Southeast Asia’s Rising Coal Demand Hampers Climate Change Efforts

Southeast Asia’s Growing Coal Demand Challenges Climate Efforts

In Southeast Asia, the rapid increase in coal consumption is posing significant obstacles to global efforts aimed at reducing carbon emissions. As the region experiences economic growth and rising electricity needs, the demand for coal is forecasted to grow over 4% annually until 2030, according to the International Energy Agency (IEA).

Indonesia, with a population of approximately 285 million, is expected to lead this surge, followed by Vietnam. This trend casts doubt on the $15.5 billion Just Energy Transition Partnerships (JETP) that both countries signed in 2022 to promote renewable energy. The situation is compounded by previous U.S. policy reversals under President Donald Trump that aimed to address climate change.

The region is at a critical juncture, facing severe impacts from climate change, including extreme weather events. Katherine Hasan from the Centre for Research on Energy and Clean Air notes, “We’re standing on two opposite grounds — wanting to build clean energy, but not letting go entirely of coal.”

Coal, which contributes significantly more to global warming than other fossil fuels, is responsible for much of the toxic haze in Southeast Asian cities. Despite global coal demand stabilizing as nations like South Korea reduce their consumption, Southeast Asia’s reliance on coal persists due to cost and energy security concerns. Paul Baruya of FutureCoal points out, “Nobody burns coal for fun. Coal still underpins a level of energy security that the region needs.”

A survey conducted by Singapore’s ISEAS–Yusof Ishak Institute highlights a rising public inclination to delay coal phase-out until 2030 or 2040, prioritizing power supply reliability over climate concerns. This sentiment is echoed by regional governments, including Indonesia’s climate envoy Hashim Djojohadikusumo, who stated the nation is committed to a phase-down rather than a phase-out of fossil fuels.

Indonesia, the world’s largest coal exporter and a key carbon emitter in Southeast Asia, plays a crucial role in the region’s energy transition. As Dinita Setyawati from Ember notes, Indonesia’s hesitation to shift away from coal sets a precedent for other developing countries.

Vietnam, meanwhile, has made significant strides in solar energy capacity but continues to increase its coal imports, reaching a record high in 2025. This move is partly a response to power shortages exacerbated by a drought in 2023, which resulted in substantial economic losses.

Despite Vietnam’s ambitious plans to expand renewable energy, including initiatives allowing major corporations like LEGO and Samsung to directly purchase renewable energy, the country’s power grid struggles with underinvestment. The government estimates $18 billion is needed by 2030 to upgrade the infrastructure, but progress is slow.

The anticipated momentum for JETP projects in Indonesia and Vietnam is unlikely to materialize soon, as noted by Putra Adhiguna from the Energy Shift Institute. The premature termination of a coal plant retirement in Indonesia and the 2025 U.S. withdrawal from JETP have tempered expectations. Adhiguna comments, “JETP was basically a brute force attempt to do a transition. Governments were trying to bulldoze through … But fundamentally there are things that take a bit of time and political commitment to happen.”