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March 25, 2026 - Coal, the dirtiest of the fossil fuels, has long been considered the bogeyman of the energy world. But the Iran war looks set to change all that.
The three-week-old conflict has damaged Qatar’s main gas plant and all but closed the Strait of Hormuz, locking up a fifth of the world’s gas supply and sending prices spiraling.
In response, countries with a heavy reliance on gas are reviving underused coal-fired power plants. To feed the generators, they are expanding mining or snapping up supplies from big producers such as Australia and Indonesia.
Coal, it seems, is back from the dead.
“In the Indo-Pacific region, but also in Europe for that matter, any utility or government that can switch from natural gas to coal-fired power generation will be doing that at the moment,” says Henning Gloystein of the Eurasia Group.
The Iran war may be over in weeks, as Donald Trump predicts, or it may drag on. But with Qatar saying that a full resumption of gas production could be years away, and the Strait of Hormuz revealed as an unreliable conduit, the shift to coal could outlast the current turmoil.
“I wouldn’t be surprised if coal has more of a renaissance in the following year, potentially longer,” says Caleb Jasso, of the US-based Institute for Energy Research.
The coal resurgence will be greatest in countries that can produce it domestically, such as China and India. But major Asian importers such as South Korea, Taiwan and Japan are switching from gas to coal.
Even in green-focused Europe, countries that still have coal capacity like Germany and Poland will follow suit.
There is no room on the bandwagon for Britain, though, which has gone further than most in shutting down coal-fired power.
The last coal-fired power plants closed in 2024, and the only debate is about whether to exploit the remaining oil and gas reserves in the North Sea.
“Countries like China, Japan, South Korea and Vietnam never switched coal off. They maintained multiple baseloads, so when gas tightens, coal capacity can step in,” says Michelle Manook, head of the global industry body FutureCoal.
She says European countries like Britain, which have pushed coal out, can now only toggle between gas and renewables.
“If there is a lesson, it is this: don’t build your energy system on a single pathway, or you risk exposing it when it matters most,” Manook says.
For many countries, gas was supposed to be the transition fuel that bridged the gap between their coal-dependent past and their renewables-based future. Gas emits less carbon dioxide and pollutants such as sulphur dioxide than coal, and is more efficient.
Demand for gas from Asia has doubled in the past two decades. Coal consumption has also grown, but has since tailed off as investment in gas and green energy has increased.
But almost no country yet has enough renewable energy, such as solar or wind, to power its economy nor the storage capacity to make renewables a reliable replacement for fossil fuels.
So for many countries – particularly those without a nuclear industry – a gas crisis can only push countries one way: back towards coal.
Iran ripped the gas market apart when it shut the Strait of Hormuz, and then used a bombing raid to cull almost one-fifth of Qatar’s production capacity for at least the next three years.
Even if the war blows over soon, Qatar’s damage will leave the gas market tighter than before. And the Asian countries that rely on Qatar can no longer trust the Strait of Hormuz.
Expectations of tight supply and a worldwide scramble for gas have doubled the price of liquefied natural gas (LNG) in Asia, taking it to a three-year high.
The response has been immediate: coal is back on the agenda.
Bangladesh, the Philippines, Thailand and Vietnam are among the countries looking to step up coal imports and boost coal-fired power generation.
Indonesia, a major coal exporter, has backtracked on plans to cut coal output this year and will now boost production. The government has also said, though, that it will prioritize domestic users over exports.
The economic powerhouses of Japan, Taiwan and South Korea, which still produce about a third of their energy from coal, are also following suit.
“We are seeing South Korea eliminating some of their coal capacity caps. We are seeing Taiwan look at restarting a mothballed coal power plant. We’re seeing strategic buying of coal stockpiles. They’re recognizing the risk, and they’re hedging right now,” says Anthony Knutson, of analyst firm Wood Mackenzie.
Countries that make a lot of their own coal, such as China, India and Pakistan, are looking to boost output.
“In India and China, 85pc to 90pc of the coal is typically supplied domestically. So they are pivoting right now to incentivize more domestic coal production,” Knutson says.
Countries in Europe that still have the capacity to generate power from coal, such as Germany and Poland, will also feel tempted to pull this lever.
‘Coal has a bad rap’
But the European Union’s net zero targets create a strong political headwind.
Poland has cut coal’s share of electricity generation from 80pc in 2018 to 53pc last year, but the soaring cost of gas may stall this momentum.
Gloystein says the Poles will want to emulate China, where a transition to nuclear and green energy is backed up by coal as a safety valve.
“The calls to burn coal for longer will be very loud, because they have a big lignite industry that employs a lot of people and has strong unions,” he says.
In Germany, Jasso says the need for coal is more acute, given the reliance on imported gas and the lack of nuclear energy, but the political resistance is stronger.
“The biggest obstacle to getting back into coal is the rhetoric that has become so deeply set against it. Coal has a bad rap,” he says.
“I am fearful to see what pain point Europeans are going to have to endure in order to get to the real conversation of how do we become more energy self-reliant and diversify our imports.”
Gloystein reckons there is a majority in the German parliament to back a law that has already been drafted to bring back into service the 6.5 gigawatts of reserve coal capacity.
Yet if the country struggles to refill its gas reserves over the summer, the government may decide to bring the draft law to a vote, he says.
“And if gas prices remain high for another five or six years, the Germans might even start fiddling with their 2038 coal phase-out,” Gloystein adds.
As for Britain, there is nothing left to switch on.
Manook says reembracing coal doesn’t have to be at odds with emissions-reduction targets if coal is made more efficient and its emissions are captured and stored.
“Across Asia, the focus has been on abating coal – improving efficiency and reducing emissions through advanced technologies,” she says.
But there are other drawbacks to coal. Its price tends to rise when gas prices rise and has jumped since the start of the Iran war.
Supply is unlikely to be directly disrupted by war, but major coal producers are regularly hit by cyclones, floods or earthquakes. There is also an ever-diminishing supply pipeline, as so few new mines are being commissioned.
The Iran war will also hit the cost of coal by pushing up the prices miners pay for diesel and for shipping their product.
“If you can’t produce coal domestically, you’re basically replacing one import risk with the other,” Gloystein says.
Kieran Tompkins, of Capital Economics, acknowledges that coal can increase diversity of supply for importing countries and self-reliance for producers.
But its resurgence is really part of a bigger question: just how do they inoculate themselves against a chaotic and conflict-prone world?
“The legacy of the current crisis could be that energy security becomes an increasing priority,” he says. |
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