What coal’s global comeback means for Vietnam’s energy future

While this trend is often framed as a global climate contradiction, for Vietnam it carries very practical implications for energy security, grid planning, and business competitiveness.

Coal is growing but its role is changing

According to Global Energy Monitor (GEM), 104 coal-fired generator units are scheduled to begin operation in 2026, part of a wider pipeline of 439 projects currently under construction. The overwhelming majority of this new capacity is in China, which accounts for 212GW of the 256GW under development worldwide. China alone is expected to commission 85 coal-fired units in 2026, contributing 55GW, almost 90% of the global total expected that year.

This matters for Vietnam not only because China is the region’s largest energy player, but because its energy decisions increasingly shape power markets, technology costs, supply chains, and regional emissions trajectories.

China’s continued investment in coal does not necessarily signal a long-term recommitment to the fuel. Instead, coal is evolving into a system-balancing tool rather than a baseload workhorse. As China rapidly deploys wind and solar at scale, installing an extraordinary 240GW of new solar capacity in the first nine months of 2025 alone, coal plants are being retrofitted to operate more flexibly, backing up intermittent renewables rather than running continuously.

By 2030, S&P Global Ratings estimates that Chinese coal plants will operate at around 47% capacity on average, down from previous years. In parallel, China has been retiring older coal plants at a rate of roughly 3GW per year since 2021.

Vietnam’s balancing act: Energy security vs. Transition pressure

For Vietnam, this shift offers a critical lesson: the question is no longer whether coal capacity exists, but how it is used within the wider energy system. Vietnam is also cited by GEM as one of several Asian countries, including India and Indonesia, still developing new coal projects. This reflects Vietnam’s real and immediate challenge: electricity demand continues to grow rapidly, driven by manufacturing, data centres, urbanisation, and rising living standards.

For Vietnamese businesses, especially in export-oriented sectors such as electronics, textiles, and heavy industry, reliable power supply remains non-negotiable. Any disruption risks production delays, higher costs, and reputational damage in global supply chains.

At the same time, Vietnam faces increasing pressure from investors, international buyers, and trade partners to decarbonize. Mechanisms such as carbon border adjustments, ESG-linked financing, and renewable sourcing requirements mean that energy choices are no longer just a policy issue; they are a commercial risk factor.

China’s experience suggests one possible pathway: coal capacity retained for grid stability, while renewables scale rapidly and take priority in dispatch. However, this model requires sophisticated grid management, investment in flexibility, and clear long-term signals to the market.

Implications for Vietnam’s Power Grid and Energy Network

Seen from Vietnam, the global energy picture raises some uncomfortable but necessary questions about how our power system is evolving. As renewable energy scales up, it’s becoming clear that adding capacity alone is not enough. Grid flexibility now matters just as much as how many megawatts we install. Vietnam’s network will increasingly have to cope with variable supply, sharper peaks in demand, and regional imbalances between where power is generated and where it is actually used. Without serious investment in storage, transmission, and smarter grid management, there is a real risk that headline renewable growth will not translate into the reliable electricity that businesses depend on day to day.

Coal, in this context, feels less like a long-term strategy and more like a holding position. It can still play a role in keeping the system stable in the short term, but global experience suggests this role is shrinking. Countries that are further along the transition are already discovering that batteries, demand-side response, and hybrid systems can do much of what coal was once relied on for—without locking the system into higher emissions and future regulatory risk. For Vietnam, continuing to lean too heavily on coal risks solving yesterday’s problems while creating new ones for the decade ahead.

Regional dynamics add another layer of complexity. China’s massive rollout of renewables is driving down the cost of solar panels, wind turbines, and energy storage at a pace few would have imagined a decade ago. That is a genuine opportunity for Vietnam, particularly if policy and grid investment can keep up. At the same time, coal demand across the region still affects fuel prices, shipping costs, and the level of international attention on emissions. Vietnam does not make energy choices in isolation, and the regional context will increasingly shape what is affordable, acceptable, and financeable.

For Vietnamese businesses, some experts said this is no longer an abstract energy debate. Power strategy is becoming a core part of commercial strategy. Export-oriented manufacturers are already feeling pressure from international customers to demonstrate cleaner energy use and better efficiency. Large energy users and industrial zones are starting to look seriously at on-site solar, private power purchase agreements, and hybrid solutions, not out of ideology, but out of necessity.

Investors, too, are paying closer attention to exposure to coal-heavy operations, and that scrutiny is beginning to show up in the cost and availability of capital. In practice, the direction of Vietnam’s energy system will increasingly shape which businesses thrive, which struggle, and which are left behind.

Vietnam stands at a crossroads similar to where China was several years ago, but without China’s scale or fiscal flexibility. The global resurgence of coal capacity should not be read as a signal to slow the energy transition but rather as a warning about the costs of delayed system planning.

The real lesson from China is not that coal is back, but that transition without flexibility is risky. For Vietnam, the next decade will be less about choosing between coal and renewables and more about designing an energy system that supports growth, competitiveness, and credibility in a decarbonizing global economy.