Southeast Asia’s coal appetite is growing more quickly than the region’s shift toward cleaner power, undermining efforts to cut emissions linked to global warming, the International Energy Agency reported. The IEA said the trend is being driven by rising electricity demand across a region of more than 600 million people, as economies expand.
The challenge is playing out most visibly in Indonesia and Vietnam, which signed deals worth $15.5 billion in 2022 under Just Energy Transition Partnerships meant to help finance renewable-energy transitions. In the latest assessment, questions are mounting about whether those transitions can keep momentum as both governments continue to look to coal for reliability and affordability—an issue also complicated by political moves in Washington, including steps under President Donald Trump to reverse policies aimed at addressing climate change.
Katherine Hasan, an analyst with the Centre for Research on Energy and Clean Air, described the dilemma as a tension between building clean energy and still holding on to coal, saying, “We’re standing on two opposite grounds — wanting to build clean energy, but not letting go entirely of coal.” The IEA has warned that regional coal use remains sticky: coal supplies just over a third of Southeast Asia’s electricity, making the region the third-largest coal-consuming area in the world after India and China.
Coal also carries health and environmental consequences beyond carbon emissions. The AP report noted that coal emits more planet-heating emissions than other fossil fuels such as oil and gas when burned, and that pollution from coal contributes to toxic haze that can blanket many Southeast Asian cities. The report said that while global coal demand is expected to plateau as alternatives expand and major buyers such as South Korea cut back, Southeast Asia is heading in the opposite direction, with cost and energy security identified as key drivers.
Paul Baruya of FutureCoal, a group backed by the fossil fuel industry formerly known as the World Coal Association, said the region’s policy debate often comes back to reliability and infrastructure costs, telling AP, “Nobody burns coal for fun.” Baruya added that coal “still underpins a level of energy security that the region needs,” and argued that coal cutbacks would mean writing off billions of dollars tied to fossil-fuel infrastructure such as power plants and mines.
A survey described in the report from Singapore’s ISEAS–Yusof Ishak Institute found a growing public preference for delaying the end of coal until 2030 or even 2040, with concerns about adequate power supplies and costs countering worries about climate change. The report said governments in the region have echoed that reasoning. Hashim Djojohadikusumo, brother to Indonesian President Prabowo Subianto and Indonesia’s special climate envoy, said, “What is important is that our government is firm in its stance that there will be no phase-out of fossil fuels.” He added that Indonesia has “rejected” a phase-out and is instead “sticking with a phase-down,” saying “Indonesia’s economy, especially its industry and electricity sector, will continue to rely on fossil fuels.”
Indonesia’s position is also influenced by how difficult it has been to retire coal capacity. The report said a years-long effort to retire a coal plant in West Java fell through last month, illustrating the country’s struggle to move beyond coal. It added that Indonesia’s updated climate pledge dropped a promise to phase out coal by 2040, which Climate Action Tracker rated “critically insufficient,” saying the country’s aims do not align with the Paris Climate Agreement, and that Indonesia is considering reopening the door for future construction of new coal plants.
In 2025, Vietnam also reached new coal benchmarks even as it expanded renewables. The report said Vietnam had grown its solar generating capacity from 4 megawatts in 2015 to 16 gigawatts a decade later, with plans to increase further to as much as 73.4 gigawatts by 2030 and up to 295 gigawatts by 2050. But it reported that Vietnam hit a record-high in 2025 by importing more than 65 million metric tonnes of coal, up 2.6% by volume from a year earlier, citing the latest data from Vietnam’s customs department.
Vietnam’s coal imports are tied, the report said, to caution after power shortages in 2023 when a drought reduced hydropower output, causing about $1.4 billion in losses, according to the World Bank. The report also said Vietnam is pursuing rapid electricity growth: to sustain GDP growth of around 10% a year through 2030, the government aims to increase electricity sales to a level comparable to Germany’s current annual energy consumption, while allowing large companies—including LEGO and Samsung—to buy electricity directly from Vietnamese wind and solar producers to meet climate targets.
The report said Vietnam’s broader transition plan faces grid constraints. It described Vietnam’s power grid as under strain from the rapid, uneven rollout of renewables and years of underinvestment in transmission equipment, and it reported that the government estimates it needs about $18 billion by 2030 to upgrade the system, with funding committed so far covering only a fraction of that need. Analysts cited in the report said that shifting electricity demand toward renewables could raise Vietnam’s renewable share, but grid limits and delivery timelines are shaping the pace.
A pushback on clean-energy transitions is also affecting investment confidence around JETP projects. The report said Putra Adhiguna of the Jakarta-based Energy Shift Institute expected momentum for JETP-backed projects in Indonesia and Vietnam to be unlikely to pick up this year. It linked that view to Indonesia’s cancellation of the early retirement of the West Java coal plant and to the 2025 U.S. withdrawal from JETP under the Trump administration, which, the report said, has shaken faith in the rollout of tangible projects in 2026. Adhiguna said, “JETP was basically a brute force attempt to do a transition,” and added, “Governments were trying to bulldoze through … But fundamentally there are things that take a bit of time and political commitment to happen.”