From Thailand to Bangladesh: Asia Reboots Coal Power in Emergency as Global LNG Supply Crisis Persists

The blockade of the Strait of Hormuz caused by the Middle East war is putting Asia’s energy system to a severe test. With Qatar’s LNG production coming to an abrupt halt and nearly one-fifth of global liquefied natural gas supplies vanishing in an instant, countries across Asia—from Japan to Bangladesh—are scrambling to purchase spot supplies and restart coal-fired plants to cope with this region-wide energy supply crisis.

On March 18, according to The New York Times, the conflict in the Middle East has entered its third week, the Strait of Hormuz is effectively paralyzed, and Qatar’s production has come to a standstill. Asia is the world’s largest region for LNG consumption and receives more than 80% of Qatar’s exports. In economies such as Japan, Singapore, Thailand, Pakistan, and Bangladesh, a third or even more of electricity generation relies on natural gas.

The impact of this crisis has quickly reached the policy level. The Thai government ordered coal-fired units to operate at full capacity this month and deployed the national energy subsidy fund on a large scale to stabilize prices; Bangladesh’s state-owned power transmission company data shows that since the outbreak of the Iran conflict, the country’s coal power generation has risen sharply; South Korea’s industry minister said last week that the country is preparing to increase nuclear and coal power output to hedge against supply fluctuations. Analysts warn that the impact of this shock on Asia’s energy landscape will far outlast the war itself.

Price War and the Resurgence of Coal Power

The Strait of Hormuz is the world’s most critical LNG trade corridor. Qatar is one of the world’s largest LNG exporters, with the vast majority of its cargoes having to be shipped through the strait. The current conflict has led to the effective closure of the strait and the shutdown of Qatar’s production, causing nearly a fifth of global LNG supplies to disappear from the market overnight.

The geographical characteristics of Asia make it particularly vulnerable. Due to terrain limitations on cross-border pipelines, Asian countries are highly dependent on seaborne LNG, mainly from two global giants—the United States and Qatar. US supply is distant, while Qatari supplies are now blockaded by war.

The supply gap has driven Asian countries to rush for spot procurement. According to Henning Gloystein, Managing Director for Energy at Eurasia Group, “Asia is in a full-scale price competition, and any country that can switch from natural gas to coal is doing so.”

Thailand is one of the most notable economies hit by this crisis. Since 2011, Thailand has aggressively promoted LNG imports, building two main import terminals and increasing the share of gas-fired generation to over half of total electricity in 2022, with LNG accounting for nearly a quarter—up from just 2% in 2011. During the Russia-Ukraine conflict in 2022, wealthy European countries flooded the LNG spot market, and Thailand was forced to delay retiring the Mae Moh coal-fired plant. Now, a similar scenario is playing out again, with the Thai government once again ordering coal plants to run at full capacity.

Bangladesh faces similarly severe circumstances. Data from the country’s state-owned power transmission company show that coal-fired generation has risen dramatically since the outbreak of the Iran conflict. South Korea’s industry minister also publicly stated last week that the country is preparing to boost nuclear and coal-fired capacity to deal with fluctuations in oil and gas supplies.

Most Asian analysts anticipate that, as long as the conflict continues, countries will continue to temporarily revert to coal. However, after the crisis, energy policies will face much deeper choices. According to Amy Kong, an analyst at research firm Zero Carbon Analytics, Pakistan provides an instructive reference point:

Affected by the Russia-Ukraine conflict in 2022, Pakistan nearly doubled its installed solar capacity between 2021 and 2024, a transformation largely driven by the proliferation of low-cost solar panels, which effectively reduced reliance on LNG imports. Although the country still faces energy supply disruptions, the expansion of renewables has spared it from even greater shock.

Kong stated that Asia’s “immediate response will inevitably rely on available domestic supplies, especially coal,” but looking five years ahead, “whether natural gas can truly surpass renewables in economic and supply stability terms will be further debated.”

Setyawati characterizes the current situation as a historic inflection point: “After the 2022 crisis, LNG was promoted as a stable substitute for pipeline gas because it can be shipped anywhere in the world. Now, however, the LNG supply chain itself is confronting its own bottlenecks.”