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Taiwan’s Governmental Overconfidence Keeps Creating Crises

An energy shortage threatens critical semiconductor supply lines as COVID-19 surges.

By , a journalist in Taiwan.
A pedestrian walks in Taiwan.
A pedestrian wearing a protective mask walks along a street in Taipei, Taiwan, on June 1. Billy H.C. Kwok/Getty Images

Until very recently, Taiwan had one of the world’s most successful COVID-19 strategies. That success came to an end in mid-May after a daily trickle of local cases surged to triple-digit figures, resulting in an increase of more than 8,000 local cases in 19 days, as of June 2.

Although the outbreak is serious enough to warrant a level three alert, which mandates masks outdoors, closes schools, and bans indoor dining, it is not the only problem to threaten Taiwan. Two island-wide blackouts, occurring within five days amid the COVID-19 surge, brought the country’s glaring power issues, exacerbated by the effects of an ongoing drought, to the forefront.

Taiwan had instituted the world’s earliest COVID-19 preventative measure on Dec. 31, 2019, when it started inspecting flights from Wuhan and implemented a comprehensive response that prevented any full-blown COVID-19 outbreaks, earning worldwide plaudits. As a result, from 2020 to the start of this May, Taiwan had less than 1,200 local COVID-19 cases and only 12 deaths. There were no lockdowns, and normal life continued in the form of concerts, nightlife, religious parades, work, and school.

However, the success story concealed a few shortcomings. Among these was a short three-day quarantine requirement for aircrews, inadequate vaccine acquisition, and a sense of complacency that saw no need to take note of steps taken by other countries to fight COVID-19. Taiwan’s COVID-19 success, largely based on keeping the coronavirus out and tracking cases down quickly through contact tracing, was also a weakness as authorities failed to prepare for widespread community outbreak, address aircrew quarantine shortcomings, underestimate how contagious new variants are compared to those in 2020, or learn from other countries. In short, Taiwan has been fighting this year’s outbreak using 2020’s methods.

In April, local cases were detected for the first time since February after several China Airlines pilots contracted COVID-19 and then infected their family members. A hotel manager, whose place of work housed the pilots as well as regular guests, was also infected, resulting in cases spreading across various counties.

The outbreak’s spread in both numbers and geographical locations took the authorities by surprise. There were reversals and reluctance to raise alert levels before triple-figure daily cases changed their minds, hesitancy to change the criteria to implement a formal lockdown (level four), and bickering between central and local authorities, with bipartisanship a factor. Most worrying was the lack of testing and test processing capabilities as well as hospital bed shortages—despite over a year of potential preparation. People who tested positive but were asymptomatic were told to stay at home like during the early days of the outbreak in other countries.

Highlighting this testing inadequacy, since May 22, authorities have reported local cases in a strange dual format consisting of new cases and back-logged cases, which are retroactively added to daily totals over the previous six to 12 days. For instance, on May 27, Taiwan’s Central Epidemic Command Center officially reported the day’s toll as 401 local cases and 266 “retroactively added” cases, which were backlogged as far back as May 17.

The authorities have claimed a computer reporting “bottleneck” was a reason for this huge backlog, but there are also serious delays in testing and test processing, resulting in a pile of unprocessed tests that reportedly numbered around 30,000 tests at one point.

This has been compounded by a failure to obtain enough COVID-19 vaccines, with the result that only around 2 percent of Taiwan’s 23.5 million people have been vaccinated as of June 1. Although Taiwan has inked deals with several manufacturers, including Moderna and AstraZeneca, the shipments have been pushed back while Taiwan’s government alleged a proposed deal for BioNTech vaccines was foiled by China.

Taiwan’s authorities, especially Taiwanese Health Minister Chen Shih-chung, deserve a lot of credit for successfully handling COVID-19 for more than a year—but they also bear responsibility for not being prepared for widespread community outbreak.

But as Taiwan struggles to control this outbreak, it is also facing serious power supply problems. On May 13 and May 17, severe blackouts occurred, triggered by a malfunction at a power station in the city of Kaohsiung,—the first of which authorities blamed on a technician’s error and ensuing grid problems. That first blackout shocked the public, which endured rolling blackouts from mid-afternoon until nighttime.

The second blackout five days later, while not as long, infuriated a lot of Taiwanese and prompted the authorities to admit demand had exceeded supply after the same power station malfunctioned. (This time, human error was not cited.) After this second blackout, power reserves remained precarious for more than a week at between 6 to 10 percent due to high demand and reduced supply, leading to fears of further blackouts.

The power failures reflect Taiwan’s increasingly tight supply amid energy shortages caused by a deliberate pullback in nuclear power, a delay in building a new liquified natural gas (LNG) plant, and sluggish use of renewable energy sources.

Nuclear energy is controversial in Taiwan for several reasons, including fears stemming from Japan’s Fukushima disaster in 2011 and the disposal of nuclear waste for decades on an island populated by Indigenous people. As a result, Taiwanese President Tsai Ing-wen campaigned during the 2016 election on promises to abolish nuclear power by 2025. Since then, Tsai has claimed she will indeed close down Taiwan’s three nuclear plants by 2025 as well as make renewable energy account for 20 percent of Taiwan’s power by then. But the reality of the energy situation makes this difficult.

