As War Chokes Natural Gas Supply, Asia Turns Back to Coal

Due to the war's impact on natural gas supplies, several major Asian importers are reverting to coal as an energy source. This shift is occurring across Asia as liquefied natural gas (LNG) supplies have significantly decreased. The reduced LNG availability is challenging its established position as a reliable energy source in the region. This transition back to coal is primarily driven by the need to secure stable energy supplies amidst geopolitical instability and fluctuating natural gas markets. The timing of this shift coincides with increasing concerns about energy security and affordability in Asia.

Asian utilities are increasing coal-fired power generation to reduce costs and ensure energy supply amid rising LNG prices due to the US-Israeli war on Iran. The conflict has halted shipping through the Strait of Hormuz and reduced Qatar's LNG shipments, leading to a surge in Asia spot LNG prices to three-year highs. In response, Bangladesh plans to boost coal power generation and imports in March. Pakistan aims to further increase domestic power generation from solar and coal sources after avoiding similar supply issues following Russia's 2022 Ukraine invasion. The Philippines is ramping up coal-fired power and slashing LNG-fired output, while Vietnam's EVN negotiates coal supply and Thailand boosts its largest coal plant's generation.