Natural Gas & Coal

Natural Gas and Coal: Managing emissions for Asia’s energy future

Natural gas and coal are used to produce more than half of the world’s electricity. Both are fossil fuels, meaning they are formed from the buried remains of prehistoric organisms. Within Asia, coal is the dominant fuel, accounting for more than 50 per cent of all electricity. No other region of the world is as coal-dependent as Asia.

While coal provides Asia with important energy security, it is also a high-emitting fuel (much more so than natural gas). The dependence on coal in Asia is strongest in emerging and fast-growing economies. For the region – and by extension the world – to make progress on emissions reductions targets, it will need to find alternative, lower-carbon sources of energy security.

Coal use in Asia

What Is Coal

Formed over millions of years, coal is the result of heat and pressure being exerted underground on the decomposed remains of prehistoric plants. Coal is primarily composed of carbon and stores the energy from this plant matter, which is how it comes to be used as a fuel. Coal has been mined for thousands of years, including in ancient China and the Roman Empire.

Coal Production

Many Asian nations have coal industries of their own, including China, India and Indonesia. However, regional coal production is not sufficient to meet overall demand and nations in Asia import significant volumes of coal, including from Australia, the United States and Russia.

Coal For Energy

Coal use in Asia is strongly driven by demand for electricity generation. Emerging nations, in particular, use coal for energy security because it is inexpensive compared to other fuels, highly available and also familiar to them. Global coal use has hit new record levels in 2022, 2023 and 2024 and growing consumption from Asia has been the biggest factor in this. China and India are the world’s two biggest coal users and, alongside Indonesia and the Philippines, currently generate more than 50 per cent of their electricity using coal. Coal also provides more than 40 per cent of power in Malaysia and Vietnam.

Emissions from coal

While coal is accessible and affordable for nations in Asia and helps provide much-needed energy security, the region’s strong dependence on it is problematic. Coal produces more emissions than any other fossil fuel when used to generate electricity and if its use in Asia continues to grow, global efforts to reduce emissions will be slowed or possibly even stall. Asia is already home to more than half the world’s people and by 2050 it is also expected to account for half of the world’s energy demand and gross domestic product.

Natural gas as an energy source

What is Natural Gas

Like coal, natural gas is a fossil fuel, formed when decomposing plants and animal materials are subject to intense heat and pressure under the earth’s surface. Natural gas can be found in underground reservoirs both on and offshore. It is extracted by drilling, through either a conventional method where wells are established directly into reservoirs or by using hydraulic fracturing, a more recently developed technique that involves stimulation of gas flow out of shale deposits.

Production

Once extracted, gas is processed to remove impurities and can then be either transported via pipeline ready for immediate use or converted to liquefied natural gas (LNG) for shipping. Conversion to LNG reduces gas to about 1/600th of its size and ensures it can be more safely and easily transported to markets that can be thousands of kilometres away from the point of production.

Natural Gas’ Role In Energy

Natural gas has a strong existing role in energy systems in Asia. It is an important source of energy security for Japan and South Korea, the primary fuel used for electricity generation in Singapore and Thailand and has a growing role in China, India and other coal-dominated nations in the region. Because Asia’s regional gas resources are limited, most of the supply comes from LNG imports from Australia, the United States and Qatar.

Advantage of LNG

While gas is a fossil fuel and, as such, has an emissions profile that requires management, it burns much more cleanly than coal and oil when used to create electricity. Natural gas has been found to produce around half the emissions of coal when combusted for power generation. The key challenges for Asia when it comes to using natural gas are its availability and affordability. This is particularly the case for the region’s emerging nations, for whom energy-related decisions are highly price sensitive. Because of limited regional resources, affordability and availability of gas for Asia are heavily reliant on levels of production by LNG-exporting nations.

Managing emissions from energy production and use

Progress on global climate targets relies on large-scale reduction of emissions, including from the energy sector. In the context of power generation, lifecycle emissions can be considered to be greenhouse gases released during production, transportation and consumption of any fuel.

Greenhouse gases are those which trap heat in the atmosphere and include carbon dioxide, methane, nitrous oxide and a variety of fluorinated gases. Carbon dioxide is the primary greenhouse gas produced by human activities and the emissions contributions of all greenhouse gases are usually converted to a carbon dioxide equivalent to provide a standardised point-of-reference.

