WWIII
Taiwan's Energy Crisis Could Prove to Be Existential
Taiwan's isolated energy grid is heavily dependent on fossil fuel imports, leaving it highly vulnerable to blockades.
Chinese military exercises have targeted potential energy disruptions, signaling the strategic importance of Taiwan's power supply.
Taiwan's energy insecurity threatens not only its own economy but also global semiconductor production, sparking concerns of a broader conflict.
Taiwan is walking an energy tightrope. The island nation’s isolated energy grid supports a population the size of Australia’s at 23 million and one of the most advanced and energy-intensive tech sectors in the world. And not only is it being pushed to its absolute limit by economic factors, it’s also facing an existential threat from potential Chinese aggression.
“As the age of energy-hungry artificial intelligence dawns, Taiwan is facing a multifaceted energy crisis: It depends heavily on imported fossil fuels; It has ambitious clean energy targets that it is failing to meet; And it can barely keep up with current demand,” Yale360 reported in September of last year. “Addressing this problem, government critics say, is growing increasingly urgent.”
On top of these issues, China has been ramping up military exercises off the coast of Taiwan, running simulations of live-fire strikes on ports and energy facilities, and setting up blockades on vital shipping routes to and from the sovereign island. Such blockades, if carried out, would be devastating to the island’s energy security. "People would run out of power and water, as the water supply is powered by electricity. Communication is based on electricity, and the military would not be able to function," James Yifan Chen, a scholar of international relations, recently told DW.
The Chinese government views Taiwan as a breakaway territory and wants to unify the island with mainland China under its One China policy, by force if necessary, even though the People’s Republic of China has never governed Taiwan. Tensions between Taiwan and China have been escalating in recent years, and experts fear that they could soon come to a head. And in the case that China does carry out a full-on invasion of Taiwan, the island’s energy supply will be its first target.
"Taiwan is more vulnerable than Ukraine," says Chen. This is because of the isolated nature of the island’s grid – Taiwan has no neighboring grids to turn to in a time of crisis, and has extremely limited fuel storage capacity. The most optimistic outlooks estimate that Taiwan’s gas reserves would last for just 40 days under a full Chinese blockade. Other estimates say that the reality is closer to two weeks.
Taiwan’s energy supply is its “Achilles heel of national security,” according to the French Institute of International Relations (IFRI). “Aware of the challenge, the Taiwanese government is working to strengthen its energy independence, for example by encouraging the development of renewable energies, diversifying fossil fuel suppliers, increasing fuel storage capacities, and enhancing the security of the power grid,” says IFRI. “However, the government struggles to formulate an energy policy that explicitly aligns with national security needs.”
This could mean doomsday for the nation’s economy. After Taiwan’s presidential elections last year, the Chinese military conducted a series of military exercises with the objective of making Taiwan a “dead island” via a blockade for the “disruption of energy supplies” leading to an “economic collapse,” according to Colonel Zhang Chi of the People’s Liberation Army and professor at the National Defense University in Beijing.
An attack on Taiwanese energy would not only be devastating for the people of Taiwan. It would also have reverberating effects on the rest of the world. Taiwan is the world leader in the semiconductor industry and is responsible for a whopping 68% market share of global chip production. Just one company, the Taiwan Semiconductor Manufacturing Company (TSMC), produces at least 90% of the world’s most advanced computer chips.
Furthermore, a Chinese attack on Taiwan’s energy grids could lead to far-reaching conflict. The Council on Foreign Relations warns that “many foreign policy analysts fear a Chinese attack on Taiwan could draw the United States into a massively destructive and costly war with China.”
By Haley Zaremba for Oilprice.com
Southeast Asia Picks Gas Over Green Hype as Power Demand Surges
- Natural gas is gradually going to overtake coal and crude oil as the biggest source of primary energy in Southeast Asia.
- Demand for electricity has been on a strong rise in the region.
- Wood Mackenzie: The region will be a net importer of liquefied natural gas by 2032.
