Taiwan Spent a Decade Phasing Out Coal. It Just Restarted a Coal Plant.

The Lai Ching-te (賴清德) administration's decision last week to restart the Mailiao coal-fired power plant for three months is the latest and most damning indictment of Taiwan's ruling party's energy strategy. It is not the first reversal. It will likely not be the last.

The trigger is a crisis unfolding thousands of miles away. Since late March, US military strikes on Iranian nuclear facilities have escalated into a broader armed conflict, prompting Iran to block the Strait of Hormuz — the chokepoint through which roughly a third of the world's LNG passes. For Taiwan, which depends on natural gas for nearly half of its electricity generation, the consequences have been immediate: soaring costs and a genuine risk of supply cutoffs. The Mailiao restart is a direct admission that the current energy mix cannot hold.

What makes this particularly damning is that none of it should have come as a surprise.

When the Tsai Ing-wen (蔡英文) government took office in 2016, it committed to two central pillars of energy policy: the complete phase-out of nuclear power, and a new generation mix of 50% natural gas, 30% coal, and 20% renewables. Critics raised serious objections at the time. Two risks in particular stood out.

The first was supply disruption. Taiwan is an island nation that imports virtually all of its energy. LNG can only be delivered by ship and stored in receiving terminals with a safety reserve of just eleven to fourteen days. Any disruption — conflict in a distant region, a blockade of shipping lanes, or even a typhoon preventing vessels from docking — could quickly leave Taiwan facing a power cutoff. Building half the country's electricity generation around a fuel with that vulnerability was always a gamble.

The second risk was cost volatility. Natural gas prices have historically been far more volatile than nuclear fuel or coal. When the Tsai administration launched its energy transition in 2016, that pattern was already well established — and European nations shifting away from coal toward gas were already driving structural demand higher. Concentrating so much of Taiwan's generation capacity in gas made the country acutely exposed to those swings.

Russia's invasion of Ukraine in 2022 triggered a global gas price spike that pushed Taipower into massive financial losses. Although prices subsequently retreated, the structural damage remained: the energy transition had replaced nuclear power — the cheapest source in Taiwan's grid by a wide margin — with gas and renewables costing roughly two to four times as much per kilowatt-hour. Even after electricity tariffs were raised multiple times, with cumulative increases of around 40%, Taipower continued to absorb enormous losses — losses ultimately borne by Taiwan's taxpayers.

Now the supply disruption risk has arrived as well. Iran's blockade has effectively cut off Qatar, the source of roughly 30% of Taiwan's LNG supply. Taiwan is scrambling to procure replacement cargoes on the spot market, primarily from the United States, at significant premium. There is no clear timeline for normalization: even if the strait reopens, Qatar's production infrastructure has been damaged, and global supply chains have been disrupted in ways that will take months to unwind.

The Mailiao episode also illuminates the internal contradictions of the ruling party's energy planning. The plant's three supercritical coal units — with a combined installed capacity of 1.8 gigawatts, roughly equivalent to a mid-sized nuclear plant — are technically more efficient and produce lower carbon emissions than the older subcritical units at the Taichung power plant. Yet when Taipower's 25-year power purchase agreement with plant operator Formosa Plastics expired, the government chose to retire the Mailiao units early, well short of the standard 40-year operational lifespan, in order to replace their output with gas-fired capacity.

With nuclear phased out and renewables falling far short of targets — supplying under 13% of the generation mix — nearly 90% of Taiwan's electricity now comes from thermal sources. The government's push to substitute gas for coal wherever possible made sense on paper. It has now collided with reality.

The contradiction runs deeper still. While the more efficient Mailiao supercritical units were retired early, the older, dirtier subcritical units at Taichung are scheduled to remain in operation until 2034. The policy is not just flawed — it is internally incoherent.

The record of Taiwan's nuclear-free policy over the past decade is one of repeated failure. Electricity prices have risen multiple times, the operating reserve margin fell to as low as 1–2% — far below the internationally accepted minimum of around 15% — and Taiwan experienced two island-wide blackouts. Air pollution and carbon emissions worsened.

And now the government that built its identity around replacing nuclear and coal with gas and renewables is restarting coal plants and reconsidering nuclear power — the loudest possible repudiation of its own decade-long platform.

Taiwan's people have spent ten years and enormous sums paying for these miscalculations, at a cost that includes not only money but public health. Those responsible for the policy have yet to be held accountable. That, too, is a failure — and one that compounds all the others.

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