Coal’s Contribution To Greenhouse Gas Emissions

It’s estimated that coal use accounts for about 40 per cent of global greenhouse gas emissions. According to the International Energy Agency, coal was responsible for about 70 per cent of the increase in emissions due to energy combustion in 2023.

A 2025 study by S&P Global Commodity Insights identified that 90 per cent of Asia’s power sector emissions came from coal-fired generation. The power sector accounts for half of all emissions from Asia.

If growth in Asia’ demand for coal can initially be slowed and then overall coal use in the region reduced, there will be a significant reduction in emissions.

Gas Vs Coal Emissions

Percentage of global energy production and combustion emissions by fossil fuels (2022)

As shown above. Coal contributed 27.6% of the energy supplied while production 43.7% of combustion emissions. Gas produces 23.1% of the energy supplied while producing only 21.3% of combustion emissions.

Energy transition in Asia: gas, coal and a lower-carbon future

Coal will likely have a larger profile for longer in Asia than in other regions of the world. Coal-fired power fleets in emerging Asia are often 15-20 years away from being retired and – as referenced elsewhere in this article – coal’s affordability has made it an attractive fuel for energy security.

However, Asia’s emerging economies recognise they must expand their use of lower-carbon energy sources to reduce emissions and support progress towards national and regional climate objectives. Growing investment in renewable energy will contribute towards this but there are challenges for renewables – wind and solar power are intermittent, and battery technology has not yet proven economically feasible to counter this. The high cost of upgrading dated grid infrastructure to incorporate increasing amounts of renewable energy has also proved an issue. Many countries in Asia have set ambitious renewable energy targets that will be very difficult to achieve.

Increased use of natural gas in electricity production offers the opportunity for Asia to reduce coal consumption and develop renewable energy while maintaining energy security. Gas-fired power is highly dispatchable, meaning it can be quickly ramped up to counter intermittency and act as a perfect complement to renewable energy. Because gas produces around half the emissions of coal when combusted, it offers a much lower-carbon source of reliable baseload power generation for emerging nations. A 2024 study by Berkley Research Group found that lifecycle greenhouse gas emissions for LNG produced in the United States and exported for use in Asia were less than half of those for coal being used in the region. Similarly, S&P Global Commodity Insights found that LNG from Australia, the US and Qatar being used in power generation in Japan, the Philippines and Vietnam had 47 per cent lower average lifecycle carbon intensity than coal.

Benefits Of Coal-To-Gas Switching

One of the prime examples of the benefits of coal-to-gas switching can be seen in the United States, where natural gas has now overtaken coal as the largest source of electricity generation. Data from the United States Energy Information Administration (EIA) shows that CO2 emissions from US power generation decreased by 819 million tonnes between 2005 and 2009. Of this reduction, 65 per cent could be attributed to shifting from coal-fired power to generation from natural gas.

S&P Global Commodity Insights analysis from 2025 identified that pairing increased use of LNG with expansion of renewables offered a pathway for countries in Asia to significantly reduce emissions over the next 10 years. The study found that the focus countries of Japan, the Philippines and Vietnam could reduce emissions by 33-38 per cent and retire half their coal-fired power by 2035, while investing only an additional 8-16 per cent in their energy systems.

Conclusion

Large parts of Asia currently rely on coal as an affordable and highly available source of energy. While it is not realistic to expect coal-dependent nations in Asia to abandon a familiar fuel that has provided them with energy security for decades, there is a clear need over the next few decades to transition to much lower-carbon energy systems.

Natural gas has a critical role to play in this transformation, providing a cleaner-burning alternative to coal for power generation that can support increasing investment in renewable energy. Fast-growing economies such as the Philippines, Vietnam, Malaysia and Indonesia have identified this opportunity for gas in their energy planning. The key to realising the potential of natural gas in Asia is there being sufficient global supply available to ensure affordability for emerging nations.

Over the next few decades, this supply-price equation will require not only ongoing but increased production from major LNG-exporting countries like the US, Australia and Qatar. If growing demand cannot be met, nations in Asia will simply fall back on coal to a large extent. A 2024 Wood Mackenzie study found that if some of the planned and proposed LNG export facilities in the United States were not built, Asia could use an additional 95 million tonnes of coal per year by 2035. This would be the annual emissions equivalent of putting an extra 20 million cars on the road.