In 2020, coal and gas accounted for more than 75 percent of Taiwan’s generated and purchased net power, according to state electricity provider Taiwan Power Company. Nuclear energy provided almost 13 percent while renewable sources, including wind and solar energy, accounted for under 6 percent.

The government is banking on major new LNG plants and renewable energy projects, such as offshore wind projects, to boost Taiwan’s power supply. But several of these projects are still being planned or behind schedule. Even when finished, it is not clear these projects can adequately fill the gap if Taiwan’s nuclear plants are taken offline. An increased use of coal and gas is much more likely, with the former already creating significant air pollution.

More ominous is Taiwan has been experiencing greater adverse weather effects caused by climate change, including longer and hotter summers, less typhoons, and lower rainfall. This, along with strong economic growth and rise in manufacturing production since last year, has led to increased power usage.

As such, pro-nuclear activists have successfully campaigned for a referendum, which was approved to be held this August, on activating a fourth nuclear plant that was under construction before being halted in 2014.

The power supply shortages that led to the May blackouts were exacerbated by the lack of hydropower due to an ongoing drought—the worst in more than 55 years. Dams across Taiwan are at record low capacity levels, with several in the single digits percentage-wise. The direct reason is the lack of typhoons last year, the first time in many decades, and a lower amount of rainfall than usual over the past year and a half. However, given Taiwan is usually one of the wettest places in the world in terms of rainfall, the underlying reasons go beyond just a freak summer without typhoons.

There are major problems with Taiwan’s infrastructure, such as leaky pipes and high levels of sediment buildup, in reservoirs. Extremely cheap water rates also eliminate the need for people to conserve water usage and for authorities to invest in more efficient infrastructure repairs and maintenance. As an island surrounded by the ocean, desalination should be a major option, but there are only three desalination plants on Taiwan.

The shortage is so serious water was withheld from irrigation for tens of thousands of acres of fields this year. At 70 percent, agriculture is the leading water user in Taiwan, but even this cut was not enough to prevent water shortages for industrial and consumer users. Several cities and counties have had their water supply cut for two days every week since April, with other counties subjected to less severe restrictions applied as recently as May. Desperate agriculture officials even participated in a mass ceremony in March to pray to the sea goddess Matsu, Taiwan’s most popular deity, for rain.

These problems are not recent. In the last few years, they’ve become known as the nation’s “five shortages” in water, power, land, labor, and talent. But Taiwan’s electricity and water costs are both among the lowest in the world, which encourages excessive consumption, discourages spending by authorities on infrastructure improvements, and does little to foster conservation habits.

Taiwan’s climate problems aren’t just a local issue, thanks to the impact of its semiconductor industry, especially Taiwan Semiconductor Manufacturing Company (TSMC), the world’s leading manufacturer of advanced chips, which made up 54 percent of the global market by revenue in 2020 entirely by itself. Taiwan’s semiconductor industry, which collectively made up 63 percent of the global market by revenue in 2020, has ramped up production as global demand for chips—vital for phones, computers and automobiles—has gone up significantly amid a shortage. This increased production has furthered the industry’s usage of power and water, with the latter essential for the chip manufacturing process.

Yet TSMC has had to curtail its water usage in line with local water restrictions as well as pay to truck in water from elsewhere and build a wastewater treatment plant. If the drought worsens, the company might need to not only further reduce its water usage but also cut production. TSMC was also briefly affected by the May blackouts, and more blackouts would certainly affect its operations. Meanwhile, TSMC is planning to build a new complex to manufacture 2 nanometer wafers, which would increase its already substantial water and power requirements. Any significant reduction of TSMC and the semiconductor industry’s operations would hit Taiwan’s exports and the world’s supply of semiconductors.

Meanwhile, Taiwan’s government has banked on a “reshoring initiative” to lure Taiwanese firms back from China to set up operations locally. It has been relatively successful so far, attracting almost 800 firms and more than $40 billion in investments, but if these new projects all come to term, this would further increase the demand for power and water, which are already in short supply. The prospects of more droughts and blackouts in the future does not bode well for Taiwan, especially for its industry and agriculture, as well as the global economy, which relies heavily on Taiwan for vital chips.

Governmental complacency and shortsightedness over the years, fierce political bickering among the main parties, and an inability to make tough decisions out of fear of angering the electorate have all contributed to obstructing a proper response to the growing crisis. As with national defense and COVID-19 preparedness, Taiwan’s current government has failed to adequately address this issue with suitable urgency despite having enjoyed a booming economy and a near COVID-19-free environment for most of 2020 and this year.

Although Taiwan might be able to get its COVID-19 outbreak under control, its energy and water problems are going to last much longer—and pose an even greater challenge to its security.

Hilton Yip is a journalist in Taiwan.