LNG Shock, Coal Myths, & The Real Winners On The Grid

The recent disruption in LNG supplies following tensions in the Strait of Hormuz sparked widespread speculation that coal-fired power generation would surge as a fallback option. At first glance, this seemed plausible since delays and price hikes in gas deliveries could make coal plants more economically attractive. However, comprehensive analysis from the Centre for Research on Energy and Clean Air (CREA) reveals a more nuanced reality: global fossil fuel generation actually declined year-on-year in March 2026, with coal generation remaining largely flat and gas-fired output dropping by 4%. Instead of a coal resurgence, renewable energy sources like solar and wind saw significant increases, highlighting a shift towards diversified electricity portfolios rather than a simple return to coal. CREA’s data, which covers the majority of global coal and gas generation, distinguishes between regional responses to the LNG shock. Outside China, coal generation fell by 3.5%, while gas generation declined by 4%, and renewables such as solar and wind rose by 14% and 8% respectively. This trend underscores how modern power systems leverage a combination of renewables, hydro, nuclear, storage, and demand flexibility to manage fuel supply shocks. The simplistic narrative that coal is the automatic “winner” in such crises fails to capture the complexity of grid operations and the evolving energy mix in many countries. China remains an important exception where coal-fired generation increased by 2% in March, as some provinces substituted coal for gas. Yet, since gas constitutes only a small fraction of China’s power mix, this switch had a limited impact on the global coal picture, which stayed broadly flat. Notably, China continues to invest heavily in renewable capacity and grid flexibility, which will likely reduce reliance on imported fuels over time. This regional variation highlights that a modest rise in coal use within a single large market does not equate to a global coal comeback. Country-level data further illustrate the differentiated responses to the LNG supply disruption. Japan and South Korea, with large coal fleets and limited renewable resources, saw increases in coal generation as a short-term hedge. Conversely, countries like the United States, Germany, India, South Africa, Türkiye, and the Netherlands experienced declines in coal use, reflecting their deeper renewable integration and grid flexibility. Coal trade figures also do not support a broad resurgence, with seaborne coal shipments falling 3% year-on-year and notable declines in shipments to major consumers such as China, India, and Türkiye. The overall findings challenge the conventional wisdom that coal is the default fallback fuel during global gas supply shocks. Instead, they demonstrate that modern electricity systems are increasingly resilient and capable of adapting through a mix of renewables, storage, and flexible demand. While coal remains a factor in some regions, its role is more nuanced and constrained by economic, policy, and infrastructure realities. These trends suggest that future energy security strategies will continue to prioritise clean flexibility over a return to traditional fossil fuels.