China Burns More Coal as Hormuz Disruptions Slash Oil and Gas Imports
Asian economies saved $177 billion in fossil fuel import costs through renewable power expansion in 2025, according to the International Renewable Energy Agency, with over 90% of new capacity undercutting the cheapest fossil alternative. China's slice of those savings was the largest. By April (2026-04-30), that progress was under pressure: Strait of Hormuz shipping disruptions had cut China's crude oil imports roughly 20% year-on-year and natural gas imports about 13%, forcing the country's power system back onto domestic coal for the fourth consecutive month.4,1
The import squeeze arrived at a difficult moment. Weak wind conditions, subdued solar performance, and extended nuclear refuelling outages had already left China's grid stretched in early 2026, despite total power generation rising 6.6% year-on-year in April (2026-04-30). Coal generation stepped into the gap. Thermal power commissioning in the first quarter of 2026 surged more than 160% year-on-year, a record pace for new coal capacity additions, according to Centre for Research on Energy and Clean Air data.1
The renewable picture is mixed rather than uniformly positive. Solar power capacity additions fell 31% year-on-year in the first quarter of 2026, coming off an exceptionally high base from 2025, though they remained above first-quarter 2023 levels. Wind additions rose 8%. Neither offset the output shortfall created by below-average resource conditions and nuclear outages, illustrating that capacity additions and delivered output can diverge sharply when weather does not cooperate.1
Battery output offered a counterpoint. Production surged 55.6% year-on-year in April (2026-04-30), driven by energy storage demand and export orders, signalling that China's industrial base is preparing for a storage-backed grid even as near-term generation remains coal-heavy. Solar cell output dropped 25.6% year-on-year, reflecting weaker domestic installation volumes and a partial pullback in exports after the first-quarter surge.1
ICE Brent crude front-month traded at $76.23 on Friday (2026-07-10), down 0.46% on the session. Dubai crude was assessed at $70.48. JKM Asian LNG front-month held at $16.57 per MMBtu. The absence of a sustained crude price spike from the Hormuz transit disruptions suggests markets view the risk as manageable at present levels, or that Chinese buyers have found viable alternative routing — South African cape routes, Russian Far East terminals — at a cost that compresses margins but keeps volumes moving.1
The IEA's World Energy Outlook 2025 flags an infrastructure mismatch that China's April experience made concrete. Investments in electricity generation have risen nearly 70% since 2015, but spending on power grids has increased at less than half that pace, creating bottlenecks that become visible precisely when supply disruptions demand rapid rebalancing.2
Global data centre investment reached an estimated $580 billion in 2025, surpassing the $540 billion being directed at oil supply, according to IEA projections. AI-driven power demand is adding load to Asian grids already navigating the fossil-to-clean transition. In the United States, data centres account for roughly half of incremental electricity demand growth; in Asia, where compute expansion is accelerating in India, Japan, and South Korea, the pressure on generation and grid infrastructure is similar.2,3
India and Southeast Asia are on course to replace China as the primary drivers of global energy demand, the IEA's WEO 2025 projects. China accounted for 50% of global oil and gas demand growth and 60% of electricity demand growth since 2010. As China's growth trajectory moderates, the question for the region is whether new demand centres can build on the renewable cost advantages that delivered $177 billion in savings in 2025, or whether Hormuz-style supply shocks and grid infrastructure lags push them toward the same coal backstop China reached for in April (2026-04-30).2,4
One supply-chain risk cuts across both the clean energy build-out and the fossil supply disruption: critical mineral dependency. The IEA warns that a single country dominates refining for 19 of 20 key strategic minerals, with an average 70% global market share. The same geopolitical tensions that complicate Hormuz transit can, in a different register, tighten the mineral supply chains on which solar panels, batteries, and wind turbines depend. Asia's $177 billion in fossil cost avoidance rests on a supply chain with its own concentration risks — that is the number to set against the headline figure.2