Industrial Decarbonization in East Asia

The report identifies four technical pillars for industrial decarbonization in East Asia: energy and material efficiency, electrification with renewable energy, CCUS, and green hydrogen/clean feedstocks. It highlights significant barriers, including high fossil fuel dependence, insufficient clean power infrastructure, a lack of fit-for-purpose finance, and a skills gap in the workforce. The document proposes a comprehensive policy package focusing on industry-power co-optimization, cluster-based financing, and vocational training to achieve net-zero targets by 2050 or 2060.

• The industrial sectors of China, Indonesia, and Viet Nam are heavily dependent on fossil fuels, with shares of 71%, 66%, and 70% respectively when petroleum and natural gas are included. Consequently, industrial emissions as a share of total energy-related CO2 emissions are 26% in China, 24% in Indonesia, and 31% in Viet Nam, significantly exceeding the global average of 18%.
• Energy and material efficiency (Pillar 1) is the most cost-effective 'no-regrets' solution, capable of abating 36% of industrial CO2 emissions in China, 26% in Indonesia, and 29% in Viet Nam. These measures can reduce energy consumption by 13–19% for most industrial subsectors.
• Electrification powered by renewable energy (Pillar 2) has the highest abatement potential in Indonesia (53%) and Viet Nam (41%), while in China it abates 32%. However, without a clean grid, 'easy electrification' (Tier 2a) has little effect, as 85–90% of avoided industrial emissions are replaced by increased emissions from the electricity sector.
• Carbon Capture, Utilization, and Storage (CCUS) is critical for cement and primary steelmaking, accounting for 11–12% of total abatement in China and Indonesia, and 19% in Viet Nam. While its energy costs are low because it relies on cheaper fossil fuels, its capital costs per tonne of CO2 abated are the highest of all modeled technology tiers.
• Green hydrogen and clean feedstocks (Pillar 4) are the most expensive abatement strategies, with annualized capital and energy costs for combustion (Tier 4a) reaching $198/tCO2 in China, $341/tCO2 in Indonesia, and $234/tCO2 in Viet Nam. They are essential for high-temperature processes and chemical feedstocks where other options are not feasible.
• Industrial decarbonization requires massive capital investment: $1.5 trillion for China, $122 billion for Indonesia, and $120 billion for Viet Nam. Current financial flows are insufficient, with only 1.4% of global climate finance directed toward industrial decarbonization in 2022.
• A significant gap exists between the skills provided by current education systems and the demands of the green transition. There is a specific need for professionals who can integrate technical expertise with 'decarbonization literacy', digital capabilities, and regulatory knowledge.
• Fossil fuel subsidies create market distortions that hinder the transition. In 2022, explicit subsidies were $104 billion in China, $34 billion in Indonesia, and $33 billion in Viet Nam; implicit subsidies reached 12.5% of GDP in China and over 14% in Indonesia and Viet Nam.

APA

Energy Innovation (2025). Industrial Decarbonization in East Asia. https://energyinnovation.org/wp-content/uploads/Industrial-Decarbonization-In-East-Asia-Executive-Summary.pdf

Chicago

Energy Innovation. Industrial Decarbonization in East Asia. 2025. https://energyinnovation.org/wp-content/uploads/Industrial-Decarbonization-In-East-Asia-Executive-Summary.pdf.

Wikipedia

{{cite report |author=Energy Innovation |title=Industrial Decarbonization in East Asia |date=2025 |url=https://energyinnovation.org/wp-content/uploads/Industrial-Decarbonization-In-East-Asia-Executive-Summary.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{energyinnovation2025industrial, author = {{Energy Innovation}}, title = {{Industrial Decarbonization in East Asia}}, institution = {Energy Innovation}, year = {2025}, url = {https://energyinnovation.org/wp-content/uploads/Industrial-Decarbonization-In-East-Asia-Executive-Summary.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }