Japan Temporarily Lifts Coal Power Restrictions Amid Middle East Energy Turmoil

Bearish (-0.3)Impact: High

Published on March 27, 2026 (4 hours ago) · By Vibe Trader

Japan's government has announced plans to temporarily lift restrictions on coal-fired power plants in response to an energy crunch caused by the ongoing Middle East war, officials stated on Friday [1]. The proposal, presented at a panel of experts and approved, will allow the full operation of older, less efficient coal-fired plants for one year starting from the new fiscal year in April [1]. Previously, power suppliers were required to keep the operating rate of coal-fired thermal power stations at or below 50 percent due to their high carbon dioxide emissions [1].

Japan relies on thermal power plants for approximately 70 percent of its electricity needs, with coal and liquefied natural gas (LNG) each constituting 30 percent, and oil comprising seven percent [1]. The emergency measure is estimated to save around 500,000 tonnes of LNG, according to an industry ministry official [1]. The move comes as uncertainty regarding future LNG procurement increases due to disruptions in the Middle East, including Iran's partial closure of the Strait of Hormuz and attacks on energy facilities in the Gulf [1].

The decision has sparked concerns among climate experts. Yoko Mulholland of climate think-tank E3G warned that lifting coal power restrictions could deepen the risk of Japan failing to meet its goal of phasing out inefficient coal plants by 2030 and may lock the country into continued fossil-fuel dependence, delaying progress toward Prime Minister Sanae Takaichi's goal of 100 percent domestic energy self-sufficiency [1]. Mulholland emphasized that the crisis highlights the risks of relying on imported fossil fuels and called for Japan to embrace renewable energy as a strategic national asset [1].

Other Asian nations are also responding to the energy turmoil by increasing coal usage. South Korea plans to lift its cap on coal-powered generation capacity and boost nuclear operations, while the Philippines intends to increase coal-fired power output to keep electricity costs down amid disruptions to gas shipments [1]. Japan is the fifth-largest oil importer, with over 90 percent sourced from the Middle East, and about 10 percent of its LNG imports also coming from the region. Nearly 80 percent of Japan's coal imports are from Australia and Indonesia [1].

CONCLUSION

Japan's temporary lifting of coal power restrictions is a direct response to energy supply uncertainties stemming from the Middle East conflict, aiming to ensure stable electricity supply and reduce LNG dependence. While the measure is expected to have a significant impact on energy markets, it raises concerns about climate goals and long-term fossil fuel reliance. The crisis underscores the vulnerability of Japan's energy strategy and the growing call for a shift toward renewables.

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Japan Temporarily Lifts Coal Power Restrictions Amid Middle East Energy Turmoil | Vibetrader