Global coal demand continues to hit record highs despite the boom of renewable energy installations, including in the most coal-dependent regions in Asia.
China and India are the biggest consumers and the key growth drivers of rising coal demand, but other emerging markets in south and Southeast Asia are also propping up coal use.
One of these is Vietnam. In recent years, soaring industrial activity and economic growth well above the global average have made Vietnam a power-hungry, predominantly manufacturing economy. The country has become a solar power leader among the countries in Southeast Asia, but it continues to rely on thermal coal for industry and is one of the few countries worldwide building new coal-fired power capacity.
Global coal demand surged to another record high in 2024, the International Energy Agency (IEA) said in December, expecting the world’s coal consumption to level off through 2027.
Meanwhile, global operating coal power capacity has increased by 13% since 2015, data from Global Energy Monitor (GEM) shows. Since 2015, when the countries reached a deal on the Paris Agreement to limit global warming to 1.5 degrees Celsius, the world has added a total of 259 GW of operating coal power capacity. As of the end of 2024, total operating coal power capacity hit a record high of 2,175 GW, while another 611 GW of capacity was under development, according to GEM’s Global Coal Plant Tracker.
In Vietnam, operating coal power capacity has doubled over the past decade, the data showed. The country has added 14 GW of coal power capacity since 2015 and had a total of 27.2 GW capacity as of the end of 2024. Moreover, Vietnam has another 4.7 GW of coal capacity under development, according to the GEM data.
The manufacturing boom and the resulting surge in coal power demand have also pushed Vietnam’s coal imports to a record high.
Last year, the Southeast Asian country’s thermal coal imports jumped by 31% to a record 44 million metric tons, according to data by Kpler cited by Reuters market analyst Gavin Maguire.
Vietnam’s import growth far exceeded the global increase of 1% and the 11% rise in coal imports in China, the top coal consumer and importer.
Despite a surge in solar PV installations in recent years, fossil fuels – predominantly coal – account for more than half of the country’s electricity generation, data from clean energy think tank Ember showed.
More than 42% of the power generation came from clean energy sources, most of all hydropower, whose share is about 30% of all electricity supply.
Vietnam leads regional peers such as Thailand and the Philippines in terms of solar and wind growth. But as power demand more than doubled over the past decade, Vietnam met this jump with a doubling of coal generation, which led to a tripling of emissions, Ember said.
Coal will continue to be a pillar of Vietnam’s power generation as its economy and industry continue to expand at rates above the global average.
Stronger exports of manufactured goods helped Vietnam’s economy to accelerate in 2024 and grow by 7%, up from the 5% economic growth seen in 2023.
Key to industry growth was the increase in coal imports as the Communist-led country looked to avoid power crunches and shortages.
Vietnam is set to continue outperforming regional peers in economic growth this year, Oxford Economics said in a December forecast.
Vietnam itself has just said that it would officially revise up its GDP growth target for 2025 to 8.0% from 6.5%-7.0%.
The strong economic growth in Vietnam and the rising coal dependence of Indonesia and the Philippines make Southeast Asia a driver of global coal demand growth, although not at the scale of China and India.
By Tsvetana Paraskova for Oilprice.com