Khaberni - The war on Iran has pushed Asian countries to rely on coal to fill a large emerging gap in their liquefied natural gas supplies.
Several Asian countries, from South Korea to Indonesia and Bangladesh, are moving towards increasing reliance on coal as a primary energy source, amidst escalating conflicts that have led to disruptions in gas supplies from one of the world's major exporting regions. Qatar is one of the most affected countries, as it hosts the world's largest liquefied natural gas export facility, which the Asian markets heavily depend on.
In 2025, China and India topped the list of the largest importers of Qatari gas. However, recent strikes have damaged about 17% of its production capacity, coinciding with the near closure of the Strait of Hormuz, making gas transportation extremely difficult. With rising global prices and market turmoil, Asian countries have begun seeking alternatives, leading to an increased reliance on coal as the most available option.
The analyst at "Rystad Energy", Sam Chua, mentioned that coal still dominates the energy mix in Asia, accounting for between 40% and 50% of consumption, and also enjoys a competitive advantage in terms of cost compared to gas. He added that what is currently happening is a noticeable decline in the demand for gas, as a result of prices rising to levels that many buyers cannot afford.
He explained that Bangladesh represents a clear example of this shift, having reduced gas supplies to power stations and fertilizer factories, and substituted them with coal. It is expected that South and Southeast Asia will see a similar trend, as governments are keen to avoid power outages and the resulting political consequences.
The rise in gas prices has directly reflected on the coal market, where futures in Newcastle "the benchmark for the markets of Asia and the Pacific" reached their highest levels since the end of 2024. As a result, coal producers in the region have been pressured to increase supplies.
In Indonesia, the world's largest coal exporter, mining companies were allowed to increase production, reversing previous policies aimed at limiting supply to support prices. South Korea has lifted restrictions on the capacity of coal plants, while Japan's largest power company is considering switching to this source if Middle East disturbances continue. Similarly, the Philippines is seeking to boost its coal imports through negotiations with Indonesia to ensure stable energy supplies.
This shift towards coal, despite being the most polluting, prioritizes economic considerations over environmental goals. These developments also raise questions about the ability of gas, which is less environmentally harmful, to play its role as a transitional stage towards renewable energy.
As the summer approaches, governments' efforts to cope with rising electricity demand are accelerating, as high temperatures increase reliance on air conditioning devices, raising consumption to its peak.
