Asian Nations Return to Coal Power as Iran Conflict Disrupts Gas Supplies

Countries across Asia are ramping up coal power generation as ongoing conflict in Iran threatens liquefied natural gas shipments through critical shipping routes. The shift back to coal threatens environmental progress and could worsen air quality in major cities across the region.

BANGKOK (AP) — Nations throughout Asia are reverting to coal-fired power generation as military conflict in Iran threatens the flow of oil and natural gas shipments through vital maritime corridors.

Asian nations face particular vulnerability due to their dependence on imported energy resources, with significant volumes transported through the Strait of Hormuz — a critical passage handling approximately one-fifth of worldwide oil and natural gas commerce.

Liquefied natural gas represents natural gas that has been cooled to liquid state for simplified storage and transportation. Energy officials have championed LNG as a transitional fuel during the move away from oil and coal toward cleaner power sources. American officials have worked to expand LNG exports throughout Asian markets. While LNG burns more cleanly than coal, it continues to release greenhouse gases that contribute to climate change, particularly methane.

The ongoing conflict has prompted nations to return to coal power to compensate for LNG supply gaps. India is increasing coal consumption to satisfy elevated summer electricity demands. South Korea has removed restrictions on coal-generated electricity. Indonesia is emphasizing the use of its domestic coal reserves. Thailand, the Philippines and Vietnam are expanding their coal-powered electricity generation.

Increased coal consumption threatens to intensify smog conditions in metropolitan areas, delay the transition toward renewable energy sources and boost the region’s greenhouse gas emissions.

Energy specialists indicate that coal serves as a temporary solution, while renewable energy represents the permanent answer. Ongoing dependence on coal leaves Asia vulnerable to future supply disruptions, according to Julia Skorupska from the international Powering Past Coal Alliance.

“This kind of crisis is a real sort of warning,” she said.

Coal remains central to Asia’s emergency energy strategies. The fuel’s widespread availability throughout Asia positions it as the standard backup option when renewable sources or natural gas prove insufficient, explained Sandeep Pai, an energy specialist at Duke University.

China, leading both coal consumption and production globally, has constructed unprecedented coal power generation facilities since 2021 to strengthen its energy independence. National policy continues to support coal utilization, despite the country’s extensive clean energy infrastructure providing some alternatives.

India, ranking second in coal consumption and production worldwide, is preparing for an intense summer season and will increase coal dependency to satisfy peak electricity demand of 270 gigawatts — almost double Spain’s total electricity generation capacity. The country maintains approximately three months’ worth of coal reserves, with certain stockpiles designated for small enterprises.

Two recent Indian liquefied petroleum gas shipments exceeding 92,700 tons successfully navigated through the Strait of Hormuz. These imports will probably supply industries like fertilizer manufacturing rather than electricity production, Pai noted.

Coal supporters including Michelle Manook from FutureCoal argue the supply shortage would be more severe without coal availability and future utilization should be calculated. “The lesson has to be diversity,” she said.

Pauline Heinrichs, who researches climate and energy issues at King’s College London, highlights China’s increased coal usage to compensate for hydroelectric power shortages caused by drought conditions, worsening emissions that fuel climate change.

“You learn to respond to shocks generated by certain insecurities by reproducing the insecurity,” she said.

Compounding the challenge for import-dependent nations, Indonesia, the world’s top exporter, is prioritizing domestic consumption over international sales. This development could restrict regional availability and drive global prices upward, said Putra Adhiguna from the Energy Shift Institute.

Coal pricing follows global markets, exposing importing countries to price fluctuations and supply interruptions. Increased coal usage does not ensure affordable or dependable electricity, noted Russell Marsh from E3G.

Vietnam already confronts this price instability. The country boosted imports following weather-related supply shortages, but Indonesian supplies now face uncertainty, prompting consideration of coal imports from the United States and Laos, according to energy market analyst Argus Media.

The benchmark price for coal utilized in Asia, known as Newcastle coal from Australia, has increased 13% since the conflict started.

Rising prices will also impact Southeast Asia, the world’s third-largest coal-consuming region, including Vietnam, the Philippines and Thailand, which are increasing coal power generation.

Current increases in coal usage will delay and potentially undermine long-term initiatives to eliminate coal-fired electricity.

Indonesia was already experiencing difficulties meeting objectives to decommission coal facilities ahead of schedule, with financing obstacles predating the Iran conflict.

Coal power in Indonesia cost 48% more in 2024 compared to 2020 due to deteriorating facilities and increased expenses, according to the U.S.-based Institute for Energy Economics and Financial Analysis or IEEFA. Government subsidies to the national utility increased 24% to $11 billion, representing approximately 5% of the national budget.

Jakarta has encouraged LNG adoption to facilitate a transition away from coal. However, the renewed coal dependence “sends a signal” that converting to natural gas “is not as easy as it sounds,” Adhiguna explained.

South Korea has committed to decommissioning most coal facilities by 2040 and reducing emissions by half by 2035. Nevertheless, the country is permitting increased coal usage during periods of low air pollution and LNG shortages.

In 2023, South Korea required substantial renewable energy expansion — approximately 8 gigawatts of new wind capacity annually — to achieve carbon neutrality objectives, Agora Energiewende reported. Progress has been limited, with renewable sources providing only 10% of electricity in 2024, compared to a global average of 32%, according to IEEFA.

During the past 11 years, South Korea has allocated $127 billion to fossil fuel projects. This amount exceeds renewable energy spending by 13 times, with 60% of export financing supporting LNG and $120.1 billion spent on fuel imports in 2024 alone, said Joojin Kim from Solutions for Our Climate.

South Korea maintains plans to eliminate coal usage, but recent policy changes could extend beyond the current crisis, Kim warned. “The concern is not just the decision itself. It is the precedent it sets.”

For nations with limited coal resources, such as Thailand, the effect on electricity costs would be minor, since coal represents too small a portion of generating capacity, explained Jitsai Santaputra from The Lantau Group. Domestic coal comprises less than 10% of Thailand’s energy portfolio.

Coal combustion creates fine particles that penetrate deeply into lungs and enter the bloodstream, increasing risks of heart disease, stroke, lung cancer and chronic respiratory conditions, according to the World Health Organization, or WHO.

This represents a widespread problem throughout Asia, particularly during seasons when agricultural burning occurs.

All 1.4 billion Indians breathe air containing particle concentrations the WHO considers dangerous, according to research by the Energy Policy Institute of Chicago. The government has suspended air-quality regulations, permitting restaurants to burn coal to address natural gas shortages.

Vietnam also experiences serious air pollution, with PM2.5 levels significantly exceeding WHO guidelines. The country is encouraging electric bicycle adoption and has established goals to reduce coal consumption.

Lan Nguyen, a shop owner in Hanoi, said she understands coal remains necessary for electricity generation currently, but expresses concern for her asthmatic son’s health. “I worry for my son’s lungs every day,” she said.