Coal and solid biofuels security review

Coal remains central to the electricity systems and industries of some ASEAN member states, but its role differs sharply between countries.  About three-quarters of regional coal demand is for power generation, with industry accounting for the remainder. Indonesia consumes more than half of the regional total, followed by Viet Nam, the Philippines, Malaysia, Thailand and Lao People's Democratic Republic (hereafter “Lao PDR”). Demand is forecast to grow by around 4.4% per year to 647 Mt in 2030, the fastest increase of any region, driven by electricity growth, new coal-fired capacity and expanding metals production. Long-term power purchase agreements, non-depreciated young plants, affordability issues and the need for reliable baseload supply make rapid substitution difficult.

Indonesia’s power and metals sectors drive much of the outlook. Indonesian coal demand is projected to reach 344 Mt by 2030, with power generation, nickel processing, aluminium and steel accounting for most growth. Coal supplies process heat, a reductant agent and captive electricity, particularly through rotary kiln electric furnace nickel production. Lower-emissions electricity, alternative processing routes and sustainable solid biofuels could reduce coal use, but replacement options must provide continuous, affordable energy and avoid further lock-in of captive coal infrastructure.

ASEAN coal resources and production are highly concentrated. The region holds nearly 40 billion tonnes of reserves, equivalent to around 80 years of current consumption, yet Indonesia accounts for 83% of these reserves and about 90% of production. ASEAN member states exported 538 Mt and imported 194 Mt in 2025, leaving a large regional surplus, but only Indonesia and Lao PDR are net exporters. Cambodia, Malaysia, the Philippines, Thailand and Viet Nam rely on imports, mainly for power generation, and Indonesia supplied more than half of intra-regional imports. Weather-related disruption to river and port logistics, changes to production quotas and licensing or Indonesia’s Domestic Market Obligation can therefore affect several markets simultaneously.

Exposure to coal costs and import dependency varies between ASEAN member states and is affected by the use of coal for electricity production. Viet Nam imported around 65 Mt of coal in 2025 after becoming a net importer in 2015, while the Philippines imported 38 Mt, 99% from Indonesia, and Malaysia imported a record 36 Mt. Many boilers are designed for Indonesian coal or specific blends, limiting short-term switching. Metallurgical coal presents a distinct vulnerability because ASEAN member states have few coking coal resources. Regional demand of around 30 Mt is supplied primarily by Australia, Canada, Mozambique, the Russian Federation and the United States. Although this supplier base is relatively diversified, rising steel and metals production warrants continued monitoring of contracts, routes and inventories.

Modern sustainable solid biofuels offer a complementary domestic resource. The solid biofuel power capacity of ASEAN member states increased from roughly 6 GW in 2015 to almost 10 GW in 2025 with Indonesia and Thailand accounting for almost 80% of this generation through the use of agricultural, forestry and industrial residues —including bagasse, rice husks, palm residues and wood waste. The capacity of power generation fuelled by sustainable solid biofuels in ASEAN member states is expected to increase by an additional 20% by 2030, reaching more than 11 GW. Locally sourced fuels can diversify power and industrial heat supply, support dispatchable renewable generation and partially substitute coal through co-firing or conversion. Advanced fuels such as torrefied pellets and biocoal may widen these applications, including in metals production. Their contribution depends on cost-competitive logistics and robust sustainability frameworks that verify emissions reductions and ensure the sustainable management of land, water and biodiversity.

Coal transitions must be planned around adequacy, affordability and regional differences. ASEAN member states have diverse net zero objectives and coal policies. Indonesia faces a particularly complex transition because of its young fleet, industrial coal use, employment and government revenues. Viet Nam plans no new coal plants after 2030 and intends to close or convert older units; Malaysia expects retirements as power purchase agreements expire, with a sharp reduction expected by 2030. The Philippines limits additional coal development, while Cambodia and Thailand have also strengthened transition ambitions. Across the region, early retirement without replacement generation, grids, storage and flexibility could undermine reliability, raise costs and create stranded assets. Greater use of gas may shift risk towards imported fuels, while renewables require substantial investment in network and flexibility.

Stockholding and transparent market arrangements can strengthen near-term security. Coal’s relatively low storage cost makes minimum inventories at power plants and industrial facilities a practical buffer against temporary disruption. Import-dependent countries should assess stockyard and port capacity, supplier concentration, contractual coverage and the ability to switch fuels or generation sources. Domestic pricing mechanisms can shield consumers from international volatility, but regulated prices that weaken producer incentives or procurement flexibility may contribute to shortages. Targeted affordability support, transparent pricing and periodic reviews are preferable to prolonged broad subsidies or controls.

The priority is to preserve reliability while preparing transition pathways that do not compromise energy security. ASEAN member states should improve regional transparency and co-ordination on production, trade, inventories, logistics and policies that may affect cross-border supply. Member states that rely on coal should assess stockholding requirements and strengthen fuel procurement and infrastructure resilience. Transition roadmaps should align retirement or conversion schedules with replacement capacity, grid readiness, affordability, financing and local economic impacts, especially where fleets are young. Governments should also encourage cleaner electricity and processing routes for industrial clusters, avoid new captive-coal lock-in where viable alternatives exist, and evaluate sustainably sourced modern solid biofuels. Together, these steps can reduce supply and price risks while supporting an orderly, secure and lower-emissions energy transition.