Asia boosts coal use as Iran war squeezes global LNG supplies
[March 24, 2026] By
ANTON L. DELGADO and ANIRUDDHA GHOSAL
BANGKOK (AP) — Asian countries are turning to coal as the Iran war
disrupts oil and gas shipments.
The continent is exposed because it relies on imported fuel, much of it
passing through the Strait of Hormuz — a chokepoint for about a fifth of
global oil and natural gas trade.
LNG is a natural gas cooled to liquid form for easy storage and
transport. It has been promoted as a bridge fuel in the shift from oil
and coal to cleaner energy sources. The U.S. has sought to expand
exports of LNG across Asia. It burns cleaner than coal, but still emits
climate change -causing gases, especially methane.
The war has countries shifting back to coal to cover LNG shortfalls.
India is burning more coal to meet higher summer demand. South Korea has
lifted caps on electricity from coal. Indonesia is prioritizing using
its domestic supply. Thailand, the Philippines and Vietnam are boosting
coal-fired power.
Burning more coal risks worsening smog in major cities, slowing the
transition to renewable energy and increasing the region’s
planet-warming emissions.
Coal is a short-term fix, experts say, while renewables are the
long-term solution. Continued reliance on coal exposes Asia to future
shocks, said Julia Skorupska of the global coalition Powering Past Coal
Alliance.
“This kind of crisis is a real sort of warning,” she said.
Rising demand drives Asia back to coal
Coal is integral to Asia’s emergency energy plans. Its wide availability
in Asia makes it the default backup when renewables or gas fall short,
said Sandeep Pai, an energy expert at Duke University.
China, the top coal consumer and producer, has built record coal power
generating capacity since 2021 to improve its energy security. Its
national policy calls for continued use of coal, even as its vast clean
energy capacity offers some relief.
India, the second-largest coal consumer and producer, is bracing for a
scorching summer and will rely more on coal to meet peak demand of 270
gigawatts — nearly twice the electricity Spain can produce. It has
enough coal for about three months, with some stockpiles earmarked for
small businesses.
Two Indian liquefied petroleum gas shipments totaling more than 92,700
tons recently made it through the Strait of Hormuz. Such imports will
likely be directed to industries such as fertilizer production rather
than power generation, Pai said.
Coal advocates such as Michelle Manook of FutureCoal say the shortfall
would be worse without coal and future use should be strategic. “The
lesson has to be diversity,” she said.
Pauline Heinrichs, who studies climate and energy at King’s College
London, points to China's boosting use of coal to offset hydropower
shortfalls due to droughts, worsening emissions that contribute to
climate change.
“You learn to respond to shocks generated by certain insecurities by
reproducing the insecurity,” she said.
Indonesia keeps coal for its own use
Adding to the vulnerability for import-dependent countries, Indonesia,
the world’s largest exporter, is prioritizing domestic use over exports.
That could tighten regional supplies and push global prices higher, said
Putra Adhiguna of the Energy Shift Institute.
Coal prices are set globally, leaving importers exposed to swings and
disruptions. More coal does not guarantee cheap or reliable power, said
Russell Marsh of E3G.
Vietnam is already facing that volatility. It increased imports after
weather-related shortages, but supplies from Indonesia are now uncertain
so it's considering importing coal from the U.S. and Laos, according to
energy market tracker Argus Media.
The main price for coal used in Asia, called Newcastle coal from
Australia, has risen 13% since the war began.
Higher prices will also hurt Southeast Asia, the world's third largest
coal-consuming region, including the Vietnam, Philippines and Thailand,
which are boosting coal power.
[to top of second column] |
A laborer smiles as she takes a break from loading coal into a truck
in Dhanbad, an eastern Indian city in Jharkhand state, on Sept. 24,
2021. (AP Photo/Altaf Qadri, File)
 Relying on coal now could
backfire
More coal use now will slow and possibly undermine long-term efforts
to phase out coal-fired power.
Indonesia was already struggling to meet targets to retire coal
plants early, with financing delays even before the Iran war.
Coal power in Indonesia was 48% more expensive in 2024 than in 2020
due to aging plants and higher costs, according to the U.S.-based
Institute for Energy Economics and Financial Analysis or IEEFA.
Subsidies to the national utility rose 24% to $11 billion, about 5%
of the national budget.
Jakarta has promoted use of LNG to ease a shift from coal. But the
renewed coal use “sends a signal” that switching to gas “is not as
easy as it sounds,” Adhiguna said.
South Korea has pledged to retire most coal plants by 2040 and halve
its emissions by 2035. But it is allowing more use of coal when air
pollution is low and LNG is in short supply.
In 2023, South Korea needed a major renewable expansion — about 8
gigawatts of new wind annually — to meet net-zero goals, Agora
Energiewende said. Growth has been slow, with renewables supplying
just 10% of electricity in 2024, versus a global average of 32%,
according to IEEFA.
Over the past 11 years, South Korea has committed $127 billion to
fossil fuels. That's 13 times more than it spent on renewables, 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.
South Korea still plans to phase out use of coal, but the recent
moves could outlast the crisis, Kim said. “The concern is not just
the decision itself. It is the precedent it sets.”
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, said Jitsai Santaputra of The Lantau Group.
Domestic coal makes up less than 10% of the Thai energy mix.
Coal brings dirtier air
Burning coal produces fine particles that lodge deep in the lungs
and bloodstream, raising the risk of heart disease, stroke, lung
cancer and chronic respiratory disease, according to the World
Health Organization, or WHO.
It's a problem across Asia, especially during seasons when farmers
are burning their fields.
All 1.4 billion Indians breathe air with concentrations of these
particles the WHO considers unsafe, according to a report by the
Energy Policy Institute of Chicago. The government has now paused
air-quality rules, allowing restaurants to burn coal to ease a gas
shortage.
Vietnam also faces severe air pollution, with PM2.5 far above WHO
limits. It is promoting electric bikes and has targets to cut coal
use.
Lan Nguyen, a shopowner in Hanoi, said she knows coal is essential
for electricity right now, but worries for her asthmatic son’s
health. “I worry for my son’s lungs every day,” she said.
___
Ghosal reported from Hanoi, Vietnam. Associated Press writer Sheikh
Saaliq in New Delhi contributed to this report.
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