The newly released series of “reciprocal tariffs” by the U.S. Trump Administration has sent shockwaves around the world. Already anticipating the potential tariff policies, the Taiwanese government has prioritized the expansion of U.S. liquefied natural gas (LNG) imports, with a new target of investment in Alaska. Elizabeth Forst, the research assistant, and Jia-Shen Tsai, the non-resident research fellow of DSET, recently published an op-ed regarding the new shift in the Taiwanese policy, further diversifying the sources of LNG imports with the primary objective of energy security under the current geopolitical tension in the region.
The op-ed argues that Alaska has been a crucial export hub in meeting the rapidly growing LNG demand from Asia due to its geographical proximity. Although the high development costs have made investors weigh more against other cost-effective alternatives, such as Qatar, Canada, and other U.S. Gulf Coast terminals, Taiwan’s interest stems from deepening the Taiwan-U.S. cooperation and bolstering the Indo-Pacific energy security. As Taiwan’s LNG dependency will continue in the upcoming decade, China pivoting to the Australian LNG, Taiwan’s major LNG source of import, as a counter-measure to its suspension of U.S. imports, could cause instability in Taiwan’s LNG imports. Furthermore, as the better supply security of the U.S. carriers and the shipping route from Alaska than from other locations, the U.S. suppliers are likely to play an increasingly vital role for Taiwan over the long term.
However, the authors also analyzed the challenges encountered during the Taiwan-U.S. cooperation on LNG. On one hand, domestic challenges to the project cause uncertainty to the cooperation, such as the increased cost due to the rising tariffs and the environmental impact lawsuits. In the long run, the surging demands from the AI data centers could undermine the competitiveness of U.S. LNG. The possibility of policy reversals under future administrations adds another layer of uncertainty. On the other hand, the investment may not align with Taiwan’s long-term energy transition objectives. The authors mentioned domestic opinions, stating that new infrastructure will risk locking Taiwan into decades of fossil fuel dependence.
The authors stated that the U.S. should consider the energy transition objectives of allies while strengthening the LNG exports, which could smooth out the Taiwan-U.S. cooperation. They suggested that the U.S. could commit to helping Taiwan develop carbon capture and storage (CCUS) facilities to deal with residual LNG emissions, to be in line with Taiwan’s CCUS action plan. Meanwhile, Taiwan and the U.S. can also bolster low-emission energy projects such as hydrogen and geothermal energy to further support Taiwan’s climate goals while increasing Taiwan’s LNG imports to mend the gap in energy policies.
