Vietnam's Coal Use Surges Amid US-China Trade Shift

Gavin Maguire argues that the prolonged US-China trade conflict has redirected manufacturing investment and export production toward Vietnam, pushing coal-fired electricity generation to records. Ember data show Vietnam's coal plants produced 132.9 terawatt hours during the first nine months of 2026. Ember puts the increase from the corresponding months last year at 15%, a record output for that period.

Vietnam's hydropower output has fallen roughly 12% so far this year because rainfall was below normal this summer. Utilities have increased coal-fired generation to compensate for reduced reservoir output. However, Maguire identifies the sustained expansion of export-oriented manufacturing as the larger driver of increased coal use. Vietnam's manufacturing sector has expanded rapidly over the past decade, raising total electricity demand by nearly 50% since 2019.

Maguire argues that US tariffs on imports from China since 2018 encouraged manufacturers to establish production in cheaper locations, making Vietnam a major beneficiary. Maguire argues that the resulting factory expansion has linked growing US-bound export production to an electricity system heavily dependent on coal.

US imports from China were approximately 10 times imports from Vietnam in 2018. Monthly US imports from the two countries have been almost equal this year. LSEG data show average monthly US trade flows to China were about $45 billion when annual US imports from China peaked near $539 billion. Average monthly US trade flows to Vietnam were about $4 billion that same year. Average monthly US trade flows to China have been around $22.9 billion so far in 2026. Average monthly US trade flows to Vietnam have been around $22 billion over the same period.

Maguire argues that the increase of more than 400% in Vietnam's monthly export value to the United States helped drive broader economic growth. The International Monetary Fund puts Vietnam's average annual GDP growth at 7.4% since 2022. That growth ranked among the world's fastest during the period and drove sustained increases in electricity consumption. Ember data show Vietnam's total electricity consumption grew by an average of 6% annually between 2022 and 2025.

Coal-fired stations have supplied an average of around 49% of Vietnam's utility electricity since 2019. Coal supplies about one-third of electricity generation worldwide, making Vietnam more coal-dependent than most power systems. Coal's contribution to Vietnam's electricity supply varies substantially with the availability of other sources. Coal supplied only 38.5% of Vietnam's electricity in 2022 because hydropower output was strong and international coal prices surged. The price surge prompted nearly all cost-sensitive power systems to reduce coal use.

Coal has supplied nearly 52% of Vietnam's generation so far in 2026 because hydropower output is the lowest since 2023. Coal's share is the highest for that period since 2020. Ember data show the increased coal share drove power-sector emissions up 16% to a record 129 million metric tons of carbon dioxide and equivalent gases so far this year. Maguire expects further increases in coal use and emissions because the peak hydropower production season has passed. Maguire argues that those increases will help make 2026 a record year for Vietnam's dependence on coal-fired electricity.

Global Energy Monitor reports that Vietnam has around 11 gigawatts of gas-fired capacity under construction. Global Energy Monitor also reports construction of 1.4 gigawatts of hydropower capacity and around 1.3 gigawatts of wind capacity. However, Vietnam also has 2.7 gigawatts of coal-fired capacity under construction. Vietnam plans another 2.6 gigawatts of coal-fired capacity after that.

Maguire concludes that Vietnam looks set to rely primarily on coal to supply production meeting Vietnam's growing share of US import demand. Maguire argues that this reliance may keep production costs relatively low. However, Maguire warns that the associated climate costs may confront US importers when supply chains face scrutiny.