolitical and economic background Taiwan, officially the Republic of China, sits in a precarious position, facing regular aggression from its neighbor across the Taiwan Strait. In May 2024, Chinese forces encircled the island and released military propaganda expressing disapproval of the newly inaugurated president (Jash, 2024). Such actions occur frequently. China conducted military drills simulating a blockade of Taiwan twice in 2024 alone (Chang & Regan, 2024), its navy notably crossing into Taiwan’s maritime contiguous zone and edging closer with each exercise. China assertively promotes its One China principle, claiming Taiwan as an inalienable, renegade province of the People’s Republic of China to be reclaimed (Mission of the People’s Republic of China to the European Union, 2022). On this basis, China persistently reinforces its claim on the island by retaliating against states that recognize Taiwan as sovereign, leaving it with little formal recognition internationally. Even the US, a key ally, does not formally recognize Taiwan’s independence (Bureau of East Asian and Pacific Affairs, 2022). Without United Nations membership, Taiwan can attend but not participate in UN climate meetings (Hilton, 2024), which is especially damaging when these conversations revolve around global transitions to renewable energy. Taiwan boasts strong economic performance, with GDP growth averaging 3.4% annually from 2016 to 2021 (Ministry of Foreign Affairs, Republic of China [Taiwan], 2024). GDP totaled $757B in 2023 (International Monetary Fund, 2024). The industrial sector drives almost 38% of the economy and is particularly sensitive to energy prices owing to its energy intensity (Ministry of Foreign Affairs…, 2024), consuming the largest share of energy (33%) of any sector in the economy (Energy Administration, 2024). As the global leader in chip manufacturing, the Taiwan Semiconductor Manufacturing Company (TSMC) has become central to Taiwan’s diplomatic strategy and economy. TSMC’s energy use grew 85% from 2017 to 2022, 30 times faster than the industrial sector average (Fairley, 2024). At current growth rates, TSMC will soon consume 12.5% of Taiwan’s electricity, more than all civilian households combined (Hilton, 2024). Thus, TSMC plays a critical role in Taiwan’s geopolitical and economic policies. Yet that dominance comes with a substantial downside; the company is projected to consume as much electricity in 2030 as the entirety of Belgium did in 2022 (International Energy Agency, 2022). Geopolitical vulnerabilities of Taiwan’s energy landscape Geopolitical tensions and foreign power dynamics can disrupt Taiwan’s reliable energy supply. Taiwan imports most of its oil from the Middle East (Webster, 2023), where China has increased its presence. For instance, for Oman, which supplies 7% of Taiwan’s oil, 33% of its GDP comes from oil exports to China (Webster, 2023). Taiwan not only depends on Oman’s cooperation for reliable oil pricing and availability but also must consider the sway China has with Oman, given Oman’s economic ties with China. China has expanded its role in the Middle East through trade relations that revolve around oil (Eslami & Papageorgiou, 2023). China has also built a presence in the Middle East to encompass economic, geopolitical, and strategic partnerships beyond
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