Vietnam’s Surge in Thermal Coal Imports

By Gavin Maguire

LITTLETON, Colorado (Reuters) – Vietnam has become a key driver of global growth in thermal coal imports, supercharging imports of the power fuel by over 30% in 2024 to record highs.

Vietnam’s imports of thermal coal rose 31% to 44 million metric tons in 2024, according to ship-tracking firm Kpler, contrasting with just a 1% expansion in global thermal coal imports last year to 1.01 billion tons.

An enduring boom in Vietnam’s export-oriented and power-hungry manufacturing sector has been the main catalyst behind the surge in its imports and use of coal, which is the country’s largest source of power.

The growth rate of Vietnam’s coal purchases in 2024 far exceeded the 11% rise in imports by China, the world’s largest coal consumer, ensuring that Southeast Asia registered the largest rise in coal imports among all regions last year.

Vietnam’s coal consumption is on track to keep growing, as the country’s coal-burning capacity will rise by a further 15% once projects under construction are completed.

That expanded coal capacity will likely ensure that global coal-fired power emissions will continue to grow over the coming years, even as coal burning steadily contracts outside of Asia.

Coal Dependence

Coal-fired power stations generated half of Vietnam’s electricity from January to October in 2024, according to Ember, marking Vietnam’s largest coal share since 2020.

Total coal-fired generation expanded by 17% from January to October 2023, helping drive total electricity supplies up by 10% on the year to a new high.

Of the total current installed generation capacity of around 70,000 GW, coal holds the largest footprint with around 39%, or 27,239 gigawatts, according to Global Energy Monitor (GEM). Hydropower, solar farms, natural gas, and wind farms make up the remaining shares at 21%, 19%, 12%, and 9%, respectively.

There is roughly 11,600 GW of new generation capacity under construction in Vietnam, with coal and gas-fired generation set to grow by around 4,000 GW. A combined 3,500 GW of new solar, wind, and hydro capacity is also being built.

As coal and gas-fired power capacity account for around 70% of the total capacity under construction, Vietnam’s fossil fuel-fired power footprint is expected to increase from around 51% currently to 53.3% once the current capacity under construction is complete.

Regional Norms

Vietnam’s expanding fossil fuel generation contrasts with planned capacity changes in Europe and the United States, where heavy fossil fuel reliance remains the norm across Southeast Asia. Fossil fuels currently hold a 71% share of power generation capacity in Southeast Asia and around 60% share of capacity under construction.

A key driver of fossil fuel dependence is the strong economic growth rates across the region and the large, rapidly growing workforces in Southeast Asian countries. Indonesia, the Philippines, and Vietnam all have populations exceeding 100 million and projected GDP growth nearly double the global average of 3.2% in 2025, according to the International Monetary Fund.

Leading Role

Vietnam’s economy has grown by an average of 5.6% annually since 2018, the fastest growth pace among all Southeast Asian nations during that period. Key to Vietnam’s success has been a significant rerouting of manufacturing supply chains from China to other low-cost production hubs since the U.S.-China trade war began under President Trump.

Vietnam’s strong global trade route connections and developing manufacturing experience made it an ideal location for companies looking to shift production bases out of China while maintaining a presence in Asia.

However, this rapid expansion in manufacturing has led to a surge in energy consumption, requiring local power firms to enhance power supplies urgently. Vietnam’s total electricity demand surged by 27% from 2018 to 2023, exceeding the 23% rise in Indonesia and 12% rise in the Philippines.

The increasing power consumption has led to frequent outages, notably during heatwaves. To avert further issues, Vietnam’s energy suppliers have focused on stability and cost efficiency, perpetuating the strong dependence on coal as the primary power source.

Although energy firms plan to increase generation capacity from renewables and other clean power sources between 2030 and 2050, coal remains Vietnam’s power fuel of choice, expected to continue growing alongside the country’s economy for the foreseeable future.

The opinions expressed here are those of the author, a market analyst for Reuters.