Coal Demand Soars in Asia as Clean Energy Plans Stumble

UPDATE: Asia’s coal industry is experiencing a resurgence as energy demands surge, undermining efforts to transition to cleaner energy. Recent reports highlight significant setbacks in Indonesia, India, and China, where coal is regaining traction amid growing power needs.

Indonesia has just canceled the Cirebon-1 Project, a key initiative aimed at reducing coal reliance. Meanwhile, India is reconsidering plans to phase out coal-fired power, potentially expanding its coal capacity to 420 gigawatts by 2047, instead of the previously projected 2035. In China, coal production is on track for another record year, driven by robust demand from the chemicals sector and a steady rollout of renewable energy sources.

This shift towards coal raises urgent concerns about energy security and costs in a region marked by rapid population growth and rising incomes. According to Jom Madan, a principal analyst at Wood Mackenzie Ltd., “It comes down to supply security and cost.” Even as clean energy installations rise, they are not keeping pace with soaring power demands from air conditioning to data centers.

At the recent COP30 Climate Summit, nearly 200 nations avoided explicitly addressing fossil fuel transitions, reflecting a broader trend among developing countries prioritizing economic growth over climate commitments. China, which consumes more than half of the world’s coal, is expected to add 80 gigawatts of new coal capacity by 2025, marking the highest level in a decade.

In Indonesia, the world’s largest thermal coal exporter, coal power capacity has more than doubled over the past decade. Despite ambitions for a renewable energy transition by 2035, President Prabowo Subianto is continuing coal power expansion. The combined policies of Indonesia, India, and China are projected to drive the largest increase in global carbon emissions since the 2015 Paris Agreement.

The region faces significant challenges in moving away from coal, primarily due to its cost-effectiveness and availability. Asia’s fleet of coal plants is relatively young compared to Europe and the US, complicating efforts to retire them early without financial backing. Initiatives like the $20 billion Just Energy Transition Partnership have thus far only attracted $3 billion, as seen in the recent scrapping of the Cirebon-1 project.

In the Philippines, a Singapore-backed proposal for “transition credits” to fund early coal plant shutdowns has yet to gain traction due to concerns over real emissions savings and potential job losses. However, organizations like The Rockefeller Foundation remain committed to closing coal-to-clean transactions by 2026.

Despite the current coal revival, experts caution that the future of coal in Asia is not guaranteed. If India and Indonesia meet their renewable targets, emissions from the power sector could peak by the end of the decade. Lauri Myllyvirta of the Centre for Research on Energy and Clean Air notes, “As renewable energy and storage costs reach record lows, investments in new coal will only get harder to justify.”

Asia’s reliance on coal poses significant risks to both the environment and public sentiment, as fears of power shortages loom large. With the region’s ongoing economic growth, the challenge of transitioning to cleaner energy remains urgent and complex.