Asia turns to coal amid fears of protracted war in the Middle East

Asian countries are restarting coal-fired power plants and increasing their production to bolster energy security.

The moves come amid concerns that the protracted conflict in the Middle East risks long-term disruptions to oil and gas supplies, the Financial Times reported.

The region is the world’s leading importer of liquefied natural gas (LNG), with China, Japan, South Korea and India among the top importers. Many Asian countries are critically dependent on shipping through the Strait of Hormuz in the Persian Gulf, which has been virtually shut down since the US and Israeli strikes on Iran.

Big coal producers such as China and India are tapping their own reserves. Other countries from Bangladesh to South Korea are ramping up coal capacity and cutting gas consumption, despite the environmental risks.

Thailand has also restarted coal-fired power plants and cut fuel subsidies. Since the war, thermal coal has risen 17 percent in price, while gas prices in Asia have jumped more than 60 percent, making coal-fired generation more economically viable.

“Coal doesn’t go through the Strait of Hormuz,” said Jonathan Toebner, an analyst at the Institute for Energy Economics and Financial Analysis.

The fuel is an affordable and widespread source of energy for Asia’s industrial economies, despite recent efforts to curb its use to reduce emissions.

“Coal is already the dominant fuel in Asia’s energy mix, accounting for more than 40 to 50 percent of the region’s energy mix,” said Sam Chua, director of Rystad Energy.

Coal has always been cheaper than gas, he said, but the process of displacing gas has accelerated. The expert cited the example of Bangladesh, where gas supplies for power generation and fertilizer production have been restricted in favor of coal.

South Korea, where President Lee Jae-myung had previously planned to phase out coal by 2040, has lifted an 80% seasonal cap on coal-fired power plants to reduce its reliance on LNG.

Japan, the world’s second-largest importer of liquefied natural gas, still gets a third of its energy from coal. Prime Minister Sanae Takaichi announced that the government would lift a cap on aging coal-fired power plants for a year to “ensure a stable electricity supply.”