Energy Transition Provides Scope for Taiwan-Nordic Cooperation

Since 2016 the Democratic Progressive Party (DPP) has run the administration in Taiwan and cross-strait relations have deteriorated due to the DPP’s political and cultural stances—distancing Taiwan from China. The visit of U.S. House Speaker Nancy Pelosi to Taiwan in August saw cross-strait relations fall to freezing point. China believed the U.S. violated the ‘One China Principle’ (一個中國原則) and described her visit as a ‘hostile provocation’ (惡意挑釁). In response, China conducted military exercises around Taiwan and frequently crossed the medium line in the Taiwan Strait. Given the context of the ongoing Ukraine war, the Taiwan situation drew international attention and continues to be tense on the ground.

Despite these geopolitical constraints, Taiwan is doing well economically. It not only produces more than 53 percent of semiconductors in the world but also controls key production technologies. These assets create a “silicon shield” for Taiwan to maintain the status quo of cross-strait relations. Additionally, Taiwan has made important innovations and developed technologies in the textile, ICT, bicycle, and electronic vehicle industries. As a small island, Taiwan relies on exports. Exports of goods and services account for 51.6 percent of GDP in 2020. The top four export states/regions are China, ASEAN countries, the U.S., and the EU. They respectively account for 42.3 percent, 15.7 percent, 14.7 percent, and 7.1 percent of Taiwan’s exports.

Relations between Taiwan and Nordic countries

Diplomatically, Taiwan has no relation with any Nordic countries. Economically, Sweden, Denmark, and Finland have gradually strengthened bilateral relations with Taiwan through trade talks, economic cooperation conferences, and signing MoUs.

The energy transition policy can be seen as the most important topic that connects Taiwan and the Nordic countries. Just recently, in August 2022, Ørsted, the Danish renewable energy company that constructed Taiwan’s first commercial-scale offshore wind farm, established an Asia-Pacific hub in Taiwan. Additionally, from the bilateral Economic Cooperation Conferences or Trade Talks between Taiwan-Sweden and Taiwan-Finland, we see that the areas of cooperation encompass electronic vehicles, semi-conductor industry, sustainable development, financial technology (FinTech), and ICT industries.

After the outbreak of the Ukraine war and Pelosi’s visit, Sweden, Finland, and Denmark have increased their interests in Taiwan and are showing their support by visiting Taiwan and calling upon international society to consider the issue. This trend provides a positive platform for Taiwan to deepen its relations with the Nordic countries. As neighboring countries to Russia, Finland and Sweden highlight the importance of geopolitical security and cooperation to balance and maintain the status quo.

Taiwan’s Current Green Energy Policies

In March, Taiwan announced its roadmap of 2050 zero net emissions (台灣2050淨零排放). This policy pushes Taiwan’s energy policy to follow the renewable energy trend promoted by international organizations and many other countries. The roadmap includes energy transition (能源轉型), industrial transformation (產業轉型), lifestyle transformation (生活轉型), and societal transformation (社會轉型).

Taiwan’s need for energy transition is not only about the goal of zero net emissions but also about reducing Taiwan’s vulnerabilities in energy supply. Taiwan relies on 97.8 percent imported energy, and merely has 2.2 percent indigenous energy. Notably, enormous energy needs are required for the semiconductor industry, one of the essential industries in Taiwan.

The urgent need to increase renewable energy production has a promising market in Taiwan after the announcement of the 2050 zero net emissions plan. The roadmap aims for an ambitious target of 60 percent renewable energy power generation by 2050. Currently, only 5.5 percent of the energy in Taiwan is from renewables. This situation offers Nordic countries—pioneers in green energy industries—a platform and market to cooperate and develop.

Deepening and Diversifying Cooperation

The Nordic countries have a minor influence on international or Indo-Pacific affairs compared to the U.S., Japan, or China. Moreover, the Nordic countries have advanced technologies that Taiwan does not have. These characteristics make the Nordic countries have a relatively neutral role in Taiwan’s geopolitical situation while having the technologies that Taiwan needs. Taiwan needs to cooperate with allies that support its values, have economic cooperating incentives, and have minor political international influence. The Nordic countries meet all these considerations.

Taiwan already has some economic cooperation with Nordic countries. However, it is quite limited due to the lack of interaction and information. Taiwan must realize its capacities in the world and actively take advantage of them to deepen its ties with potential allies. What does Taiwan have that can provide incentives for the Nordic countries?

  1. Resilient and flexible supply chains, including the semiconductor, ICT, textile, bike, electronic vehicles, and components manufacturing industries. Taiwan has the ability to reflect and adapt to the ever-changing global market.
  2. Advanced technologies and experiences in the industries mentioned above can lead to mutually beneficial cooperation that increases trade ties and technological innovation.
  3. As a democratic, self-controlled island, Taiwan has the stability that China does not have. Policies related to the economy and society are predictable in Taiwan, and the political situation is also stable, which is important for international cooperation and investment.
  4. China is one of the largest markets in the world, and Taiwan is involved in China’s economy due to geographical and economic reasons. This involvement makes Taiwan a potential entry point for the Nordic countries to participate in China’s market.
  5. Connecting to the fourth point, Taiwan can also be an entry point to Asian markets for the Nordic countries. Significantly, Taiwan’s New Southbound Policy (新南向政策) could bridge Taiwan, Nordic countries and Asian markets.

These advantages should be actively used to connect Taiwan and the Nordic countries in different industries rather than heavily focusing on the green energy industry or high technology. There is massive potential for further cooperation, but Taiwan should value its multiple advantages and diversify the cooperation to enhance bilateral relations with the Nordic countries. As Johan Nylander and Håkan Jevrell mentioned in ISDP’s Taiwan–Nordic Forum 2022, Nordic countries and Taiwan have enormous cooperation possibilities. Yet, the lack of interaction and information leads to a lack of interest. Thus, Taiwan should face this problem by offering information to the public and private sectors and actively engage in exchange programs. Such programs need not be limited to technology exchange and could also include information on work cultures, business systems, and trade opportunities.

As an island forced to balance between China and the U.S., it is urgent for Taiwan to deepen and diversify its relations with the Nordic countries. Not only for the economic profits but also for the diversification of international support. Taiwan should take the initial step to contact, interact, and provide information for Nordic countries to exchange potential cooperation opportunities. Last but not least, cooperation outside of the economy also matters. Expanding bilateral cooperation in academia, tourism, and societal levels could provide a platform for people to interact, thereby increasing the aspiration of bilateral cooperation.