The year 2024 saw a record rise in coal use with an interesting pattern of “triple +1”: a 1 percent increase in global coal consumption. Demand for coal1 percent increase in the world Coal power capacityAnd an increase of 1 percent Energy-related carbon dioxide emissions. Despite years of climate summits and international commitments, these coal statistics are a powerful reminder of how dependent the world still is on it. Asia, including Southeast Asia, holds the heart of coal’s resilience.

Coal currently generates 37 percent of total power generation in the Association of Southeast Asian Nations (ASEAN). A Latest report From the ASEAN Energy Center shows that among the economies most dependent on coal – Indonesia (67 percent), The Philippines (63 percent), Vietnam (49 percent(and Malaysia)43 percent) A clear pattern has emerged over recent years: the shift to coal is underway, but the path forward remains complex and uneven.

All of these countries, except the Philippines, have pledged to phase out coal from 2040 to 2050 and achieve net-zero or carbon neutral targets from 2050 to 2060. The Philippines, although it does not have any specific net-zero or carbon neutral target, plans to achieve this Start stop playback Its coal plants are based on market performance from 2024. However, details vary widely.

Malaysia has taken the clearest and most consistent path towards phasing out coal. Since it was announced Carbon neutrality 2050 To meet the target in 2021, the government suspended approvals for new coal-fired plants, and aligned with the utility’s strategy through Tenaga Nasional Berhad’s plan to Half the capacity of coal By 2035, coal retirement will be integrated into National Energy Transition Roadmap (NETR), now aiming to a Complete exit by 2044.

Indonesia and the Philippines exemplify how bold coal transition announcements are often followed by clarifications that dilute their impact.

Indonesia pledged No new coal plants Beyond those already committed, incorporate this into Electricity Supply Action Plan 2021-2030 (RUPTL)and even indicate a complete phase-out within 15 years (by 2040). However, by December 2024, Govt He explained It was not seeking to phase out coal, but rather to “taper down,” arguing that a rapid exit from coal would hurt economic performance and energy affordability. In practice, Indonesia has also allowed exceptions for captive coal 2024-2060 The National Electricity Master Plan (RUKN) foresees new capacity to support metallurgical industries.

The Philippines also announced a Endowment Green coal in 2020 Reinforced By the Department of Energy advisory, however He explained In 2024, this policy was not an outright ban, but rather allowed projects that met certain criteria to move forward. Both countries have shown pilots for early retirement, Cirebon-1 Indonesia power plant and South Luzon Thermal Power Company with a capacity of 246 MW (SLTEC) for power generation in the Philippines, but these come along with policies that enable new capacities.

On the other hand, Viet Nam expressed its opinion strongly And her call for fairness and justice He stressed that as a developing country that began industrialization only three decades ago, we cannot expect it to move at the same pace as developed economies without significant international support. This frame shaped its release US$15.5 billion Just Energy Transition Partnership (JETP). and National Energy Development Plan (PDP) 8which caps coal at 30-31 GW by 2030 before phasing it out entirely by 2050. The large cancellations, 9.6 GW in early 2023 alone, underscore the seriousness of this shift. However, contradictions remain as heritage projects e.g Kwang Trash I He continues.

Four common challenges

The journey reflects four common challenges involving ASEAN member states.

The first is policy coherence and consistency. Bold international commitments often conflict with domestic realities, prompting governments to issue clarifications or exemptions that undermine previous pledges. Public expectations for a rapid coal phase-out often exceed what regulators deem possible without risking energy security and affordability. Countries often express that the energy transition should not affect the affordability of electricity, which may hamper economic competitiveness and social well-being.

Second, the “grow first, move later” mentality reflects how fast-growing economies such as Indonesia, the Philippines and Vietnam still link coal to industrial expansion – from captive plants in Indonesia for nickel smelting to Vietnam’s allocation of coal in the PDP8 to support its industries. manufacturing and Data center boom.

Third, the weight of the pipeline demonstrates how “no new coal” policies are rarely applied retroactively, allowing projects that have already been approved to go ahead and add capacity despite long-term phase-out goals. Governments often find themselves adding “special requirements” to exclude coal plants that protect certain economic sectors, such as mineral processing industries, from decommissioning or license revocation.

Finally, shifts in borrowed capital highlight the high costs of early retirement and dependence on external support. Short-term flight programs in Indonesia and Vietnam, as well as the Philippines’ emergency emergency mechanism, illustrate the extent to which accelerated exits are dependent on international financing. Indonesia’s energy transition roadmap for the energy sector through MEMR Regulation No. 10/2025, which sets criteria for selecting coal-fired power plants (CFPP’s) for phase-out in order to accelerate them, ranked the availability of financing support as the most important criteria to consider, while the age and capacity of the CFPP ranked last.

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ASEAN’s coal transition will not be judged by new pledges, but by whether governments can break away from the cycle of policy uncertainty, economic dependency, and fiscal rigidity.

Lintang Ambar Pramaste and Suantu, ASEAN Energy Centre

The way forward

ASEAN’s coal transition will not be judged by new pledges, but by whether governments are able to break away from the cycle of policy uncertainty, economic dependency, and fiscal rigidity. First, high-level commitments must be translated into actionable roadmaps that reevaluate pipeline projects, set binding retirement timelines, and close loopholes that allow captive coal to continue under the guise of industrial necessity.

Second, ASEAN must transform its fastest-growing sectors, such as data centers, smelters, and industrial parks, into engines of clean energy demand rather than drivers of new coal. Direct Power Purchase Agreement in Vietnam (Data Protection Department) and a scheme for supplying renewable energy to companies in Malaysia (Chris) shows how industrial consumers can purchase renewable energy sources directly.

Third, coal plants will remain operated via pipelines because sunk costs, long-term contracts, and cheap financing make them viable. Therefore, the economics of coal also need to be radically reshaped through smarter financing. reformer JETP and ETM models offering more grants, soft loans and blended financing can make early retirement economically possible by purchasing or refinancing projects. Coal retirement mechanisms (Customer relationship managementwhich restructures debt and compensates asset owners for lost value, could further accelerate lockdowns in developing economies such as the Association of Southeast Asian Nations.

While international financing remains critical, especially in light of developed countries’ climate debt, ASEAN must also develop innovative domestic financing strategies to support the transition to coal. The area can be explored Emerging mechanisms Such as soft loans, transition credits, and managed transition tools. These approaches offer new ways to reduce the cost of capital, generate alternative sources of income, and align investor incentives with climate goals. Thus, ASEAN can demonstrate that its coal transition is not an externally imposed burden, but rather a domestically driven strategic effort that strikes a balance between equity, economic resilience, and long-term energy security.

Suwanto is the Director of the Fossil Fuels, Hydrocarbon and Minerals Division at the ASEAN Energy Center (ACE) with over 10 years of working experience and currently supports regional fossil fuel-related actions to achieve the energy transition and the Sustainable Development Goals. Lintang Ambar Pramesti is a Junior Research Analyst in the Fossil Fuels, Hydrocarbon and Minerals (FOM) Division at ACE with a particular focus on carbon capture, utilization and storage technologies, clean coal technologies, and the integration of these technologies with policy and regulation.

The opinions expressed in this article are those of the authors and do not reflect the views and beliefs of the ASEAN Energy Center.