The conflict in Iran forces two Asian allies to revert to coal usage
Major liquefied natural gas (LNG) importers, notably Japan and South Korea, are significantly increasing their reliance on coal-fired power generation. This shift is a direct and immediate consequence of the ongoing conflict in Iran, which has severely disrupted LNG shipments passing through the strategically critical Strait of Hormuz. The war has effectively choked off a vital supply route, leading to a sharp spike in the prices of LNG, a super-cooled fuel essential for power generation and industrial use in these energy-dependent nations.
The disruption has forced these countries to revert to more carbon-intensive and less environmentally friendly energy sources such as coal, despite their long-term commitments to reducing greenhouse gas emissions. The sudden surge in coal usage highlights the vulnerability of global energy supply chains to geopolitical conflicts and the challenges faced by countries heavily dependent on imported energy resources.
Henning Gloystein, a senior analyst at the Eurasia Group consultancy, issued a stark warning about the broader economic implications of this energy crisis. He noted, “Some companies won’t survive this triage for long,” emphasizing that the financial and operational strain caused by soaring LNG prices and supply shortages will not be confined to Asia alone. Instead, the ripple effects are expected to cascade through global supply chains, impacting industries worldwide that rely on stable and affordable energy inputs.
This situation underscores the interconnectedness of global energy markets and the critical need for diversified energy sources and resilient supply chains. It also raises urgent questions about energy security, the pace of the global energy transition, and the economic fallout from prolonged geopolitical instability in key energy-producing regions.
