On April 2, U.S. President Donald Trump announced a series of “reciprocal tariffs” on countries worldwide, sending shockwaves across the globe.
In response to this so-called Liberation Day, Taiwanese President Lai Ching-te outlined a series of countermeasures, including expanding purchases of U.S. oil and natural gas.
The seeds for this move had been sown much earlier. Anticipating potential tariff policies under the Trump administration, Lai’s government had already prioritized expanding U.S. LNG imports as a strategic objective.
On March 20, CPC – Taiwan’s state-owned petroleum company – signed a letter of intent with the state-owned Alaska Gasline Development Corporation. According to Alaska Governor Mike Dunleavy, CPC plans to purchase 6 million tons of LNG annually and may also invest in infrastructure projects such as pipelines. This procurement commitment represents 30 percent of Alaska’s projected maximum LNG output, and would translate into additional investment of at least $2.3 billion.
The Alaska LNG Project aims to export 20 million tons of LNG annually by 2030, positioning Alaska as a crucial export hub to meet rapidly growing demand from Asia. Geographically, the Nikiski facility would be among the closest U.S. LNG export terminals to East Asia, cutting shipping times from 20-26 days to just 7-10 days. The project has been positioned as a foundation for deepening energy cooperation between the United States and its democratic allies.
Although the demand is robust, prospective East Asian buyers are weighing Alaska’s high development costs, estimated at $44 billion, against more cost-effective alternatives coming online. Qatar’s North Field expansion, the LNG Canada project in British Columbia, and new Gulf Coast terminals in the United States can all deliver cargoes at lower breakeven prices, roughly $7‑8 per MMBtu, compared with estimates of $10‑11 for Alaska due to its challenging environmental and logistical conditions.
But Taiwan’s interest stems from more than just pricing. Participating in Alaska’s LNG projects – whether through direct investment, pipeline investment, or purchasing agreements – would deepen Taiwan-U.S. energy and trade cooperation and bolster Indo-Pacific energy security amidst growing regional tensions. Japan and South Korea share similar strategic considerations.
Still, all three governments remain cautious. Moving from letters of intent to actual investment will require overcoming doubts about viability and ensuring import deals align with domestic priorities.
Both geopolitical and sustainability factors are shaping Taiwan’s position in this evolving energy landscape. Sustained U.S. involvement and commitment are necessary in order to facilitate resilient and mutually beneficial partnerships.
Taiwan’s LNG Procurement Strategy: Balancing Energy Transition and Energy Security
Taiwan’s reliance on imported natural gas is primarily driven by demand from the electricity sector. Under Taiwan’s energy transition policies, natural gas is expected to account for 50 percent of power generation by 2030. Even as this share decreases to 20-27 percent by 2050, overall electricity demand is expected to continue to grow, implying that total natural gas imports will rise further.
CPC, Taiwan’s integrated LNG supplier, must ensure stable supply sources by diversifying procurement from various countries and seller types to mitigate potential supply chain disruptions and ensure energy security. According to the Ministry of Economic Affairs, Taiwan imported approximately 20 million tonnes of natural gas in 2023, primarily from Australia (40.2 percent), Qatar (27.9 percent), and the United States (9.8 percent).
Australia is currently Taiwan’s largest natural gas supplier, but uncertainties surrounding the stability of exports have grown in light of the Australian government’s 2022 decision to cap coal and gas prices and the risk of structural gas shortages by 2027. Meanwhile, China suspended all LNG imports from the U.S. in early April, pivoting to Australian LNG. Given these developments, U.S. suppliers are likely to play an increasingly vital role for Taiwan over the long term.
Taiwan’s growing LNG purchases from the United States – up from 57,100 tons in 2015 to more than 1 million tons in 2020 – have mostly come from deals signed with energy companies exporting LNG from the Gulf Coast. However, transporting gas from the Gulf Coast to East Asia requires passage through the Panama Canal, with shipping times ranging from 20 to 26 days and potential risks related to China. By contrast, Alaska’s southern ports offer shorter shipping routes and reduced delays.
U.S.-flagged LNG carriers would also likely face fewer threats in the face of China’s increasing use of gray zone tactics against Taiwan. Alaska Senator Dan Sullivan recently suggested that the U.S. Navy could even escort LNG carriers from Alaska, further boosting supply security.
Such a security guarantee would make Alaskan LNG a more attractive prospect for Taiwan, and this added value could help address concerns over price competition.
While natural gas plays a crucial role in Taiwan’s plan to phase out coal, expanding LNG imports raises tough questions about compatibility with long-term climate goals. Building new import terminals and pipelines at a time when global markets are pivoting toward clean energy risks locking Taiwan into decades of fossil fuel dependence. According to recent estimates, up to 60 percent of LNG infrastructure could become stranded assets by 2050, undermining both energy security and decarbonization goals.
Much depends on how quickly Taiwan can scale up renewable deployment over the next decade. These parallel challenges underscore the importance of ensuring that U.S. LNG supports the resilience and transition strategies of its partners.
Challenges Ahead: Infrastructure Demands, Policy Clarity, and Strategic Interests
Whether the project can actually start supplying natural gas to Taiwan by 2030 as scheduled is still uncertain, raising questions about the role of Alaskan LNG in Taiwan’s future energy mix.
In the short term, environmental impact lawsuits and rising raw material costs exacerbated by tariffs pose significant hurdles. Over the long term, the possibility of policy reversals under future administrations adds another layer of uncertainty. Like many global oil and gas companies, Taiwanese investors may hesitate to commit until there is clearer regulatory stability. Providing assurance on the durability of executive orders governing federal land leases and sales, alongside a Final Investment Decision timeline, will help mitigate these concerns.
If Trump’s energy dominance strategy is to succeed, it must deliver on both price competitiveness and supply security. Domestic concerns over price volatility, particularly during winter peaks and in response to surging demand from artificial intelligence data centers, could undermine the long-term competitiveness of U.S. LNG. While experts do not foresee a dramatic price spike, these concerns signal the need for long-term infrastructure planning that balances domestic energy needs with reliable export capacity.
Achieving True Energy Dominance through Cooperation with Allies
Taiwan’s cautious participation in the Alaska LNG project underscores a broader truth: even strategically aligned democratic allies cannot ignore cost realities and long-term climate goals.
LNG projects that ignores partner countries’ domestic constraints, such as volatile pricing, infrastructure lock-in, and decarbonization timelines, risk becoming symbols of overreach rather than strategic alignment. For U.S. policymakers, that means energy diplomacy in Asia must pair export ambition with credibility on delivery, financing, and policy alignment.
The United States could overcome these concerns by committing to helping Taiwan develop carbon capture and storage (CCUS) facilities to deal with residual LNG emissions, in line with Taiwan’s CCUS action plan. Cooperation on CCUS, and other low-emissions technologies such as geothermal and hydrogen, would demonstrate the Taiwan-U.S. energy relationship goes beyond surface-level announcements on purchase agreements and aligns with Taiwan’s climate goals.
Taiwan’s interest in expanding imports of U.S. LNG signals its willingness to address the trade imbalance, but goodwill alone will not be enough for the United States to successfully reshape Asia’s energy landscape. Dealing with uncertainties around price, economic feasibility, and future certainty, and ensuring alignment with Taiwan’s decarbonization pathway, is key to success both for the U.S. energy export ambitions and long-term geopolitical trust.
DSET would like to thank Angela Glowacki for assistance in preparing this article. DSET’s in-depth analysis in Mandarin of Asia’s response to the Alaska LNG Project can be read here.