Asian countries are increasing their coal-fired power generation to cope with the LNG supply shortage caused by the Middle East war. Despite rising coal prices, it’s becoming a necessary buffer to help mitigate the impact of high gas prices and reduced supply. As LNG prices surge to three-year highs, Asia is scrambling to find alternatives, leading some nations to boost their use of coal.
Coal has long been a dominant fuel source in many Asian economies, which are now relying on it more due to the scarcity and expense of natural gas. This shift is driven by the need for energy security and diversification over emission reductions.
Analysts at Wood Mackenzie say that while coal can’t fully replace lost gas supply, it will take market share from gas and LNG in power sectors in countries like Japan, South Korea, China, India, and Southeast Asia. Governments are also investing in domestic gas production and renewables to mitigate the impact of the crisis, but these efforts won’t be immediate solutions.
As Qatar’s LNG offline due to the war, higher coal use is seen as a temporary fix to help Asia navigate this energy shortage. The price increase of 17% for coal since the war began is smaller than the 70% jump in Asia’s spot LNG prices, making it an attractive option in the short term.
Tsvetana Paraskova is a writer for Oilprice.com with over a decade of experience writing on energy news and topics.
Source: https://oilprice.com/Latest-Energy-News/World-News/Asia-Burns-More-Coal-as-Middle-East-War-Sends-LNG-Prices-to-3-Year-Highs.html