Asia: Back to coal will raise costs and risks for Southeast Asia
Source: Asia Insurance Review | May 2026
Oil and gas supply shock triggered by the Middle East conflict has led several Southeast Asian countries to ramp up their coal reserves. A recent report, however, reveals that the region’s shift back to coal is likely to increase costs sharply rather than reduce them.
The report, ‘Economics of coal versus renewables in Southeast Asia’s energy crisis’, published by decarbonisation research and analysis company Zero Carbon Analytics (ZCA), reveals that the region’s shift back to coal could perhaps turn out to be the most expensive option.
ZCA said, “Recent spikes in global oil and gas prices — triggered by the ongoing war in the Middle East — have prompted short-term switching from gas to coal across the region. However, this shift is already pushing up coal prices, exposing ASEAN countries to the same volatility they sought to avoid. Renewables offer a cheaper, more secure alternative amid global energy shocks.
These facts raise urgent questions about the long-term energy security and affordability across the region.
ZCA Oil and gas researcher and author of the report, Amy Kong, said, “Fuel switching may offer short-term relief, but it ultimately locks countries into higher costs and greater exposure to global price shocks.”
She said since the onset of the crisis, Asia’s LNG prices have surged nearly 70%, with coal prices also rising as demand increases — echoing the 2022 global gas crisis, when coal reached record highs. The findings highlight a structural challenge: all forms of fossil fuels are interconnected, and shifting between them does not insulate economies from price shocks.
“Once we account for the full costs of coal, the economic case for renewables becomes overwhelming.” A