Gas-to-coal switching drives a surge in Asia’s coal burn

Asia’s coal burn surged by more than 100 TWh since March amid tight LNG supplies and high gas prices, which are supporting gas-to-coal switching dynamics in the power sector.

Preliminary data indicates that Asia’s coal burn in the power sector dropped by around 10% yoy through the March-August period, equating to just over 50 TWh is absolute terms. This translates into approximately 10 bcm of gas savings (vs the 50 bcm shortfall in LNG supply through Hormuz).

In China, gas-to-power demand dropped by more than 7% since March, primarily driven by gas-to-coal switching dynamics in the coastal provinces, which are the most exposed to the global LNG market.

In Pakistan, gas-fired power generation plummeted by more than 30% compared to last year. The country was the most hit by the Hormuz crisis as it has been extremely reliant on Qatari LNG supplies in the past (98% of its imports in 2025). Coal-fired generation surged by more than 30% yoy since March, broadly offsetting the drop in gas-based generation.

We see similar dynamics at play in Bangladesh, Japan, Korea and the Philippines. While in India, coal-based generation surged by more than 10% (or a staggering 70 TWh) amid sizzling summer heatwaves, lower hydro output and lower gas-fired power generation at the margin.

Asian gas-to-coal switching playing a key role in absorbing the LNG supply shock since the closure of the Strait of Hormuz. However, this is not a sustainable, long-term solution as it leads to higher carbon emissions and worsens Asia’s air quality crisis.

The current crisis once again highlights the need for cost-competitive LNG which can reverse the current trends and Asia’s temporary switching to coal. The gas and LNG industry can’t afford an affordability issue.

What is your view? How will current market dynamics play out? How can gas and LNG help to phase-out coal in Asia?

Source: Greg Molnár, LinkedIn