Asia’s policy pathway to net zero


Asia is notorious for its emissions heavy industry and favourable view of coal. Will the region give up on coal? Will their financial systems and EXIM banks align to a greener shift? Do they actually have a choice? This article gives an overview of decarbonisation efforts of five Asian countries, focusing specifically on policy changes to expedite the energy transition.

As the world focuses on recovering from the dramatic economic impact of the COVID-19 pandemic, governments are realising the potential to combine this process with decarbonisation efforts.

This article was originally published in the Enlit Asia special supplement of 
Smart Energy International Issue 4-2020.
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This period of green recovery has been hailed as a once-in-a-lifetime opportunity for countries to make signifi cant strides towards Paris Agreement compliance. The action needed now is that of policy change.

Governments need to take an active stand to foster a regulatory framework more in line with technological advances and renewable energy innovation; and is also aligned with the societal zeitgeist, which is upping the ante in the battle for green.

Asia is among the most dynamic and yet vulnerable regions in the world, with large and growing populations exposed to high and extreme climatic risks due to rapid growth in carbon emissions.


According to Climate Action Tracker, China contributes 27% of the world’s emissions due to population and economic growth. In 2018, the country added 9,358 metric tons of carbon to the atmosphere.

China’s energy sector is moving into a new direction following the president’s call for an “energy revolution” and a transition towards a service-based economic model.

Energy policy places the emphasis on electricity, natural gas and cleaner, higheffi ciency and digital technologies.

There seems to exist a dichotomy between what the region wants to achieve in terms of emissions and the policies currently in place, which suggest different priorities.

Pre-COVID crisis, China’s fossil fuel consumption was growing rapidly, plateauing in the latter half of 2010. We have also seen new coal mines opened and restrictions on new coal-fired plants loosened, with more approvals in March 2020 than in the whole of 2019 combined.

The China Electricity Council has called for the cap on coal-fired power generation capacity to be increased to 1,300GW by 2030, which is 290GW higher than current levels. However, in the second quarter of 2020, The National Energy Administration announced a public consultation for a draft energy law, setting the agenda for a low-carbon and efficient energy system.

China’s Energy Law aims to bring all of China’s disparate energy laws under the same umbrella creating synergy between the laws governing different kinds of sources, such as renewables and fossil fuels, as well as electricity generation and conservation. The Bill is hailed as a response to climate change; however, the proposed legislation also specifies the need for further exploration of fossil fuel energy sources.

In the coming months, China has an opportunity to strengthen its targets for 2030 greenhouse gas reductions under the Paris Agreement as it develops its 14th Five Year Plan, setting its top-level energy and climate policy blueprint for 2021-2025.

China’s national emissions trading system should play a significant and central role in lowering emissions. It will operate first for the power sector before rolling out to industry sectors. The system will reward more efficient and lower carbon power stations, as they will need to make fewer emissions reductions to comply and could profit from trading. The tradable performance standard benchmark approach sets emissions targets relative to output.

This incentivises certain enterprises to emit less greenhouse gas per unit of electricity they produce, ultimately aligning emissions with the economy, making it well-suited to economic shocks and recoveries like those surrounding Covid-19.


Japan has long been a major consumer and importer of energy and a recognised leader in energy technology development.

Efforts to overcome the fallout from the 2011 earthquake and the subsequent Fukushima nuclear disaster have dominated energy policy in recent years, more specifi cally directing the Fourth Strategic Energy Plan.

The policy aims to reform the power system and increase attention on energy efficiency and the environment.

Japan is considered poorly endowed with energy resources and relies on imports for most of its energy needs. Japan has also been a major funder of coal-fired power plants overseas, alongside China and South Korea. While Japan’s public finance institutions haven’t changed their stance on coal, the private sector is showing signs of change.


The long-term strategy the government submitted in June 2019 also demonstrates Japan’s weak ambition – it aims to reach net-zero emissions “as early as possible during the second half of the 21st century.” The most promising changes are taking place in the automotive sector, where the government, together with all major car manufacturing companies, is planning to set a long-term target of reducing tank-to-wheel CO2 emissions by 90% below 2010 levels by 2050 for new passenger vehicles, assuming a near 100% share of electric vehicles.

Other positive developments include the proposed stricter regulations on hydrofluorocarbon (HFC) recovery from end-of-life appliances, raised energy efficiency standards for automobiles and buildings, and increased support for offshore wind power. Furthermore, the long-term strategy reiterates Japan’s commitment to developing hydrogen as a major decarbonised fuel, for which a national strategy was established in 2017.

Japan has long been a leader in energy efficiency through the development and application of innovative technologies. A policy of significance is the country’s 2008 Cool Earth-Innovative Energy Technology Programme, which focuses on identifying areas for energy technology development to support the achievement of ambitious 2050 emissions reduction targets.

The country has also set a 2030 timeline for the universal uptake of net-zero housing, high-efficiency lighting, and smart metering, as well as a 70% share of next-generation hydrogen vehicles.

Japan’s current energy strategy foresees a relatively large share of baseload power plants (i.e. nuclear and coal-fired power plants) of 46–48% in 2030 of total electricity production.

At the IEA Global Clean Energy Transitions Summit which took place in July 2020, Japan’s Minister of Economy, Trade and Industry, Hiroshi Kajiyama, made it clear that no single path will achieve decarbonisation.

However, he committed to tightening rules for investment in foreign coal-fired power stations on environmental grounds. He also stated that countries seeking investment would be required to change their “behaviour” towards decarbonisation.


The country’s national energy policy is framed a great deal by the XI Malaysia Plan, which states that energy efficiency is indispensable to promote a secure and diversified energy supply and to minimize energy costs. The XI Malaysia Plan focuses on the adoption of energy-efficient and low-carbon buildings, transport, products, and services. This plan seeks to introduce demand-side management (DSM) through a comprehensive DSM master plan covering electric and thermal energy, as well as the transport sector.

The XI Malaysia Plan also aims to reduce the nation’s dependency on fossil fuels for electricity generation by boosting the share of renewables in the energy mix, starting from 1% in 2015 and reaching 9%, 10% and 13% in 2020, 2030, and 2050 respectively.

Currently, the country is introducing net energy metering (NEM). The objective is to enhance renewable energy generation by prioritising internal consumption.

Focus is heavily placed on biodiesel blending obligations, with the government targeting 15% biodiesel blending in automotive fuel by 2020. Furthermore, the Electricity Supply Act 2021 aims to increase the energy efficiency of commercial buildings and the negotiation for monetisation on carbon trading as advocated by the current government policy and initiatives on renewable energy.

Malaysia has also seen the recent launch of multi-stakeholder platforms such as GreenTech Malaysia. Under the Ministry of Energy, Science, