0 Comments
Table of Contents
The Philippines is expected to keep coal consumption broadly steady this year, with coal-fired plants continuing to provide much of the baseload power needed to meet electricity demand, the International Energy Agency (IEA) said.
The IEA, in its Coal Mid-Year Update 2026, noted that Philippine coal plants are already operating at high load factors, underpinning continued demand for the fuel.
The Philippines relies largely on imported coal, with Indonesia supplying about 99% of imports. Coal remains a major part of the power mix, accounting for around 60% of generation.
By 2027, coal consumption in Southeast Asia is expected to pick up, fueled by rising electricity demand in the Philippines, Indonesia and Vietnam. The Philippines and Vietnam are also projected to account for much of the region’s growth in thermal coal imports.
“But this increase is too small to outweigh falling imports in China and other mature import markets,” clarified the IEA.
China, the world’s largest electricity system, generated nearly 60% of its electricity from coal in 2024 and accounted for 55% of global coal-fired generation.
In contrast, the Philippines has a relatively small contribution to global emissions, as pointed out by Philstar columnist Boo Chanco. “Nothing wrong with trying to save our world,” he wrote. “But the Philippines only accounts for roughly 0.44 percent to 0.45 percent of the world’s annual carbon dioxide (CO2) emissions, and about 0.5 percent of total global greenhouse gas emissions.”
(Also read: Philippines Steps Up Native Hydrogen Exploration As Koloma Targets Palawan)
The Baseload Solution
Department of Energy (DOE) Sharon Garin has pointed out that coal “remains one of the cheapest options” in electricity production, which is why it continues to feature prominently in the country’s power generation mix.
While the DOE declared a moratorium on new coal projects in 2020 as part of efforts to shift the country away from fossil fuels, the policy stops short of covering all coal developments. Existing plants already in operation, as well as projects considered committed at the time, remain outside the ban.
Coal plants classified as indicative projects may be exempted if they had already made substantial progress and obtained clearances from the local government units and regional development councils in their areas.
DOE Undersecretary Rowena Cristina Guevara said a coal transition plan is being prepared to guide the development of projects exempted from the moratorium, potentially adding 3 to 5 gigawatts (GW) of new baseload capacity.
Coal-fired plants have traditionally served as the grid’s steady backbone, supplying power continuously. But the recent shutdown of several large coal plants has tightened available supply, adding to ongoing power constraints in the Visayas and Mindanao.
However, the government’s response to the supply crunch in the Visayas still underscores its continued reliance on coal as a source of baseload power. With the region repeatedly placed under red and yellow alerts, the DOE is turning to additional baseload capacity to shore up the grid.
Garin announced that around 135 megawatts (MW) of new baseload capacity is targeted for Panay by 2028. The government plans to add another 270 MW the following year and 150 MW by 2030.
Additionally, operators of major coal-fired plants have been ordered to fast-track the return of generating units currently offline due to forced outages. Therma Visayas Inc.’s (TVI) Units 1 and 2 are expected to be back soon, while the Panay Energy Development Corporation’s (PEDC) Unit 3 is targeted to resume operations by October 3.
Chanco likewise noted that a reliable power grid requires firm baseload capacity, which can come from coal, natural gas, nuclear, geothermal, and hydropower plants.
But he also highlighted that the country’s locally available baseload options are limited to geothermal, hydropower, and the dwindling output of the Malampaya gas field. Geothermal capacity currently stands at 2,057 MW, with only 300 to 500 MW of additional capacity expected over the next five years. Hydropower, meanwhile, is largely seasonal, while major dams must also prioritize irrigation needs.
“Many of our coal plants are over 20 years old and account for about 3,400 to 3,600 MW of installed capacity,” he wrote. “But let us proceed with the new coal plant projects exempted from the DOE ban.”
He cited as examples MGEN’s 1,200-MW Atimonan project, which was approved before the 2020 moratorium but has struggled to secure bank financing, and the planned 300-MW expansion of the TVI plant in Toledo, Cebu. Similar projects are also in the pipeline, including SMC Global Power’s pre-approved “indicative” coal permits covering sites in Luzon and Mindanao.
“Adding units to operational sites is the fastest, lowest-cost way to reinforce the fragile Visayas grid,” he stressed.
