From Coal Reliance to Clean Power: East Asia’s High-Stakes Journey to Net Zero by 2050

The new World Bank report Green Horizon: East Asia’s Sustainable Energy Future, authored by Xiaodong Wang, Inchul Hwang, Chiara Rogate, Yuge Ma, and Priyank Lathwal, and drawing on research from the International Energy Agency (IEA) and the Emissions Database for Global Atmospheric Research (EDGAR), situates East Asia firmly at the heart of the global climate challenge. In 2023, the region accounted for 42 percent of global greenhouse gas emissions and consumed nearly 60 percent of the world’s coal, producing almost 70 percent of coal-fired electricity. China, Indonesia, and Vietnam dominate this landscape, responsible for 80 percent of regional emissions and 88 percent of coal consumption. Despite lower per-capita emissions than OECD averages, the region’s rapid industrialization and urbanization are pushing demand sharply upward. Electricity consumption is expected to more than double to 22,700 TWh by 2060, while industrial energy use could rise by 72 percent in Indonesia and 143 percent in Vietnam. Without intervention, East Asia’s development path could lock the world into a high-carbon future.

Unlocking the Region’s Renewable Wealth

The report stresses that the transition must begin with clean power. East Asia possesses extraordinary renewable energy potential, about 65,000 GW, dominated by solar, vast offshore wind reserves in China and Vietnam, and Indonesia’s geothermal endowment. China has already emerged as the world’s renewable leader, installing 358 GW of new solar and wind capacity in 2024 alone, more than the rest of the world combined. Vietnam’s solar boom before 2020 was dramatic, but momentum has since slowed due to policy uncertainty. Indonesia lags behind, with less than 1 GW of installed solar and wind by 2023. To harness this wealth, the World Bank calls for competitive renewable energy auctions to replace outdated subsidies, massive investments in modernized grids and storage, the expansion of distributed renewables such as rooftop solar, and regional power integration across ASEAN and the Greater Mekong Subregion. The message is clear: without deep reform of grid systems and markets, much of this clean power will remain stranded.

Policies and Reforms to Drive Investment

Private developers point to a set of persistent barriers, opaque permitting processes, weak power purchase agreements, unpredictable tariffs, and land acquisition hurdles that continue to undermine investor confidence. The report argues that standardized and bankable contracts, predictable auction schedules, and clear risk allocation are essential. In China, reforms must expand ancillary service markets to value storage, scale up interprovincial power trade, and prioritize renewables in dispatch. Indonesia must adopt large, transparent auctions, invest in cross-island grid interconnections, and bring distributed renewables to remote islands. Vietnam needs a robust competitive bidding framework, updated PPAs to attract offshore wind capital, and urgent investment in transmission to reduce curtailment. Lessons from countries such as Brazil, South Africa, and Uzbekistan, where auctions have driven renewable costs to record lows, show the potential impact of reform if East Asia acts decisively.

Industry: The Hardest Sector to Decarbonize

If the power sector is the linchpin, industry is the hardest frontier. Heavy industries, steel, cement, chemicals, and refining, dominate energy use in China, Indonesia, and Vietnam, accounting for up to 87 percent of industrial energy demand. These “hard-to-abate” sectors require high-temperature heat and carbon-intensive feedstocks, making the transition more complex. The World Bank identifies a three-step pathway: first, improve energy and material efficiency, which could deliver one-third of the required cuts at the lowest cost; second, electrify where possible, though a clean power supply is essential; third, deploy advanced technologies such as green hydrogen and carbon capture, utilization, and storage. Without such measures, China could achieve only modest industrial emission reductions by 2050, while Indonesia and Vietnam could see emissions rise by up to 88 percent. Tightened efficiency standards for new plants, carbon pricing to level the playing field, and investments in R&D pilots, from thermal batteries to CCUS in cement, are critical. Cluster-based decarbonization hubs, modeled on Norway’s carbon capture projects and China’s zero-carbon industrial parks, are highlighted as scalable solutions to pool infrastructure and risk across industries.

Financing and Workforce for a Just Transition

The scale of investment needed is staggering. Decarbonizing the power sectors of China, Indonesia, and Vietnam requires nine trillion dollars by 2040, while industrial decarbonization will demand 1.7 trillion dollars by 2050. Early investments in efficiency and electrification yield 65 percent of abatement at just one-fifth of the cost, but advanced technologies need subsidies, concessional finance, and risk-sharing tools. SMEs, which dominate industrial activity, often lack access to affordable credit, underscoring the need for green bonds, sustainability-linked finance, and carbon markets. Yet uptake is limited: only 1.4 percent of global climate finance reaches industry, and a mere 0.07 percent flows into East Asia’s manufacturing. At the same time, millions of workers face disruption. Coal-dependent provinces like Shanxi in China and East Kalimantan in Indonesia risk deep job losses, while Vietnam’s SMEs in rural industrial zones struggle to access reskilling programs. The report urges urgent investment in technical and vocational training, new certification frameworks, and continuous upskilling to ensure workers can transition into clean energy, carbon services, and industrial electrification. Without this, the social and regional inequalities of the transition could deepen.

The World Bank’s report ends on a double note: one of warning, and one of opportunity. Without bold reforms, electrification could backfire, industrial emissions could soar, and the region could entrench coal dependence for decades. But with synchronized power and industry transitions, East Asia could transform itself from the world’s largest consumer of coal into the driver of a global green revolution, modernizing its industries, securing its energy future, creating millions of new jobs, and setting the pace for a sustainable global economy.