Coal Renaissance in the Shadow of the Hormuz Blockade. India and Thailand are postponing transformation

The increase in natural gas prices related to the conflict in the Middle East may contribute to maintaining the important role of coal in the energy mix of some Asian countries – according to an analysis by the Polish Economic Institute.

Since the outbreak of the war in the Persian Gulf until April 13, the prices of liquefied natural gas (LNG) on Asian markets increased by 81 percent, and in the second half of March the increases reached up to 108 percent. During this time, steam coal prices increased only by 24%. – PIE reported.

“This reflects the partial potential of coal to replace natural gas (and to a much lesser extent oil) in some sectors. Some countries, such as South Korea, Thailand, the Philippines and India, have announced initiatives to expand the use of coal in electricity production during the hydrocarbon supply crisis,” the analysis said.

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Some countries have already announced that they will delay the closure of old coal-fired power units or suspend the existing limits on their use. In some countries, planned renovations were postponed.

“In China, India, Indonesia and Vietnam, coal already played a key role in the electricity sector before the crisis, so the potential for additional growth is limited,” the authors of the analysis noted.

In their opinion, another gas crisis may, however, contribute to maintaining the important role of coal in the energy mix of some Asian countries for a longer period of time. This applies especially to those countries that meet most or all of their coal demand with their own mining. These include, for example, China, India and Indonesia.

“Although much lower pollutant emissions (2-2.5 times in the case of CO2, more in the case of dust and other harmful substances) and higher efficiency and flexibility (and therefore better cooperation with the rapidly developing renewable energy in the region) speak in favor of modern gas-fired power plants, another weakening of faith in the global LNG market strengthens the attractiveness of the domestic, cheaper raw material,” it was written.

This does not mean that it will translate into the construction of new coal-fired power plants outside China and India, it was noted.

In China, coal is not only a fuel for energy, but also a raw material for industry.

“This applies not only to coking coal used in steel production, but also to large chemical synthesis – in the production chains of fertilizers and plastics, which in other countries are based on natural gas and oil,” it was pointed out.

Coal consumption in China's chemical sector has been increasing in recent years.

The increase in prices of natural gas and LPG translates into the increased use of coal and wood for preparing meals, among others in India and Thailand. (PAP)

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