Five levers to accelerate the coal-to-clean energy transition in Southeast Asia

Southeast Asia's energy systems are changing rapidly. Most countries in the region have announced coal phase-down commitments, yet implementation has not kept pace. A new Agora Energiewende policy brief takes a bottom-up approach to analyse this challenge, tracing coal-to-clean transition from affected workers and provinces up to national energy security strategy.  

The 2026 energy disruption exposed a dual vulnerability across the region: coal-importing countries such as Viet Nam and the Philippines faced rising coal prices and tighter supply. Meanwhile, coal-exporting countries like Indonesia came under pressure to restrict exports to safeguard domestic needs. The brief shows that both dynamics strengthen the strategic case for accelerating domestic renewable energy deployment. The brief notes that current evidence suggests any increase in coal use is limited and temporary rather than a structural reversal of transition trends. 

Regional coal dependency runs deeper than national figures suggest 

At 45 percent of the regional power mix in 2025, barely changed from its 2020 peak, coal remains dominant in Indonesia, Viet Nam and the Philippines. The brief finds that national statistics understate where the real weight falls.  

In provinces such as East Kalimantan, Quảng Ninh and Antique, coal dominates local revenues, with some municipalities depending on coal-related activities for up to 79 percent of local government income. The workforce is larger and more precarious than formal data suggest, with large numbers of informal and migrant workers excluded from social protection systems, labour market data and transition planning processes. 

Protecting workers and communities for a just transition 

Agora argues that protecting workers and diversifying coal-dependent provinces underpins the political feasibility of the transition. Regions experiencing the shift as uncompensated loss are potential ground for political resistance that can slow national commitments.  

The brief recommends social protection floors funded through coal royalty revenues, coal worker registries covering formal and informal workers, and gender-responsive transition planning that addresses the full workforce, not only direct employees. 

Institutionalised commitments are required for economic diversification 

Drawing on country and subnational experience, the brief shows that economic diversification advances the energy transition when built on long-term planning, community participation and financing aligned with national development and energy transition strategies.  

Economic diversification requires coordinated policy responses across labour markets, social protection systems and local enterprise development. Viet Nam's Quảng Ninh province reduced coal's share of its regional gross domestic product from 35 percent in 2010 to 20 percent by 2023, attracting a record USD 3.1 billion in foreign direct investment in the process and strengthening its provincial competitiveness in the long term. Thailand's Krabi province prevented the construction of a planned 800 MW coal plant through a formal joint process combining civil society engagement with credible renewable energy alternatives.  

The 2026 energy disruption has reinforced this finding: countries that institutionalised transition commitments proved most resilient and the least likely to reverse course on coal. 

Reorganising coal power plants creates room for renewables 

With more than half of Southeast Asia's coal power plants still relatively young, premature retirement is neither economically nor politically viable. Agora proposes a framework whereby young units are repurposed as flexible, dispatchable capacity to complement renewables; mid-life plants are reserved for system adequacy; and the oldest units are retired on a mandatory schedule. This approach requires social policy measures to support workers and communities affected by the transition, as well as reform of the plants' underlying contracts. On the latter, the real barrier turns out to be contractual rather than technical, most coal plants operate under take-or-pay power purchase agreements that penalise flexible operation. Reforming these agreements toward availability-based payments, alongside binding retirement schedules, will be the central policy lever.  

Scaling renewables strengthens energy security across the region 

For two decades, governments across the region used energy security arguments to justify fossil-fuel power expansion. The 2026 Hormuz disruption inverted this logic. The brief highlights that countries heavily reliant on coal and LNG imports experienced more acute supply disruptions and price spikes, while those with more advanced domestic renewable deployment proved more resilient.  

The brief argues that treating renewable energy as an energy security priority, not only a climate strategy, can shift institutional ownership and strengthen political durability. Viet Nam and the Philippines, which have built the most credible implementation records in the region, demonstrate that headline targets require specific regulatory instruments, grid access rules, procurement mechanisms and investment frameworks, to translate into installed capacity. 

The coal transition in Southeast Asia is socio-politically complex and economically demanding, but technically and financially achievable. The brief concludes that the foundation of commitments is already in place. Meeting national energy goals now depends on building the institutional architecture and policy action to carry them through. 

The 35-page paper Five enablers for coal-to-clean energy transition in Southeast Asia: A bottom-up approach for a just transformation is available for free download below.