Another indication of coal’s continuing role in the country’s energy security is the government’s plan to auction new coal concessions, including operating areas on Semirara Island in Antique, home to the country’s largest open-pit coal mine.
According to Garin, Semirara supplies about 10% of the nation’s coal requirements, underscoring the importance of domestic production in meeting demand and reducing reliance on imported fuel.
Global Coal Demand Gets a Boost
Coal isn’t uniquely a Philippine phenomenon; global energy disruptions are also keeping coal demand resilient.
Global coal consumption is expected to rise this year as disruptions in the Middle East push up natural gas prices and make coal a more attractive alternative for power generation.
With the conflict disrupting liquefied natural gas (LNG) shipments through the Strait of Hormuz, the resulting squeeze on gas supplies has driven up prices, prompting countries with available coal-fired capacity to rely more heavily on the fuel.
The IEA said coal use has consequently been higher than previously projected in markets including Europe, Japan, South Korea and China. In China, elevated oil prices have also encouraged greater coal consumption for chemical production.
The trend extends to Southeast Asia, where coal demand is projected at about 574 million tons, with Indonesia and Vietnam accounting for much of the region’s consumption.
Weather could provide another boost. The IEA forecasts a potential super El Niño to increase coal consumption in Indonesia, Vietnam and the Philippines as hotter conditions raise demand for cooling and weaker rainfall reduces hydropower generation.
PAGASA has said El Niño conditions could intensify toward the end of the year and persist into early 2027. The phenomenon, marked by unusually warm Pacific waters, is associated with heat waves, drought, and disrupted rainfall.
(Also read: Electricity Brings New Possibilities To 101 Remote Ilocos Norte Homes)
Energy Reliability and Economic Growth
Solar power offers clear benefits, but it cannot by itself address the country’s power needs. Its output depends heavily on weather and daylight, making prolonged periods of rain and cloud cover a challenge for reliable, around-the-clock supply. Its installed capacity can also overstate its actual contribution to the grid: 4,000 MW of solar capacity, for instance, may translate to only about 800 MW of average output based on a 20% capacity factor.
Meeting a large supply gap with solar would therefore require significantly more generation capacity, backed by large-scale battery storage, which remains limited in the Philippines. There are also practical constraints beyond reliability, including the land required for utility-scale solar farms and potential competition with agricultural use. One estimate puts the land needed for equivalent solar capacity at twice the combined area of Manila and Quezon City.
Despite coal’s continued role in the power mix, an estimated 3,000 to 5,000 MW of moratorium-exempt projects remain stalled amid banks’ reluctance to finance new coal developments.
The debate over whether these projects should proceed also comes against the backdrop of
advances in coal technology that have improved emissions controls. The Atimonan project, for instance, incorporates cleaner-burning systems and carbon-management measures intended to improve efficiency and limit pollutants released into the atmosphere.
But beyond the debate over coal is a broader economic concern: failing to secure sufficient, reliable power capacity could constrain GDP growth and slow efforts to reduce poverty.
“Modern economies require energy expansion to fuel economic growth,” wrote Chanco. “Industry data cited by PIDS shows that a nationwide power outage lasting just five hours inflicts roughly P556 million in immediate economic losses.”
For the Philippines, the challenge is not simply choosing between coal and renewables, but ensuring that the transition does not come at the expense of reliable and affordable power. As electricity demand grows and supply remains vulnerable to outages and weather disruptions, the country will need enough dependable capacity to keep businesses running and the economy expanding.
The long-term energy mix may continue to evolve, but the immediate priority remains clear: building a power system capable of delivering electricity when it is needed, while steadily reducing its environmental footprint.
Sources:
https://www.philstar.com/business/2026/09/14/2556026/coal-demand-likely-keep-steady-pace
https://www.pna.gov.ph/articles/1284127
https://www.iea.org/news/global-coal-demand-set-to-increase-this-year-amid-middle-east-conflict
https://business.inquirer.net/610792/el-nino-seen-to-drive-asean-coal-use
https://www.philstar.com/business/2026/09/16/2556515/our-coal-dilemma
https://ember-energy.org/latest-insights/global-electricity-review-2025/major-countries-and-regions
https://www.iea.org/reports/global-energy-review-2025/electricity