Asia Turns to Coal Amid West Asia War Straining Global LNG Supplies
Asian countries are increasingly relying on coal as the conflict in Iran disrupts oil and gas shipments. The continent’s vulnerability stems from its dependence on imported fuel, with a significant portion traversing the Strait of Hormuz—a critical chokepoint for approximately one-fifth of the global oil and natural gas trade. LNG is a natural gas that has been cooled to a liquid state, facilitating easier storage and transportation. It has been heralded as a transitional fuel in the movement from oil and coal to more sustainable energy sources. The United States has aimed to increase the export of LNG throughout Asia. It burns cleaner than coal; however, it still emits gases that contribute to climate change, particularly methane. The conflict has led nations to revert to coal as a means to address shortages in LNG supply. India is increasing its coal consumption to satisfy the rising demand during the summer months. South Korea has removed restrictions on coal-generated electricity. Indonesia is placing a strong emphasis on utilizing its domestic supply. Thailand, the Philippines, and Vietnam are increasing their reliance on coal-fired power. Burning more coal poses a threat of exacerbating smog in major cities, hindering the shift to renewable energy, and elevating the region’s greenhouse gas emissions. Experts assert that coal serves as a short-term fix, whereas renewables represent the long-term solution. “Continued reliance on coal exposes Asia to future shocks,” said Julia Skorupska. “This kind of crisis is a real sort of warning,” she said. Coal plays a crucial role in Asia’s emergency energy strategies. “Its wide availability in Asia makes it the default backup when renewables or gas fall short,” said Sandeep Pai. China, the leading consumer and producer of coal, has established record coal power generating capacity since 2021 to enhance its energy security.
The national policy advocates for the ongoing utilization of coal, despite the significant clean energy capacity that provides some respite. India, the second-largest coal consumer and producer, is preparing for an intense summer and will increasingly depend on coal to satisfy peak demand of 270 gigawatts – almost double the electricity output of Spain. It possesses sufficient coal for approximately three months, with certain stockpiles designated for small businesses. Recently, two shipments of liquefied petroleum gas from India, totaling over 92,700 tons, successfully navigated the Strait of Hormuz. According to Pai, such imports will likely be directed to industries such as fertiliser production rather than power generation. Proponents of coal, including Michelle Manook, assert that the shortfall would be more severe in the absence of coal and that future utilization should be approached strategically. “The lesson has to be diversity,” she stated. Pauline Heinrichs, who studies climate and energy at King’s College London, highlights China’s increased reliance on coal to compensate for hydropower deficits caused by droughts, exacerbating emissions that drive climate change. “You learn to respond to shocks generated by certain insecurities by reproducing the insecurity,” she said. In a move that heightens the vulnerability for countries reliant on imports, Indonesia, recognized as the world’s largest exporter, is placing a greater emphasis on domestic consumption rather than on exports. “That could tighten regional supplies and push global prices higher,” said Putra Adhiguna. Coal prices are determined on a global scale, which exposes importers to fluctuations and interruptions. “More coal does not guarantee cheap or reliable power,” said Russell Marsh.
Vietnam is currently experiencing that volatility. Following weather-related shortages, imports have risen; however, the reliability of supplies from Indonesia is now in question. Consequently, there is consideration for importing coal from the US and Laos, as reported. The primary price for coal utilized in Asia, known as Newcastle coal from Australia, has increased by 13 percent since the onset of the war. Increased prices will adversely impact Southeast Asia, the world’s third largest coal-consuming region, which includes Vietnam, the Philippines, and Thailand, all of which are expanding their coal power capabilities. Increased reliance on coal at this juncture will hinder and potentially jeopardize long-term initiatives aimed at eliminating coal-fired power. Indonesia faced challenges in achieving its goals for the early retirement of coal plants, grappling with financing delays even prior to the onset of the Iran war. According to the US-based Institute for Energy Economics and Financial Analysis, coal power in Indonesia was 48 per cent more expensive in 2024 than in 2020, attributed to aging plants and rising costs. Subsidies to the national utility increased by 24 per cent, reaching USD 11 billion, which accounts for approximately 5 per cent of the national budget. Jakarta has advocated for the use of LNG to facilitate a transition away from coal. However, the resurgence of coal usage “sends a signal” that transitioning to gas “is not as easy as it sounds,” Adhiguna stated.
South Korea has committed to phasing out the majority of its coal plants by 2040 and reducing its emissions by 50% by 2035. However, it permits increased coal usage during periods of low air pollution and when LNG supplies are limited. In 2023, South Korea required a significant expansion of renewable energy—approximately 8 gigawatts of new wind each year—to achieve its net-zero objectives, according to Agora Energiewende. Growth has been slow, with renewables supplying just 10 percent of electricity in 2024, compared to a global average of 32 percent, according to IEEFA. In the last 11 years, South Korea has invested USD 127 billion in fossil fuels. “That’s 13 times more than it spent on renewables, with 60 per cent of export finance going to LNG and USD 120.1 billion spent on fuel imports in 2024 alone,” said Joojin Kim. South Korea remains committed to phasing out coal usage; however, the recent developments may extend beyond the current crisis, Kim stated. “The concern extends beyond the decision itself.” “It is the precedent it sets.” Jitsai Santaputra said “For countries with limited coal, like Thailand, the impact on electricity prices would be minimal, as coal accounts for too small a share of capacity.” Domestic coal constitutes less than 10 percent of the energy mix in Thailand.
According to the World Health Organization, or WHO, burning coal generates fine particles that penetrate deeply into the lungs and bloodstream, increasing the likelihood of heart disease, stroke, lung cancer, and chronic respiratory disease. The issue is prevalent throughout Asia, particularly during the times when farmers engage in the practice of burning their fields. According to a report, all 1.4 billion Indians are exposed to air containing particle concentrations deemed unsafe by the WHO. The government has now suspended air-quality regulations, permitting restaurants to utilize coal in order to alleviate a gas shortage. Vietnam is grappling with significant air pollution, as PM2.5 levels exceed WHO limits by a considerable margin. It is advocating for electric bikes and has set goals to reduce coal consumption. Lan Nguyen expressed her understanding of the importance of coal for electricity at this time, yet she remains concerned for her son’s health, as he suffers from asthma. “I worry for my son’s lungs every day,” she said.
