The proposal was presented by the Ministry of Economic Affairs (MOEA) at a meeting earlier Monday attended by Cabinet officials and lawmakers of the ruling Democratic Progressive Party (DPP) at the invitation of Premier Su Tseng-chang.
Facing strong opposition from environmental groups to its Taoyuan Datan LNG terminal project, the MOEA proposed to move its location 455 meters further out to sea to 1.2 kilometers from the coast.
The change would push completion of the project back by two and a half years to 2025 and its cost higher by NT$15 billion to NT$75 billion, according to the ministry.
Citing Su's remarks at the meeting, Cabinet spokesman Lo Ping-cheng said the revised plan demonstrates the government's "maximum sincerity" in answering the people's demands.
It also represents the maximum cost the government can bear on the project, Lo said.
The Datan natural gas terminal project is thought to be crucial for the Tsai Ing-wen administration's energy policy of generating 20 percent of Taiwan's electricity from renewables, 30 percent from coal, and 50 percent from natural gas by 2025.
Economics Minister Wang Mei-hua contended that the relocation plan will guarantee that the terminal, which would be Taiwan's third, will not have an adverse impact on the underwater reef.
"It will be friendlier to the environment," she said.
The government has scrambled to find a solution to the controversy as it faces a possible referendum on the project in late August.
If the project were to be voted down, it would derail the DPP administration's plan to expand the use of natural gas to generate electricity and reduce the use of coal, because it needs the additional natural gas storage capacity.
According to Taiwan Power Company, natural gas accounted for 40.8 percent of Taiwan's energy generation in 2020, followed by coal at 36.4 percent, nuclear at 12.7 percent, and renewable energy at 5.8 percent, with various other sources making up the remaining 4.3 percent.
The MOEA's revised plan failed to win the support of some environmental activists advocating protection of the 1,000-year-old ecosystem supported by the algal reef that spreads along the coast of Datan Village in Taoyuan.
Tsai Ya-ying, a lawyer for the Wild at Heart Legal Defense Association, called the proposal "a multilateral lose" because it cannot keep the algal reef ecosystem intact, nor can it resolve the problem of bad marine conditions in the seas off Datan.
The association's Taipei branch head, Yu Chen-wei, suggested the government select a safe location for the controversial project from about 220 fishing ports around Taiwan, some of which she said, have been left unused for a long time.
The Rescue Datan Algal Reefs Alliance, consisting of environmental groups calling for the reef's protection, has collected enough signatures for its proposed referendum on the relocation of the planned natural gas terminal to get it to a national vote.
More than 700,000 signatures were submitted to the Central Election Commission on March 18, easily surpassing the threshold of 1.5 percent of the total electorate, or 289,667 signatures, required under the Referendum Act for a vote to be held.
The only step remaining is for the Central Electric Commission to certify the signatures.
If that happens, the next possible referendum could take place on Aug. 28, and would require a majority vote in favor by over 25 percent of the electorate -- around 4.8 million people -- casting ballots to become valid.