Energy shocks drive higher coal use in region

SOUTHEAST ASIA is leaning more heavily on coal-fired power generation amid global oil shocks, with countries such as the Philippines seeing increased reliance, according to international research group Zero Carbon Analytics (ZCA).

In its latest analysis, ZCA said the surge in oil and gas prices following the outbreak of the Iran war in late February has prompted some Southeast Asian countries to shift from gas to coal for power generation.

“For energy-importing countries in Southeast Asia, the current oil and gas crisis has led to consumer curtailment and a scramble for affordable resources,” according to a report authored by Amy Kong, ZCA’s oil and gas researcher.

Coal has long dominated the Philippines’ power generation mix. However, the country has been gradually shifting away from fossil fuels by expanding renewable energy capacity to reduce exposure to volatile global prices and cut carbon emissions.

Despite this transition, ZCA said countries such as the Philippines and Thailand have increased their use of coal for power generation.

The group noted, however, that most gas-fired power plants cannot easily switch to coal, limiting the scale and cost savings of any shift from liquefied natural gas to coal. It added that such switching has also put upward pressure on coal prices.

“This demonstrates that coal is not insulated from geopolitical shocks: short-term switching pushes up demand, which in turn pushes up prices,” it said.

ZCA said renewable energy sources are less exposed to price swings in coal, oil, and gas markets, as they do not require ongoing fuel inputs.

“Only renewables are immune to such immediate crises, as once installed, they do not require a constant supply of fuel to generate electricity,” it said.

The Iran war marks Southeast Asia’s second major energy price shock in five years, highlighting the risks for countries that rely heavily on fossil fuel imports, the group said.

ZCA said scaling up renewable energy and expanding regional power trading could offer a more secure long-term approach to energy security.

“For energy-importing ASEAN countries, shifting dependence from one import to another is unlikely to enhance long-term energy security,” it said. “However, most countries have sufficient wind and solar resources to support secure, domestic, renewable-based energy systems.”

The group added that Southeast Asia’s wind and solar resources offer significant growth potential, noting that less than 1% of this capacity has been developed. — Sheldeen Joy Talavera