2025 marked a turning point in Asia’s energy transition — not because a single breakthrough emerged, but because a widely promoted false solution began to fall away.

For several years, coal–ammonia co-firing has been positioned as a pathway to decarbonising Asia’s relatively young coal fleets. ARE’s analytical and engagement work – including our “Japan’s Ammonia Strategy” and “Japan’s Power Market Transition: Implications for Coal Power Profitability” publications – has consistently found that this approach does not hold up on economic or practical grounds. Without sustained and substantial fuel subsidies, low-carbon ammonia co-firing remains unviable, especially when compared with the rapidly declining costs of alternative solutions.

South Korea’s recent decision to withdraw from ammonia co-firing is a meaningful signal. Japan now stands largely alone in pursuing the strategy, raising important questions about how power-sector decarbonisation pathways must evolve as this option loses credibility.

Reframing the transition: what replaces “coal decarbonisation”?

As the feasibility of ammonia co-firing fades, the central challenge becomes unavoidable: how will economies replace coal’s share in the power mix when “coal decarbonisation” fails to materialise? In practice, this may accelerate the timelines for phasing out coal and sharpen the focus on alternatives that are already proving scalable and cost-effective.

Three areas now demand particular attention:

1. Accelerating renewable power — moving beyond ambition to delivery

Across Asian markets, policy remains the dominant constraint on scaling renewables. Targets and commitments exist, but responsibilities are often fragmented, timelines misaligned, and long-term transition frameworks incomplete. Policy uncertainty continues to deter the scaling of capital required for renewable infrastructure.

At the same time, supply chain resilience is becoming a foundational issue. Competitive, reliable supply chains for renewable technologies will increasingly determine the pace and durability of deployment.

Analysis and engagement must become more granular — at both country and sub-regional levels — to clarify trade-offs, identify bottlenecks, and support practical investment pathways.

2. Managing the structural decline of coal

As grid expansion and battery deployment accelerate, coal plants will face declining utilisation and earlier retirements. These shifts are not theoretical; they are already emerging across multiple Asian power markets.

ARE will remain deeply engaged in the analysis and dialogue surrounding these changes, particularly where investor decisions, policy design, and market structure intersect. Managing coal’s decline in an orderly and credible way is now one of the defining challenges of the transition.

3. Navigating the role of gas — carefully and contextually

The long-term vision is clear: renewables and storage must grow fast enough that new gas capacity becomes unnecessary, and existing assets operate at progressively lower capacity factors. In reality, the role of gas varies sharply by market, shaped by energy security concerns, infrastructure constraints, and policy choices.

This makes a one-size-fits-all narrative unhelpful. Instead, engagement and analysis must be tailored to local conditions, distinguishing between short-term system needs and long-term lock-in risks.

Looking ahead

As the co-firing transition narrative fades, the need for clarity becomes more urgent. The next phase of Asia’s energy transition will be defined less by headline technologies and more by implementation discipline, policy coherence, and credible investment signals.

ARE’s role remains focused on evidence-based analysis and structured engagement — helping investors, policymakers, and companies navigate this complexity and align capital with outcomes that are economically resilient and climate-aligned.

As we look to the year ahead, the task is clear: move beyond stop-gap solutions and accelerate pathways that are viable, scalable, and grounded in real-world system dynamics.