Natural gas is gradually going to overtake coal and crude oil as the biggest source of primary energy in Southeast Asia, with a share of 30% by 2050. This is according to a new Wood Mackenzie report, which has become the latest to admit the inevitable: hydrocarbons will be around for much longer than transition advocates want.
Currently, Southeast Asia is partial to coal-powered generation thanks to abundant local resources and price considerations. Also, demand for electricity has been on a strong rise in the region, prompting more coal power plant construction alongside transition buildouts of wind and solar.
Vietnam is a case in point. In recent years, soaring industrial activity and economic growth well above the global average have made the country a power-hungry, predominantly manufacturing economy. Vietnam has become a solar power leader among the countries in Southeast Asia, but it continues to rely on thermal coal for industry and is one of the few countries worldwide building new coal-fired power capacity.
At the same time, Vietnam, like its neighbors, is building a lot of wind and solar. The problem with wind and solar, as recently so brilliantly illuminated by Spain and Portugal, is that they need baseload generation as backup and as a source of reliable electricity. According to Wood Mackenzie, this source is going to shift from coal to natural gas, demand for which the consultancy sees growing at a compound annual growth rate of 3.1% until 2035.
With demand, generation capacity will grow, too, substantially. Wood Mac sees this growth twofold over the next two decades and a half, while consumption expands by 89.5%. If anything, this is further proof that growing economies need reliable, dispatchable energy to keep remain on the growth path.
As the head of gas and LNG research at Wood Mac, Johnson Quadros, put it, “the surge in gas demand is driven by the region’s rapidly growing economies, data centres expansion, the intermittent nature of renewable energy, and the ongoing transition from coal to gas power. However, the region faces challenges in meeting this demand through domestic production alone.”
Indeed, the surge in gas demand that Wood Mac and others predict for Southeast Asia—and Asia as a whole—will cause a deeper dependence on imports because the region cannot cover its consumption locally. Indeed, transition outlet Global Energy Monitor has forecast the need for an 80% increase in LNG import capacity in Southeast Asia if natural gas demand continues to grow as strongly as it is growing currently.
Wood Mackenzie agrees, predicting the region will be a net importer of liquefied natural gas by 2032, with demand for the superchilled fuel rising by a whopping 182% over the next ten years, featuring some of the fastest national demand growth rates in the world. This will provide a massive boost for local production of natural gas.
“As domestic gas demand rises and energy security becomes an increasing concern, Southeast Asian countries—particularly Indonesia and Malaysia— shift their focus toward boosting domestic production,” principal research analyst Raghav Mathur said. He added that new developments will sustain local gas production into the 2030s but by the end of that decade, demand growth will overwhelm domestic supply capabilities, prompting new frontier exploration to offset natural field decline.
The supply problem with gas, however, may turn out to be larger than just Southeast Asia. The International Gas Union last year warned that “Should gas demand continue to grow as in the last 4 years, without additional production development, a 22% global supply shortfall is expected by 2030.”
Taken together with Wood Mac’s new report, this means that expectations of a gas glut on a global scale are quite premature, and not only because building all that LNG capacity that is supposed to tip the world into an oversupply is taking longer than forecasters assumed it would. Morgan Stanley last year noted there was 150 million tons per year in new LNG capacity under construction, with its analysts saying “We expect gas market oversupply to reach multi-decade highs over the coming years.” It seems they did not pay attention to Asian demand trends—and not just Asian, either.
Natural gas acquired a reputation for being a so-called bridge fuel between the oil age and the transition age. Then this reputation became the target of numerous attacks from pro-transition organizations on the grounds that although cleaner-burning than coal and oil, gas was still a hydrocarbon and, as such, evil. Indeed, some went as far as to produce research, claiming it was actually dirtier than coal. Now, gas is reasserting itself as a cleaner-burning alternative to coal—at a price. It is the price issue that could interfere with the bright prospects of gas demand and keep coal dominant for longer. A growing economy needs reliable energy if it wants to keep growing.
By Irina Slav for Oilprice.com
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