Coal transition: An advantage for Southeast Asia

Southeast Asia is often described as facing tough trade-offs on clean energy. Demand is rising, coal plants are young, and governments are under pressure to keep electricity affordable. On paper, that does not look like a recipe for accelerating the coal-to-clean transition. But new evidence shows that retiring coal earlier can support economic growth, attract investment, and lower long-term power costs.

New research from the Coal Transition Commission shows that across the Association of Southeast Asian Nations, almost half of existing coal capacity can be retired early with tools that exist today and replaced with clean and cheap power in the near term.

That is not just a climate story. It is an economic one.

For manufacturers deciding where to build the next battery factory or data center, power costs and carbon intensity matter. Global supply chains are shifting toward low-carbon production, and multinational companies increasingly require clean electricity. If Southeast Asian economies continue to depend on coal for too long, they risk losing investment to competitors that move faster.

The transition is already quietly underway. In several countries, utilities are exploring refinancing deals that would let coal plants shut earlier while new renewables come online. These proposals are not charity, it’s about increasing profits. They are business decisions: refinancing can cut costs, reduce risk, and open the door to new revenue from clean power. In the Philippines, the South Luzon Thermal Energy Corp. (SLTEC) coal plant is already being refinanced so it can retire years ahead of its original schedule, showing how early retirement can work in practice.

Investors are watching closely. Banks and asset managers across Southeast Asia are looking for credible transition projects to finance. The capital is available. What is missing is a pipeline of retirement deals that give financiers confidence and utilities clarity. For the plants where solutions already exist, governments and utilities can identify priority sites and invite investors to the table, which would allow progress to move quickly.

Governments and industry are also considering how the transition impacts energy security and the availability of reliable and affordable power. Ultimately it is the transition to cleaner power systems–with a portfolio of system-wide solutions such as wind, solar, storage, grid upgrades, and demand-side management–that will provide the flexibility and independence needed. In the interim, as cleaner alternatives are built out, some coal may still have a role to play. But plans can confidently be made to bring forward the retirement dates of much of the fleet. Committing to retirement can also help with attracting financing and investment for the system-wide solutions which are a key part of energy security.

There is also the question of local economic development. The coal transition can provide an opportunity for economic diversification and sustainable jobs. By 2030, the broader clean energy transition will create four jobs for every one lost. Committing to early retirement creates the space to plan ahead: retraining workers, attracting new industries, and investing in affected areas before closure happens. There is already useful experience to draw on. Both Vietnam and Indonesia have put just transition principles at the center of their just energy transition partnerships. In the Philippines, the early retirement plans for the SLTEC plant have mobilized finance for a just transition road map to support workers and communities.

Southeast Asia is a catalyst in the global energy transition story. It can be the example other emerging economies look to when asking how to cut coal emissions while supporting growth. And the region has strong incentives to move now: lower power prices, investment in clean industries, and a workforce ready for the jobs of tomorrow.

The global energy transition is moving to a new phase: from pledges to real-world implementation. The most valuable message Southeast Asia can send the world is that implementation is not abstract. It is practical. Solutions already exist to retire a large share of the coal fleet. Investors are ready and benefits have already been proven.

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Julia Skorupska is the head of secretariat at the Powering Past Coal Alliance, a coalition of national and subnational governments, businesses, and organizations working to advance the transition from unabated coal power generation to clean energy.