Taiwan Moves to Revive Nuclear Capacity as LNG Prices Bite
Legal groundwork for reversing Taiwan's nuclear-free policy advances as the Iran war pushes JKM to $27.51/MMBtu.
Taiwan's ruling Democratic Progressive Party has begun legal preparations to reverse the practical consequences of its nuclear-free policy, OilPrice reported on Thursday (2026-09-17), in what would be the most significant energy policy shift on the island in a generation. The potential recovery of nearly 3.9 GW of nuclear generating capacity is the primary economic prize, according to the report.5
Asian spot LNG prices have risen 62% since the start of the Iran war, according to Reuters data, while JKM, the Asian spot benchmark, stood at $27.51/MMBtu on September 20 (2026-09-20). The Newcastle coal benchmark climbed just 13% over the same period — a gap that has been driving fuel-switching decisions across the region and concentrating attention on alternatives to gas imports.1
The supply shock has a specific origin. Iranian retaliation against U.S.-Israeli attacks knocked out 17% of Qatar's LNG export capacity, Reuters reported, tightening deliveries from one of the world's largest gas exporters. Qatar is estimated to have shipped fewer than 20 LNG cargoes to all customers since the conflict began at the end of February (2026-02-28), according to OilPrice reporting from August (2026-08-27).1,4
The DPP has not formally abandoned its nuclear-free policy. But legal preparations to reverse its practical consequences are underway, suggesting the government has concluded that holding the ideological line carries too high a cost when contracted LNG supply is disrupted at source. Bringing 3.9 GW back into service would directly reduce the volume of gas Taiwan needs to import.5
Taiwan's nuclear restart is complicated in ways domestic politics alone cannot resolve. Every arrangement governing the island's fuel cycle shares one unusual feature: Taipei signed none of them under its own name. The American Institute in Taiwan — not the Taiwanese government — negotiated the 123 agreement covering nuclear cooperation with the United States, the Taipei Times reported on August 3 (2026-08-03). Washington committed US$2.7 billion in January (2026-01) toward related fuel-cycle arrangements, according to the same reporting, but the legal constraints on what Taiwan can conclude for itself persist regardless of any financial commitment.3
The scale of Asia's LNG problem is visible in the coal-switching data. In Japan, coal-fired power supply rose 11.1% in April (2026-04) — the fastest pace in at least a year — while gas-fired generation fell 12.9% to 16,447 gigawatt-hours, Reuters reported, citing the Japanese Electricity Market and Policy Bureau. South Korea's shift was sharper: coal-fired output jumped 39.7% year over year to 10,733 gigawatt-hours in April, the biggest increase since August 2019, with gas-fired output down 6.4%, according to Korea Power Exchange data cited by Reuters.1
The trend accelerated into May (2026-05). Reuters reported that coal-fired supply was up 18.3% in Japan and 14.7% in South Korea during the first ten days of that month (2026-05-01 to 2026-05-10), while gas-fired power dropped 23.4% and 12.2% respectively. Asian buyers outside China and India had May coal imports on track to rise 9.4% year over year to 31 million metric tons, according to London-based DBX Commodities cited by Reuters; South Korea's coal imports alone were on track to increase more than 50% in May, with Japan's up more than 20%.1
Taiwan's situation differs from Japan and South Korea in one important respect: it cannot easily reach for coal as a substitute without adding different import dependencies and carbon liabilities. Nuclear, if it can be reactivated, addresses the LNG exposure more directly. But the gap between legal preparation and actual generation is measured in years, not months. Reactors need refuelling, safety re-certification and regulatory clearance — none of which depends solely on political will.5
Analysts expect continued upward pressure on Asian LNG prices if shortages persist, according to market commentary cited in late-May (2026-05) reporting. At $27.51/MMBtu for JKM, the economics of nuclear restart improve with each month of elevated spot pricing. Whether Taiwan can secure the fuel-cycle arrangements it needs through intermediary institutions — and whether those institutions can act before the next disruption to Hormuz shipping lanes — remains the specific variable traders in Asian LNG will be watching.2,3,1