Taiwan Pivots to Coal Power as War Disrupts Global LNG Market

(Bloomberg) -- Taiwan will increase coal-fired power generation to bolster energy security, as the war in the Middle East crimps gas supplies.

Taiwan Power Co., the government-owned utility that’s the main electricity supplier, will procure coal-fired power from the Mailiao plant from May after Units 1 and 3 are ramped up, the Ministry of Economic Affairs said.

Global energy markets have been upended by the war between the US, Israel and Iran, which has cut flows of liquefied natural gas and crude oil. That’s forced governments to lean more on the dirtiest fossil fuel for power generation. In Asia, Japan, South Korea and Bangladesh have all increased their reliance on coal, while in Europe, countries including Poland may boost usage of coal gas. Germany, meanwhile, may reactivate a mothballed coal plant.

Taiwan — which houses some of the world’s top chipmakers — typically relies on LNG for about half its electricity generation and bought about one-third of its supplies from Qatar last year. A shutdown in the largest LNG export plant in Qatar spurred by the conflict, coupled with the near-complete closure of the Strait of Hormuz, has sent the island scrambling for alternatives.

While the island has managed to secure LNG supply through May, and also has arrangements for about half of its June requirements, additional spending on oil and gas is estimated to cost billions of dollars.

The move to increase coal-fired power aims to address LNG supply risks, while mitigating the impact of high gas prices on electricity rates, the ministry said in a statement. Taiwan’s domestic gas supply remains sufficient, and all power generation units are operating as scheduled, it added.

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