Southeast Asia faces a tough energy reality as governments promote clean energy and lower emissions, yet coal use continues to rise faster here than anywhere else in the world. As the region’s population of more than 600 million grows and economies expand, electricity demand keeps climbing, and many countries still turn to coal because it remains cheap, widely available, and deeply embedded in existing power systems.
Consequently, coal consumption is set to increase by more than 4% each year through the end of the decade, with Indonesia and Vietnam driving most of this growth. Meanwhile, global demand is beginning to level off as other major economies shift toward cleaner energy, creating a widening gap that raises serious concerns about whether Southeast Asia can meet its climate commitments while securing enough power for growth.
Coal use continues to dominate Southeast Asia’s power supply
Coal currently supplies just over one-third of Southeast Asia’s electricity. That makes the region the third-largest consumer in the world, after China and India. Unlike other regions that are slowly moving away from coal, Southeast Asia is moving in the opposite direction.
Two main reasons explain this pattern. First is cost. Coal remains one of the cheapest ways to produce large amounts of electricity. Many countries fear that switching too fast could raise power prices for homes and businesses. Second is energy security. Coal plants provide steady power day and night, unlike solar or wind, which depend on weather conditions.
Because of this, governments worry that cutting coal too quickly could lead to blackouts or unstable power supplies. Large investments have already been made in coal-fired power plants, mines, and ports. Shutting them down early would mean losing billions of dollars.
Public opinion also reflects these concerns. Surveys across the region show that many people prefer to delay giving up coal until 2030 or even 2040. For many families, affordable and reliable electricity feels more urgent than climate goals, especially as living costs rise.
At the same time, coal causes serious environmental damage. It releases more heat-trapping gases than oil or gas when burned. It also produces thick air pollution that often covers major cities, leading to health problems and reduced quality of life. Even so, coal remains deeply rooted in Southeast Asia’s energy systems.
Indonesia’s struggle highlights the weight of coal dependence
Indonesia plays a critical role in the region’s energy story. It is the world’s largest coal exporter and Southeast Asia’s biggest carbon emitter. Because of its size and influence, Indonesia’s choices shape the direction of the entire region.
Despite earlier commitments to move away from coal, Indonesia has stepped back from a full phase-out. A major plan to retire a coal power plant in West Java collapsed recently, showing how difficult it has become to turn promises into action.
The country’s latest climate pledge no longer includes a goal to end coal use by 2040. Climate watchdogs have rated this pledge as far from sufficient when measured against global climate targets. At the same time, discussions are underway about allowing new power plants in the future.
This continued reliance on coal carries heavy costs. Indonesia already faces severe climate impacts. Floods and landslides linked to extreme weather have killed hundreds of people in a single year. Air pollution, especially in large cities, is also expected to worsen if coal use continues at current levels.
Indonesia’s position sends a strong signal to other developing nations. If the region’s largest economy struggles to reduce coal use, others may feel less pressure to change.
Vietnam’s rapid growth deepens the energy dilemma
Vietnam’s rapid economic growth is deepening its energy dilemma. While the country has expanded solar power at an exceptional pace over the past decade, coal use continues to rise as electricity demand accelerates.
Vietnam imported a record volume of coal in 2025, highlighting the need for stable, round-the-clock power after severe drought conditions in 2023 reduced hydropower output and triggered costly power shortages.
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At the same time, efforts to sustain strong economic growth through 2030 are pushing electricity demand toward levels comparable with major industrial economies.
To support cleaner energy, Vietnam has introduced policies that allow large companies to purchase power directly from wind and solar producers, a move that could significantly lift the share of renewables in the energy mix.
However, this progress is constrained by an overstretched power grid weakened by years of underinvestment. Transmission systems remain outdated and unevenly developed, requiring tens of billions of dollars in upgrades by 2030, while only limited funding has been secured so far.
Meanwhile, weakening international support for energy transitions has slowed project rollouts, reinforcing coal’s role even as renewable capacity continues to grow.
