Vietnam and other Asian countries are experiencing a coal resurgence due to their rapidly developing industrial sectors. Despite previous promises to reduce carbon dioxide emissions, these nations have found it necessary to increase their reliance on coal for energy production. Vietnam, with a projected GDP growth rate of 5.8 percent in 2024, heavily depends on the industrial sector, particularly manufacturing, which accounts for 38 percent of its GDP.
In the fourth quarter of 2023, Vietnam’s manufacturing sector showed significant improvement, according to S&P Global. With electricity being crucial for manufacturing operations, coal accounted for over 40 percent of the country’s electricity production in 2023. Hydro reserves contributed around 30 percent, while natural gas made up approximately 10 percent. However, hydroelectric generation is expected to face a shortfall in 2024 due to reduced rainfall, and higher gas prices complicate electricity production using natural gas.
As a result, Vietnam is turning to coal to meet its power demand. The country’s prime minister has urged coal miners to maximize production before demand peaks during the summer months. Additionally, there is an emphasis on increasing coal exploration, indicating a sustained interest in relying on coal in the medium to long-term.
Vietnam’s decision to increase coal use was inevitable due to the need for energy security. The country cannot afford a significant demand-supply gap when hydroelectric generation is affected by drought or when gas prices surge. The growing power demand from expanding industries necessitates a focus on energy security to ensure the positive trend in manufacturing continues.
Similar patterns are also emerging across Asia. Rapid economic growth in these countries, such as China and India, has led to a resurgence in coal consumption. China, the world’s largest coal consumer, has witnessed an increase in consumption and the construction of numerous new coal plants. In 2023, China accounted for 95 percent of the world’s new coal power plants. India has also seen an increase in coal imports and production due to infrastructure spending and a rebound in demand for coal-based steel and raw material manufacturing. Indonesia has 254 operational coal-fired power plants, with an additional 40 under construction. Japan, a major consumer of coal, has been the top importer of Australian coal in recent years.
Interestingly, the United States has been a top source of coal imports for these Asian countries. U.S. metallurgical coal exports have experienced growth driven by Asian demand. Despite this demand, the U.S. government rejects coal as a fuel source for cheap electricity, focusing instead on emission reduction targets and restrictions on natural gas exports. It is ironic that U.S. coal miners can meet the needs of Asian countries while their own government dismisses coal as a viable option.
The disparity between the actions of Asian nations and the United States regarding fossil fuel capacity expansion is notable. While Asian countries are increasing their reliance on coal to support their industrial growth, the U.S. is implementing emission reduction targets and limiting natural gas exports. This discrepancy raises questions about the potential decline in the quality of life for Americans in exchange for zero environmental benefits, as Asian countries continue to improve their standards of living.
In conclusion, Vietnam and other Asian countries are turning to coal to meet their energy demands due to their rapidly developing industrial sectors. The reliance on coal is driven by the need for energy security and the challenges posed by reduced hydroelectric generation and higher gas prices. Similar patterns are observed across Asia, with China, India, Indonesia, and Japan also increasing their use of coal. Interestingly, the United States serves as a significant source of coal imports for these Asian countries, despite rejecting coal domestically. The disparity in approaches between Asian nations and the United States raises concerns about the potential decline in the quality of life for Americans compared to the improving standards of living in Asia.
