Green industrial policies are sector-specific strategies that reshape industry production to deliver environmental benefits. Such policies aim to reduce carbon emissions, conserve resources, promote renewable energy, and support eco-friendly industries. Across the Asia-Pacific region, governments are implementing incentives such as subsidies, tax breaks, feed-in tariffs, public procurement rules, and targeted investments to encourage the adoption of renewable energy, energy-efficient technologies, and sustainable industrial practices.
The Asia-Pacific — which includes East Asia, South Asia, Southeast Asia, Central Asia, and Oceania — sits at the crossroads of industrial change and climate leadership. The region’s share of global GDP is expected to reach 42 per cent by 2040, driven by bold green industrial policies, strong decarbonisation efforts, and rising investments in sustainable technologies. But how significant is this shift?
The Asia-Pacific accounts for half of global electricity consumption in 2025, with power demand growing faster than the world average. More than 45 per cent of the world’s clean energy investment — US$729.4 billion in 2023 — was directed here, with China alone contributing the largest share. In 2022, India and seven other Asia-Pacific economies joined the ranks of countries in which renewables make up over 75 per cent of new energy capacity.
In China, 1,500GW of renewable energy capacity is projected by 2030, surpassing its previous goal of 1,200GW. China is expected to account for 60 per cent of all new global renewable energy installed through this decade, and by the end of the 2020s, will host more than half of global renewables.
Southeast Asia needs US$210 billion in investments to achieve net-zero emissions by 2050, underscoring the immense scale required for industrial decarbonisation and grid modernisation.
Despite the progress, the Asia-Pacific still faces several constraints. The region must overcome infrastructure bottlenecks, particularly power grid upgrades which are critical for integrating intermittent renewables, supporting electric vehicles (EVs), and ensuring stable industrial supply chains. Pervasive regulatory uncertainty and policy fragmentation also undermine countries’ capacity to establish clear decarbonisation timelines and market frameworks, which in turn discourages private investment.
Asia-Pacific dependence on fossil fuel continues. Despite the downward trend in China, coal still accounts for 82 per cent of power generation in Asia, and coal demand remains persistent in India and Southeast Asia. The European Union’s Carbon Border Adjustment Mechanism is pushing Asia-Pacific exporters to accelerate carbon pricing and transparent emission reporting.
Amidst these challenges, green industrial policies are being implemented across the Asia-Pacific region in several active and coordinated ways.
India’s National Green Hydrogen Mission aims to produce 5–10 million tons of green hydrogen annually by 2030 and to set up the world’s first “green steel” system. By covering the whole value chain, this policy could become a global template, transforming the hard-to-abate steel sector, which has traditionally accounted for over 7 per cent of global CO2 emissions.
China is implementing the Action Plan for Energy Saving and Emissions Reduction, which targets steep cuts in energy use and CO2 across steel, cement, and chemical manufacturing. The Action Plan will expand China’s Emissions Trading Scheme (ETS) to cover 60 per cent of national emissions — including more than 8 billion tons of carbon from the cement, steel, and aluminium industries.
Japan’s Green Transformation for ETS League (GX-ETS) aims to achieve carbon neutrality in 2050. It has rolled out the GX-ETS carbon market and issued climate bonds worth US$120 billion, channeling finance into green hydrogen, ammonia, and carbon capture and storage, with a goal of 3 million tons of clean hydrogen and ammonia production by 2030.
South Korea’s ETS covers major industrial players and is now actively promoting carbon capture and utilisation (CCU) technologies.
Almost all Southeast Asian countries are developing eco-industrial parks where industries cluster together with shared access to renewable energy, supporting infrastructure, and optimised supply chains to accelerate decarbonisation.
The region aims to build greener regional supply chains through collaborations within and across borders, notably by linking with Australia’s green aluminium and steel industries and tapping into China’s expertise in clean technologies. Southeast Asian countries and their partners are leveraging formal dialogues and trade frameworks (such as the Regional Comprehensive Economic Partnership, RCEP) to promote the free flow of clean energy goods and coordinate green industrial policy best practices.
For further progress, the Asia-Pacific region will benefit from adopting a multilateral approach, considering that many policies have regional dimensions. This includes implementing transition policies with clear and enforceable targets, establishing robust market mechanisms, encouraging industrial innovation, and increasing investment in power grids and supply chain infrastructure.
Other focus areas include addressing skills and finance gaps, harmonising regional standards, and introducing carbon accounting to facilitate cross-border trade and investment that prices in the cost of emissions. Finally, the Asia-Pacific should utilise policy instruments for green sectors and incorporate environmental costs through taxes, credits, and market measures.
These policies will require expansion of regional coordination mechanisms such as Asean, Apec (Asia-Pacific Economic Cooperation), Unido (United Nations Industrial Development Organisation), other UN agencies, and engagement with international development institutions such as ADB (Asian Development Bank), AIIB (AII-Asian Infrastructure Investment Bank), and the World Bank. The Asia-Pacific’s experience shows that multilateralism and industrial policy are not in competition but have mutually reinforcing structures and practices.
An urgent acceleration of regional arrangements, technology development and deployment, and infrastructure financing is needed. Increasing adoption of green industrial policies can help scale up regional efforts. If the Asia-Pacific succeeds, it will set a template for the world to follow.
Dr Marco Kamiya is an associate senior fellow at ISEAS – Yusof Ishak Institute, and is the United Nations Industrial Development Organization (Unido) Representative for Indonesia and Timor Leste in Jakarta.
This article was first published in Fulcrum, ISEAS – Yusof Ishak Institute’s blogsite.