Industrial Decarbonization in East Asia

The report provides a comprehensive roadmap for industrial decarbonization in East Asia, focusing on China, Indonesia, and Viet Nam. It proposes a six-tier technical strategy ranging from energy efficiency to green hydrogen and clean feedstocks. The analysis highlights that while efficiency and 'easy electrification' are cost-effective, deeper decarbonization requires massive investments—USD 1.7 trillion cumulatively through 2050 for industry alone across the three nations—and a fully decarbonized power grid. It recommends a policy package centered on carbon pricing, renewable energy procurement, and workforce reskilling to overcome high upfront costs and technical barriers.

• The industrial sectors of China, Indonesia, and Viet Nam are heavily dependent on fossil fuels, with coal and related byproducts accounting for 47% of industrial energy use in China, 57% in Indonesia, and 61% in Viet Nam as of 2022.
• Industrial decarbonization in China, Indonesia, and Viet Nam will require a cumulative capital investment of USD 1.509 trillion, USD 122 billion, and USD 120 billion respectively to reach net-zero emissions.
• Energy and material efficiency (Tier 1) is the most cost-effective strategy, potentially reducing industrial CO2 emissions by 36% in China, 26% in Indonesia, and 29% in Viet Nam.
• Direct electrification (Tiers 2a and 2b) can significantly reduce emissions, but its success is entirely dependent on the decarbonization of the power grid; without a clean grid, Tier 2b could increase CO2 emissions in China and Indonesia.
• Carbon Capture, Utilization, and Storage (CCUS) is critical for the cement industry, particularly in Viet Nam where it could reduce emissions by 19% of forecasted BAU levels.
• Green hydrogen combustion (Tier 4a) is the most expensive abatement strategy, with annualized capital and energy costs of $198/tCO2 in China, $341/tCO2 in Indonesia, and $234/tCO2 in Viet Nam.
• Industrial electricity demand is projected to increase significantly to support decarbonization: 86% higher than BAU in China, 46% in Indonesia, and 56% in Viet Nam by 2050.
• Fossil fuel subsidies create a significant price distortion; in 2022, implicit and explicit subsidies amounted to 12.5% of GDP in China and over 14% of GDP in both Indonesia and Viet Nam.
• A critical skills gap exists in the workforce, particularly in China's coal-dependent provinces like Shanxi and Inner Mongolia, where automation and decarbonization are displacing low-skilled workers.
• The report recommends a 'cluster-based approach' to reduce costs and risks by sharing infrastructure like CO2 transport and hydrogen hubs, citing China's zero-carbon industrial parks as a model.

APA

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

Chicago

Energy Innovation. Industrial Decarbonization in East Asia. 2025. https://energyinnovation.org/wp-content/uploads/Industrial-Decarbonization-In-East-Asia-Full-Report.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-Full-Report.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-Full-Report.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }