Asian nations boost local coal production

Asian economies are increasing coal-fired power generation and sourcing new coal supplies as LNG shipments through the Strait of Hormuz remain disrupted.
The supply shock has significantly reduced LNG imports, driving up thermal coal prices and forcing countries like Bangladesh, Pakistan, and Japan to rely more heavily on coal.
While the shift supports short-term energy security, it risks undermining the net-zero commitments of developing economies across the region.

Asian countries have been increasing their local coal-fired power generation and seeking new coal suppliers, as liquefied natural gas (LNG) shipments into the region remain stuck at the Hormuz chokepoint.

Prior to the eruption of conflict in the Middle East, about one-fifth of the global supply of LNG passed through the Strait of Hormuz, with 83% intended for Asian markets. Since the war began, the narrow waterway has been effectively shut down. This has halted the majority of the shipments that rely on the route, pushing Asian economies towards coal-fired energy and new sources of coal supply.

LNG supply via the Strait came almost entirely from Qatar, which paused its production earlier this month. Based on a two-month-long assumed disruption, the shock is projected to reduce regional LNG imports from 12.4 million tonnes to 5 million tonnes, leaving economies reliant on the supply scrambling. Since the disruption, the Asian benchmark for thermal coal has risen by 13.2%, reflecting a sharp, short-term increase in fuel costs for power generation.

Across the continent, Bangladesh, Pakistan, the Philippines, and Thailand are responding by ramping up the power generation of their coal power plants. Japan is maintaining the high utilisation rates of its coal plants, South Korea is planning to lift its caps on coal-fired output, and Vietnam is negotiating new supply contracts for coal.

South Asia

For Bangladesh, the disruption could lead to an 1,800 megawatts (MW) of gas shortfall. Of the country’s 12,454 MW total energy generation capacity, over a third came from gas-fired plants. In response to the newfound deficit, “Power generation from coal-fired plants will soon reach 5000 MW. We have coal reserves sufficient for one month to run coal plants at full capacity,” said Rezaul Karim, Chair of the Bangladesh Power Development Board (BPDB).

Historically having struggled with electricity shortages, Pakistan has been steadily reverting to domestic production for a while now, with an aim to rely on indigenous energy resources at over 96% by 2034. Progress towards this target has been driven largely by solar initiatives, alongside coal-fired plants financed through deals with Beijing.

To the South-East

Several coal-fired units at Mae Moh, Thailand’s largest power plant, were set to be decommissioned, as communities residing near the plant reported health difficulties. However, this decommissioning was postponed in October last year. According to the Electricity Generating Authority of Thailand (EGAT), recent events have triggered an increased reliance on Mae Moh.

There are approximately 25,432 and 32,200 pollution-related deaths in Thailand annually. The decision to extend the lifecycle of the plant came in 2025.

Meanwhile, Vietnam is reviewing its coal security. The country imported a record 65.43 million tonnes of coal in 2025, marking its position as an import-reliant country when it comes to energy.

South Korea’s ruling Democratic Party also announced on Monday, 16 March, that it will lift limits on coal-fired power generation, as well as increase nuclear power plant utilisation.

What does this mean for emissions?

Many South-East Asian nations have set goals to reach net-zero emissions, in line with the Paris Agreement. Brunei Darussalam, Cambodia, Laos, Malaysia, Singapore, Vietnam, and Thailand have set a target date of 2050, and Indonesia of 2060.

In spite of these commitments expressed by the Association of Southeast Asian Nations (ASEAN), even before the war in the Middle East, coal-fired power plants accounted for over 40% of power generation in the region.

Recent developments are set to reshape the future of greenhouse gas emissions from the continent. Coal is widely recognised as the ‘dirtiest’ fossil fuel when combusted, with LNG getting promoted as a ‘bridge’ fuel for the energy transition. However, the debate of ‘which is worse’ is shelved under the current circumstances, in favour of meeting the immediate energy security needs of emerging economies in Asia.

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The switch to renewable energy is also likely to be ‘accelerated’ by the current energy bottleneck. Renewable power investment in South-East Asia has grown over the past few years; however, in 2023, private capital only accounted for 60% renewable energy investment in the region, compared with the 90% in developed economies.

According to a report by Imperial Business School and the International Energy Agency, investment in renewable power is burdened by inadequate policy and investment frameworks, regulatory barriers, incumbent interests, and inflexible commercial arrangements. To meet sustainability demands, the region needs to invest at least $200 billion by 2030, three-quarters of which should be dedicated to clean energy.