Increase of cheaper coal in Southeast Asia foils global green push

Southeast Asian countries are turning to low-cost coal to satisfy their surging electricity demand as the West shies away from the fossil fuel under pressure from green-minded investors. Indonesia is on track for the third-largest coal-fired power capacity of new plants under development, behind China and India. Vietnam follows in fourth place, while the Philippines and Thailand will be home to multiple new coal power stations.

Electricity demand in Southeast Asia is expected to grow 70% from 2017 to 2030, the International Energy Agency forecasts, with coal power generation there projected to climb 80% during the same period. This would translate to coal accounting for 40% of the total power output for the Asia-Pacific region, excluding China and Japan.

Coal power generation — which emits twice as much carbon dioxide per energy gained as liquefied natural gas — is projected to decline 30% to 50% in the U.S. and Europe during the same period as conversion to renewables accelerates in those markets. Yet with the sharp increase in Asia, the world’s coal-fired power output is expected to edge 2% higher.

The price of thermal coal has trended lower since last summer. The shift away from coal in industrialized nations is expected to bring prices down further in the longer term, potentially reinforcing emerging economies’ reliance.

Southeast Asia has also made inroads with renewables. Solar power is being adopted in countries with suitable conditions, such as Indonesia and Thailand. And a string of wind power projects are planned in Vietnam. The region’s electricity generated from renewable sources is expected to rise 140 per cent from 2017 to 2030, according to one estimate.

But meeting the growing electricity demand solely with renewables will be difficult. Furthermore, Thailand faces the prospect of tapping out of natural gas reserves while nuclear power is growing pricier as safety costs rise.

Meanwhile, investors in Europe and the U.S. are increasingly using so-called ESG criteria, taking environmental, social and corporate governance issues into account. More than 1,000 investors, representing $8 trillion in assets under management, have pledged to divest from companies involved with fossil fuels. Facing growing pressure from these investors, the major Anglo-Australian miner Rio Tinto exited the coal business last August. Germany has decided on a plan to phase out coal power generation by 2038.

Shekhar Ghosh is consulting editor, He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at

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