A report released April 8, 2026 by Zero Carbon Analytics found that Southeast Asia’s emergency shift from gas-fired to coal-fired electricity generation in response to the Middle East supply shock has pushed Asia’s coal benchmark approximately 20% above pre-war levels, replicating a pattern last observed during the 2022 Russia-Ukraine gas crisis. The analysis argues that fossil fuel switching does not reduce exposure to global price volatility but compounds it, and that solar paired with storage would cost USD 4 billion less than planned regional gas expansion.
Key Facts At A Glance
- ZCA report released April 8, 2026; authored by Amy Kong
- Asia’s coal benchmark rose approximately 20% above pre-war levels following gas-to-coal switching
- Newcastle coal benchmark peaked March 9 at 19% above pre-war close; Dubai crude and JKM LNG peaked March 19 at 101% and 108% respectively above pre-war levels
- JKM LNG rose nearly 70% from the conflict’s onset, reaching over USD 25 per MMBtu in early March — the highest in three years
- Solar LCOE already cheaper than coal in 7 of 10 ASEAN member states as of 2024 data
- ZCA estimates replacing ASEAN’s planned 45 GW gas expansion with solar plus storage would cost USD 12 billion versus USD 16 billion for gas — a USD 4 billion saving
- Replacing that same 45 GW with coal would cost approximately USD 19 billion, USD 3 billion more than gas
- Philippines and Thailand among countries actively dispatching additional coal generation in response to LNG price spikes
- Indonesia revised upward its 2026 coal production quota in response to elevated global prices
- Newcastle coal reached a record USD 443 per tonne in September 2023 following the 2022 gas crisis; the same mechanism is now repeating
The Report And Its Findings
Zero Carbon Analytics released the analysis on April 8 as governments across Southeast Asia were already weeks into a pattern of fuel switching triggered by the Strait of Hormuz disruption. The conflict, which began with the US-Israel attack on Iran on February 28, 2026, effectively blocked a shipping route through which approximately 20% of the world’s oil and LNG flows. In 2024, 84% of oil and 83% of LNG passing through the Strait was bound for Asia.
The JKM LNG benchmark — the primary reference price for LNG deliveries to Japan and South Korea, and the de facto pricing signal for much of Southeast Asia’s gas procurement — rose nearly 70% from the conflict’s onset to reach over USD 25 per MMBtu in early March, the highest level in three years. Dubai crude peaked at 101% above pre-war levels on March 19. Faced with the cost and supply constraints associated with LNG-fired generation, power systems operators and national energy authorities in the Philippines and Thailand moved to increase dispatch from coal-fired units that had been underutilized or operating at reduced capacity.
The ZCA report documents how this switch, rather than easing cost pressure, transmitted it. The Newcastle FOB benchmark — the primary reference price for thermal coal across the Asia-Pacific market — peaked on March 9, nine days before oil and gas benchmarks hit their highs, at 19% above the pre-war close. The sequence is consistent with the 2022 gas crisis: when European countries moved to replace Russian gas with coal following Russia’s invasion of Ukraine, Asian coal prices surged to a record USD 443 per tonne in September 2023. The ZCA analysis argues this repeating pattern demonstrates that coal is not a stable fallback and that its price is directly coupled to the same geopolitical shock dynamics that govern gas and oil.
“Coal is often seen as a fallback during energy crises, but the data shows it is neither cheap nor stable,” said Amy Kong, author of the report. “Fuel switching may offer short-term relief, but it ultimately locks countries into higher costs and greater exposure to global price shocks.”
The Cost Comparison: Gas, Coal, And Solar
The report includes a forward-looking cost comparison relevant to ASEAN’s power sector planning. Under current ASEAN member state energy targets, gas generation capacity is projected to grow from approximately 90 GW in 2022 to 135 GW by 2030, an increase of approximately 45 GW. Using IEA Value-Adjusted Levelized Cost of Electricity figures and a 60% capacity factor, ZCA estimates that adding 45 GW of gas generation would cost approximately USD 16 billion in 2030. If that same capacity were replaced by solar paired with energy storage, the cost falls to approximately USD 12 billion — a USD 4 billion saving. Replacing it with coal would be the most expensive option, at approximately USD 19 billion, USD 3 billion more than gas and USD 7 billion more than solar plus storage.
The comparison is relevant because ASEAN countries have been expanding gas infrastructure on the assumption that LNG provides a cleaner and more reliable alternative to coal. The current crisis — the second major gas supply disruption in five years — has challenged that premise. As ZCA notes, Southeast Asia effectively doubled down on LNG after the 2022 crisis, investing in import terminals and power purchase agreements. The Strait of Hormuz disruption has now imposed the same type of cost shock on those LNG-reliant systems.
Solar Cost Competitiveness In The Region
The report cites 2024 LCOE data showing that utility-scale solar is already cheaper than coal in seven of ASEAN’s ten member states: the Philippines, Vietnam, Thailand, Cambodia, Myanmar, Singapore, and Laos. Indonesia is among the countries where coal retains a cost advantage, in part due to national coal subsidies that ZCA says artificially suppress domestic coal pricing and distort the comparison.
The ZCA analysis notes that countries with higher solar deployment have demonstrated greater resilience in the current crisis. Amy Kong pointed specifically to Vietnam, which has rapidly expanded solar capacity since 2019, as a country better positioned to absorb LNG price shocks than peers with less diversified generation mixes. An Ember analysis released around the same period found that solar generation at current JKM price levels costs roughly half what gas-fired generation costs — approximately USD 42 billion versus USD 71 billion for the same output across ASEAN’s projected 2030 gas capacity.
Philippines-Specific Context
The Philippines faces particular exposure to the dynamics described in the ZCA report. Coal accounts for more than 60% of its power generation mix, and the country relies on Indonesia for approximately 98% of its coal imports. As Indonesian coal producers and regulators respond to elevated global prices by adjusting export volumes and reference prices, Philippine power generators face both the cost of LNG substitution and the market-driven cost increases now flowing through to coal procurement. The Energy Regulatory Commission had already signaled an April electricity rate increase prior to the report’s release, citing the combined effects of high global fuel prices and the peso’s decline against the dollar.
Asean Power Grid As A Structural Alternative
The ZCA report and corroborating Ember analysis both cite the ASEAN Power Grid as a mechanism that would allow the region to reduce its dependence on imported fossil fuels by enabling cross-border trade in domestically generated renewable electricity. By early 2026, eight of the 18 key interconnection projects identified in the grid’s development framework had been completed, facilitating an estimated 2.8 GW of electricity flow. The ADB’s April 7 launch of the Regional Connectivity Fund for Energy in Southeast Asia — covered separately in this edition — addresses the project preparation financing gap that has historically slowed grid interconnection work.