Asian nations are increasing coal use after disruptions to oil and gas shipments linked to the war involving Iran exposed the region’s heavy reliance on imports that transit the Strait of Hormuz, a key chokepoint handling roughly a fifth of global oil and natural gas flows.
LNG—liquefied natural gas—is natural gas cooled to liquid for easier shipping and storage. Marketed as a cleaner “bridge” fuel between oil and coal, LNG still emits greenhouse gases, including methane. The United States and other exporters have pushed more supplies to Asia, but the recent conflict has tightened flows, prompting several countries to rely more heavily on coal to fill gaps.
How countries are responding
– India: Facing a hot summer and rising power demand, India is burning more coal to meet peak needs. Officials report only a few months’ worth of coal reserves in some stockpiles, and recent LPG shipments that passed through the Strait of Hormuz are likely to be diverted to industry rather than power generation.
– South Korea: The government has eased limits on coal-fired generation when LNG is scarce and air pollution is relatively low, even as Seoul maintains long-term pledges to retire most coal plants by 2040 and cut emissions sharply by 2035.
– Indonesia: The world’s largest coal exporter is prioritizing domestic consumption over shipments abroad, a move that could tighten regional supplies and push up global coal prices.
– Southeast Asia: Thailand, the Philippines and Vietnam are increasing coal-fired generation to secure power, while Vietnam considers sourcing coal from the U.S. and Laos amid uncertainty about Indonesian supplies.
Why coal is the fallback
Coal is a common emergency option because it is plentiful across much of Asia and can be fired when renewable output or gas supplies fall short. China, the largest coal consumer and producer, has added record coal-fired capacity since 2021 to reinforce energy security and retains coal in its national energy mix alongside expanding renewables. Energy analysts caution that using coal as a shock absorber can become self-reinforcing, making long-term energy security problems harder to solve.
Market and policy impacts
The region-wide shift is already affecting prices. The benchmark Newcastle coal price used in Asia has climbed roughly 13% since the conflict began. Because coal trade is set on global markets, import-dependent countries are vulnerable to price swings even if supplies appear available. Higher coal costs and aging plants have raised generation costs in some markets—for example, Indonesia’s coal power costs were reported to be substantially higher in 2024 than in 2020, and subsidies to the national utility have grown.
Some industry voices argue that fuel diversity prevents worse outages, while analysts warn that leaning on coal risks reproducing the very insecurities that triggered the shift—such as using coal to offset hydropower shortfalls during droughts.
Long-term transition at risk
Experts say the turn back to coal could slow or undermine plans to retire coal plants and scale up clean energy. Indonesia, which had aimed to cut coal dependence, has struggled to retire plants early amid financing and cost challenges. South Korea has committed large sums overseas to fossil projects and has trailed peers in renewables deployment; temporary relaxations on coal could set enduring precedents.
For nations with limited domestic coal resources, such as Thailand where coal represents under 10% of the energy mix, the immediate impact on electricity prices may be limited. But for the region overall, expanded coal use threatens to increase greenhouse gas emissions and delay decarbonization targets.
Public health consequences
Burning more coal worsens air pollution by increasing fine particulate matter (PM2.5), which penetrates lungs and the bloodstream and raises risks of heart disease, stroke, lung cancer and chronic respiratory illness. Seasonal agricultural burning already compounds the problem across parts of Asia.
Studies find that large populations—India’s 1.4 billion people, for example—experience PM2.5 levels above World Health Organization guidelines. Residents in cities such as Hanoi report concerns about worsening air quality and respiratory health as coal use climbs.
What analysts recommend
Many energy experts stress that while coal can be a short-term remedy for fuel disruptions, the durable solution is faster deployment of renewables, greater energy efficiency and broader fuel-source diversification to reduce exposure to geopolitical shocks, protect public health and meet climate goals. Policymakers face the challenge of securing reliable power now without locking in emissions-intensive infrastructure that will make future transitions more costly and difficult.