March 2022
Despite the global focus on phasing down unabated coal, thermal coal remains a reliable and abundant source of energy for Southeast and South Asian countries.

Many developing nations in the region continue to be tied to coal for electric power and industrial output. While thermal coal use has come under severe scrutiny over its highly polluting nature, the industry has continued investing in new coal-fired generation plants. The global capacity of coal power plants under construction reached 176.9GW in 2021. Additionally, a further 68GW has already been permitted.  

This increased coal power generation capacity is expected to come principally from Asia, with the developed world relying on transitional and renewable sources of energy to supply its rising electricity demand. Although China accounts for most of Asia’s participation in the demand market, countries such as India, Vietnam and Indonesia will also significantly increase its coal-fired power. AME expects global coal generated electricity to peak by 2030 with 12,170 bn kWh, rising from 11,044bn kWh in 2021, corresponding with Asia’s peak.



In 2021, thermal coal imports from nations in Southeast and South Asia reported about 299Mt, with India accounting for 50% of this amount. Malaysia’s imports increased to 34Mt in 2021, exceeding pre-pandemic volume. Vietnam's imports stayed at 35.7Mt in 2021, down by about 24% from the actual achievement in 2020. However, Vietnam is expected to significantly increase its thermal coal imports in 2022 to around 52.5Mt.

The region is anticipated to raise its demand in 2025 by 34.7% compared to 2021, which represents an over 100Mt increment. Similarly, AME forecasts the raise in demand will reach to 477Mt by the end of the decade and will be supported across all main import players. 

The main issues discussed at COP26 summit involved climate change mitigation, reduction in greenhouse gases emissions, climate financing for developing countries, and phasing out of coal. With coal power plants representing significant health and environmental hazard, 40 countries committed to phase out their coal power plants at Glasgow. However, the three leading economies with the greatest number of operational coal-fired plants that year did not agree to the terms.



The Black Sheep

India has recently committed to achieving net-zero emissions by 2070. The authorities stated the country will source 50% of energy from renewable sources and increase renewable capacity of 500GW by 2030. India expects to cut emissions intensity by around 35% of GDP from 2005 levels by 2030. The country has reportedly achieved a 24% reduction in emission intensity and has announced a green hydrogen mission to cut methane emissions.

However, as of January 2022, India holds the greatest number of coal-fired power stations in the region, with around 285 operational plants. Coming second only to China, India had the second largest coal use carbon dioxide emissions in 2020 globally, overtaking the US. Additionally, India has a pipeline of 60GW of under-construction and planned coal projects, which are expected to come online within the next five years.

India has committed about US$133bn to the energy sector since early 2020 at the beginning of the Covid-19 pandemic. More than 50% of this amount is directed to other energy, which is anticipated to be mainly fossil fuel funding.


Indonesia’s Path to Net-Zero

Although the role of coal in Indonesia’s energy mix remains substantial until 2050, the country’s long-term strategy for low carbon highlights greenhouse emissions will be peaking in 2030. The low-carbon scenario envisages coal’s share in the energy mix dropping to a minimum of 30% by 2025 and a minimum of 25% by 2050. On the other hand, gas will account for a minimum of 22% by 2025 and 24% by 2050.

Indonesia is the world's largest thermal coal exporter and a major carbon emitter. Although the country sees hydropower and biofuels supporting the power and transport sectors, Indonesia’s mitigation scenarios in the energy industry contemplate the implementation of clean coal technology in power plants, such as supercritical and ultra-supercritical coal-fired power plants, and rely on the use of carbon capture and storage technology.

Indonesia counts with around 220 coal-fired units and has another 56 units under construction. The government has granted permits to six coal-fired power plants with a combined capacity of 2,020MW, expected to start operations between 2025 and 2027.


Vietnam’s Financing Channels Shrink

Vietnam’s energy approach takes an unexpected turn with the announcement of its carbon emissions net-zero target by 2050 in the past COP26 climate conference. The ASEAN country is looking to decrease the share of coal in its energy mix as securing global funding for new projects become fiercer.

In the latest power development plan draft, the Vietnamese government is expecting to reduce coal-fired power generation by 2030 to 39.7GW, down from the 46.4GW targeted in the previous draft. Additionally, power generation capacity from new imported LNG will be almost halved to 22.4GW from 40.95GW although the conversion of coal-fired power stations to LNG and capacity from domestic natural gas remained untouched at 14.78GW by 2030.

With Vietnam signing the Global Coal to Clean Power Transition statement, Vietnam will struggle to rapidly scale up renewables and stop the construction of new unabated coal power plants as they have invested strongly in coal over the last ten years. Their pre-COP26 power development plan relied on foreign investment to almost double the country’s power capacity by 2030.

South Korea, China and Japan have been the major investors in Vietnam’s coal sector. However, they have now pull away from overseas financing in the coal sector. According to the plan draft, Vietnam would need roughly US$44bn to expand its coal fleet over the next decade. In a try to adapt to the new global shift, the country aims to have natural gas, solar and wind energy accounting for about 75% of the total installed generating capacity.