The ongoing Iran conflict is putting Taiwan’s energy fragility on full display — the island of 23 million people, home to the world’s most advanced semiconductor manufacturing, is highly dependent on imported oil and gas, especially that from the Middle East. In 2025, 69.6 percent of Taiwan’s crude oil and 38.7 percent of liquified natural gas were sourced from the Middle East. In the same year, 62 percent of crude oil and 34 percent of LNG to Taiwan went through the Strait of Hormuz. Taiwan’s state-run oil company CPC Corp’s benchmark crude oil price (70 percent Dubai, 30 percent Brent) had surpassed US$151 per barrel at one point in late March, more than double the level in late February, amplifying Taiwan’s exposure to global price shocks.
The Taiwan government’s actions over the past three weeks have understandably focused on taming direct price impact on consumers and businesses. The price, however, is being paid by CPC via a market stabilization mechanism, and ultimately by Taiwan taxpayers. As of March 25, the state-owned oil company has reportedly absorbed around NT$6.5 billion (US$203 million) in crude oil price increases to ensure Taiwan’s petrol retail prices remain the lowest among neighboring Asian countries. Additionally, CPC has paid more than NT$20 billion (US$630 million) in additional costs to purchase LNG from the spot market since the onset of the Iran conflict.
Taiwan is seeking to increase crude oil and LNG purchases from non-Middle Eastern countries or from the spot market if needed. But these measures are more akin to short-term band-aids than long-term strategy. Already heavily indebted CPC will find it difficult to maintain long-term subsidies if oil and LNG prices remain elevated for an extended period. Taiwan is also yet to secure sufficient LNG, which is used to generate roughly 50 percent of Taiwan’s electricity, beyond May.
Rather, the current energy crisis should serve as a stark reminder that Taiwan urgently needs a more diverse and balanced energy strategy, and the government can seize the moment to adjust the national energy mix. Bioethanol and nuclear power are two prime examples that could help Taiwan better weather oil price shocks.
International research has shown that ethanol blended gasoline can offer Taiwan an immediate and pragmatic pathway to strengthen energy security while advancing its climate and air quality goals. Drawing on abundant and diversified global supplies from trusted partners, ethanol improves long-term fuel price stability. Ethanol blending can be implemented within the existing transport system, allowing for a partial reduction in gasoline demand without disrupting mobility. Ethanol blending also reduces greenhouse gas emissions by around 7 percent per liter, delivers substantially lower lifecycle emissions than conventional gasoline, and cuts harmful vehicle pollutants such as carbon monoxide, particulate matter, and toxic aromatics. At the same time, ethanol enhances octane and engine performance and is compatible with nearly the entire existing vehicle fleet, making it one of the most cost-effective and scalable tools available for near-term transport decarbonization in Taiwan.
Despite Taiwan’s carbon reduction efforts and a push for more electric vehicles, a large share of Taiwan’s vehicles is expected to remain internal-combustion-based for decades, which means electrification alone cannot fully mitigate fuel supply risk. Expanding ethanol blending from E3 toward E10 would allow Taiwan to reduce its reliance on imported gasoline volumes while introducing greater flexibility in fuel sourcing — including from multiple international suppliers. With major ethanol exports originating from multiple global sources, these trade flows, which utilize different trade routes, provide an alternative supply route that is less exposed to disruptions in the Gulf region, enhancing overall fuel security.
Most of Taiwan’s neighboring countries have already adopted or are in the process of implementing national ethanol gasoline mandates. Some are even accelerating the program to combat the oil price surge in the current energy crisis.
Good policy retains flexibility and adjusts to society’s needs at different times.
Just in recent weeks, President William Lai Ching-te (賴清德) signaled a significant shift in energy policy by opening the door to restarting nuclear power plants, reversing a longstanding commitment to a “nuclear-free homeland.” In March 2026, Lai stated that Taiwan’s second and third nuclear power plants “meet the conditions for reactivation” and directed the state-owned utility Taipower to submit restart proposals to the Nuclear Safety Council for review.
This move comes amid heightened concerns over energy security following disruptions to global fuel markets linked to the Iran conflict, as well as rising electricity demand from Taiwan’s semiconductor and artificial intelligence industries. Lai emphasized that nuclear power could provide stable, low-carbon baseload electricity to reduce reliance on imported fossil fuels, while maintaining that safety, waste management, and public consensus would remain decisive conditions for any restart.
Although the policy marks a departure from the Democratic Progressive Party’s decade-long antinuclear stance, Lai has framed the shift as a pragmatic response to energy resilience needs rather than an abandonment of Taiwan’s broader renewable energy transition. While nuclear energy may provide part of the solution for power generation, strengthening resilience in the transport sector will also require practical, near-term measures.
The current crisis highlights the importance of diversifying not only energy sources, but also supply routes and fuel options. In this context, a long-term and short-term approach to diversification is critical to bolstering Taiwan’s energy mix — nuclear power as well as ethanol blending could enhance Taiwan’s ability to manage future disruptions while maintaining stability across its energy system.
If Taiwan can learn valuable lessons from the Iran conflict, it will position Taiwan to better face future market disruptions and geopolitical conflicts.
Rupert Hammond-Chambers is the president of the US-Taiwan Business Council (USTBC), a senior advisor at Bower Group Asia and sits on the board of The Institute for Indo-Pacific Security.
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