Roughly 28 million tons of liquefied natural gas have disappeared from global markets since the closure of the Strait of Hormuz and damage to Qatar’s export terminals. Analysts predict the shortfall could last years. While every energy importer will feel the pinch, not every one of them will feel it equally.
Germany, Taiwan and California are cautionary tales. All three have had their politics shaped by green movements, and all three are more vulnerable for it. When environmentalists came to power, they forced the premature retirement of nuclear reactors, coal plants and oil refineries. They calculated that the planet’s needs demanded it and that global markets would fill the gap. All three polities are now frantically reversing course, but energy sources can’t be rebuilt overnight.
Germany’s Green Party was founded in 1980 as an anti-nuclear movement. When it first entered coalition government in 1998, its price of admission was nuclear phase-out. It reentered government in 2021, in time to oversee the shuttering of Germany’s last three reactors in 2023. The Greens also pioneered the phasing out of the country’s coal plants; that Germany sits atop 35 billion tons of lignite didn’t enter into their calculations. Germany bet big on solar and wind, but intermittent renewables can’t ensure a consistent supply.
That left LNG filling the gap. Last week, Energy Minister Katherina Reiche called the nuclear shutdown “a huge mistake.” With spot prices for LNG sharply up, the government is now looking at restarting coal plants it retired. In the past, Germany has imported nuclear-generated electricity from France when squeezed.
Taiwan’s Democratic Progressive Party codified anti-nuclear dogma into its founding charter in 1986. Its arch-rival, the nationalist (and at the time authoritarian) Kuomintang, wisely built nuclear power plants as part of a breakneck industrialization program. When the DPP won power in 2016, it legislated a “nuclear-free homeland” and began retiring the country’s coal plants.
Phasing out coal made sense. Replacing nuclear with LNG, much less so. Like Germany, Taiwan can’t rely solely on renewables. Taiwan has virtually no domestic fossil fuels. And without nuclear, it has to import 97 percent of its energy by sea. Last week, the DPP reversed course and announced plans to restart the reactors.
In California, environmental regulations have achieved something remarkable: They have severed the state’s gasoline market from the rest of the country. Unique fuel blend mandates mean no other state’s gasoline is compatible with California’s. Other onerous regulations — emissions fines, profit caps, drilling restrictions — have driven refiners out. And there are no inbound pipelines for crude or refined products. Now gas is approaching $6 a gallon.
With no domestic replacement, California became dependent on gasoline imports from Asian refineries — which are now cutting shipments because the Strait of Hormuz is closed. As Chevron’s refining chief Andy Walz recently put it, “The California intent to offshore carbon to other nations has offshored their security of supply.” Chevron has warned it could leave California entirely within a decade unless regulations change.
The error in Germany, Taiwan and California was confusing good intentions with good planning — and assuming a stable global energy market would always be there to paper over the difference. The Iran war shows it won’t. The governments best situated to weather this energy shock are not the greenest, but the ones that treated energy as a national security interest and diversified their supply responsibly.
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