The year 2024 marked a record high of coal use with an interesting pattern of “triple +1”: a 1 per cent increase in global coal demand, 1 per cent increase in global coal power capacity, and 1 per cent increase in energy-related CO2 emissions. Despite years of climate summits and international commitments, these coal statistics strongly remind us how the world still relies on it. Asia, including Southeast Asia, holds the heart of coal’s resilience.
Coal currently powers 37 per cent of ASEAN’s total energy generation. A recent report from the ASEAN Centre for Energy shows that among the most coal-dependent economies – Indonesia (67 per cent), the Philippines (63 per cent), Viet Nam (49 per cent) and Malaysia (43 per cent) – a clear pattern has emerged over recent years: the coal transition is underway, but the path forward remains complex and uneven.
All those countries, except Philippines, have pledged to phase out coal around 2040-2050 and net zero or carbon-neutral goals around 2050–2060. Philippines, while not having any set target around net zero nor carbon neutrality, plans to start decommissioning their coal plants based on market performance from 2024. However, the details diverge significantly.
Malaysia has taken the clearest and most consistent path toward phasing out coal. Since announcing its 2050 carbon neutrality target in 2021, the government has halted approvals for new coal plants, aligned utility strategy through Tenaga Nasional Berhad’s plan to halve coal capacity by 2035, and embedded coal retirement into the National Energy Transition Roadmap (NETR), now aiming for a full exit by 2044.
Indonesia and the Philippines exemplify how bold coal transition announcements are often followed by clarifications that soften their impact.
Indonesia pledged no new coal plants beyond those already committed, embedding this in its 2021–2030 Electricity Supply Business Plan (RUPTL), and even signalled a full phase-out within 15 years (by 2040). Yet by December 2024, the government clarified it was not pursuing a phase-out but rather a “phase-down,” arguing that a rapid coal exit would harm economic performance and energy affordability. In practice, Indonesia has also allowed exceptions for captive coal, with its 2024–2060 National Electricity Master Plan (RUKN) projecting new capacity to support mineral industries.
The Philippines likewise declared a moratorium on greenfield coal in 2020, reinforced by a Department of Energy advisory, but clarified in 2024 that the policy was not an outright ban, permitting projects meeting certain criteria to move forward. Both countries have showcased early retirement pilots, Cirebon-1 power plant in Indonesia and 246 MW South Luzon Thermal Energy Corp (SLTEC) power plant in the Philippines, yet these sit alongside policies enabling new capacity.
Viet Nam, on the other hand, strongly expressed its call for fairness and justice at COP26, stressing that as a developing country that began industrializing only three decades ago, it cannot be expected to move at the same pace as advanced economies without significant international support. This framing shaped the launch of its US$15.5 billion Just Energy Transition Partnership (JETP) and the National Power Development Plan (PDP) 8, which caps coal at 30–31 GW by 2030 before phasing it out entirely by 2050. Significant cancellations, 9.6 GW in early 2023 alone, underline the seriousness of this shift. Yet contradictions remain as legacy projects such as Quang Trach I continue.
Coal’s share in ASEAN’s power generation mix has risen through decades. Image: ASEAN Centre for Energy, Shun Culture, Low Carbon Power, VOI, Energy Tracker, ANGEA, and Global Climate Scope
Four common challenges
The journey reflects four common challenges that cut across ASEAN Member States.
The first is policy cohesion and consistency. Bold international commitments often clash with domestic realities, prompting governments to issue clarifications or exemptions that dilute earlier pledges. Public expectations of rapid coal phase-out frequently outpace what regulators see as feasible without risking energy security and affordability. Countries often express that the energy transition should not compromise the affordability of electricity, which could hinder economic competitiveness and social welfare.
Second, the “growth first, transition later” mindset reflects how fast-growing economies such as Indonesia, the Philippines, and Viet Nam still link coal to industrial expansion – from Indonesia’s captive plants for nickel smelting to Viet Nam’s allocation of coal in PDP8 to support their industrialisation and the boom of data centres.
Third, the weight of the pipeline shows how “no new coal” policies rarely apply retroactively, allowing already-approved projects to proceed 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 permit cancellation.
Finally, transitions on borrowed capital highlights the high costs of early retirement and reliance on external support. JETPs in Indonesia and Viet Nam, as well as the Philippines’ ETM, illustrate how accelerated exits depend on international funding. Indonesia’s Power Sector Energy Transition Roadmap through MEMR Regulation No. 10/2025, which set out criteria for choosing which coal-fired power plant’s (CFPP’s) phase out to accelerate, ranked financing support availability 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 be judged not by new pledges, but by whether governments can break free from the cycle of policy ambiguity, economic dependence, and financial inertia.
Lintang Ambar Pramesti and Suwanto, ASEAN Centre for Energy
The way forward
ASEAN’s coal transition will be judged not by new pledges, but by whether governments can break free from the cycle of policy ambiguity, economic dependence, and financial inertia. First, high-level commitments must be translated into enforceable roadmaps that reassess pipeline projects, set binding retirement schedules, and close loopholes that allow captive coal to persist under the guise of industrial necessity.
Second, ASEAN must turn its fastest-growing sectors such as data centres, smelters, and industrial parks, into engines of clean energy demand rather than drivers of new coal. Vietnam’s Direct Power Purchase Agreement (DPPA) and Malaysia’s Corporate Renewable Energy Supply Scheme (CRESS) show how industrial consumers can directly procure renewables.
Third, coal plants will remain in pipeline operation because sunk costs, long-term contracts, and cheap financing keep them viable. Therefore, the economics of coal also need to be fundamentally reshaped through smarter financing. Reformed JETP and ETM models that offer more grants, concessional loans, and blended finance can make early retirement economically feasible by buying out or refinancing projects. Coal Retirement Mechanisms (CRMs), which restructure debt and compensate asset owners for foregone value, can further accelerate closures for developing economies like ASEAN.
While international finance remains vital, especially given the climate debt owed by developed nations, ASEAN must also develop innovative domestic financing strategies to support coal transition. The region can explore emerging mechanisms such as concessional loans, transition credits, and managed transition vehicles. These approaches offer new ways to reduce the cost of capital, generate alternative revenue streams, and align investor incentives with climate goals. Therefore, ASEAN can demonstrate that its coal transition is not an externally imposed burden, but a strategic, locally driven effort that balances equity, economic resilience, and long-term energy security.
Suwanto is manager of the Fossil Fuels, Hydrocarbon and Minerals Department at the ASEAN Centre for Energy (ACE) with over 10 years of professional working experience and currently supports regional fossil fuels-related works towards energy transition and sustainable development goals. Lintang Ambar Pramesti is a junior research analyst in the Fossil Fuels, Hydrocarbon, and Minerals (FOM) Department at ACE with a particular focus on carbon capture, utilisation 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 opinions and beliefs of the ASEAN Centre for Energy.
