BANGKOK — Asian countries are turning back to coal as the war involving Iran disrupts oil and gas shipments, exposing the continent’s dependence on imported fuel that often passes through the Strait of Hormuz — a chokepoint for about a fifth of global oil and natural gas trade.
LNG, or liquefied natural gas, is natural gas cooled to liquid form for easier storage and transport. Promoted as a bridge fuel in the move from oil and coal to cleaner energy, LNG burns cleaner than coal but still emits greenhouse gases, including methane. The U.S. has sought to expand LNG exports to Asia. But with supply squeezed by the conflict, several countries are reverting to coal to cover shortfalls.
India is burning more coal to meet higher summer demand. South Korea has relaxed caps on electricity from coal. Indonesia is prioritizing domestic coal use over exports. Thailand, the Philippines and Vietnam are increasing coal-fired power. Experts warn that this short-term shift risks worsening smog in major cities, slowing the transition to renewables and boosting the region’s climate-warming emissions.
“This kind of crisis is a real sort of warning,” said Julia Skorupska of the Powering Past Coal Alliance, noting that coal is a stopgap while renewables remain the long-term solution.
Rising demand drives Asia back to coal
Coal is central to Asia’s emergency energy plans because it’s widely available in the region and serves as the default backup when renewables or gas are short, said Sandeep Pai, an energy expert at Duke University.
China, the world’s top coal consumer and producer, has added record coal power capacity since 2021 to bolster energy security. China’s national policy still calls for coal use alongside its expanding clean energy capacity. India, the second-largest coal consumer and producer, expects a scorching summer and will lean more on coal to meet a peak demand near 270 gigawatts. India reportedly has about three months’ worth of coal reserve, with some stockpiles set aside for small businesses. Two recent Indian liquefied petroleum gas shipments passed through the Strait of Hormuz; those imports are likely to be allocated to industries such as fertilizer production rather than power generation, Pai said.
Coal advocates argue the fuel prevents worse shortages. “The lesson has to be diversity,” said Michelle Manook of FutureCoal. But other analysts warn that relying on coal to offset shocks can reproduce long-term insecurity. “You learn to respond to shocks generated by certain insecurities by reproducing the insecurity,” said Pauline Heinrichs of King’s College London, pointing to China using more coal to offset hydropower shortfalls from droughts.
Indonesia keeps coal for its own use
Indonesia, the world’s largest coal exporter, is prioritizing domestic use, which could tighten regional supplies and push global coal prices higher, said Putra Adhiguna of the Energy Shift Institute. Coal prices are set on global markets, leaving importers vulnerable to swings. More coal availability doesn’t guarantee cheap or reliable power, warned Russell Marsh of E3G.
Vietnam, already hit by earlier weather-related shortages, increased imports but now faces uncertainty about supplies from Indonesia and is considering coal from the U.S. and Laos. The key benchmark for coal used in Asia — Newcastle coal from Australia — has risen about 13% since the war began. Higher prices will strain Southeast Asia, the world’s third-largest coal-consuming region, including Vietnam, the Philippines and Thailand, which are expanding coal-fired power.
Relying on coal now could backfire
A renewed dependence on coal risks slowing or undermining long-term plans to phase out coal plants. Indonesia had been struggling to retire coal plants early even before the Iran war, with financing delays complicating the transition. Coal power costs in Indonesia were 48% higher in 2024 than in 2020 due to aging plants and rising operating costs, the Institute for Energy Economics and Financial Analysis (IEEFA) reported. Subsidies to the national utility rose 24% to $11 billion, roughly 5% of the national budget.
Jakarta promoted LNG as a pathway away from coal, but the recent turn back to coal “sends a signal” that switching to gas is not straightforward, Adhiguna said. South Korea has pledged to retire most coal plants by 2040 and halve emissions by 2035, but it is allowing more coal use when air pollution is low and LNG supplies are tight. In 2023 South Korea needed about 8 gigawatts of new wind annually to meet net-zero goals; growth has been slow and renewables supplied only 10% of electricity in 2024 versus a 32% global average, according to IEEFA. Over the past 11 years South Korea committed $127 billion to fossil fuels — 13 times its renewables spending — with 60% of export finance going to LNG and $120.1 billion spent on fuel imports in 2024 alone, said Joojin Kim of Solutions for Our Climate. Kim warned that temporary policy relaxations could set lasting precedents.
For countries with limited coal resources, like Thailand, domestic coal makes up less than 10% of the energy mix and the impact on electricity prices is likely to be small, noted Jitsai Santaputra of The Lantau Group.
Coal brings dirtier air
Burning coal produces fine particulate matter (PM2.5) that penetrates deep into lungs and the bloodstream, raising risks of heart disease, stroke, lung cancer and chronic respiratory illnesses, according to the World Health Organization. The problem worsens during seasonal agricultural burning across Asia.
All 1.4 billion Indians breathe air with PM2.5 concentrations above WHO safe levels, a report by the Energy Policy Institute of Chicago found. Facing gas shortages, India has paused some air-quality rules and allowed restaurants to burn coal. Vietnam also experiences severe air pollution well above WHO limits and is promoting electric bikes and has targets to cut coal use.
Residents notice the health impacts. Lan Nguyen, a shopowner in Hanoi, said coal is essential for electricity now but worries about her asthmatic son: “I worry for my son’s lungs every day.”
Experts emphasize that while coal may be a short-term remedy for fuel disruptions, accelerating renewables and diversifying energy sources are critical to reduce exposure to future shocks, protect public health and meet long-term climate goals.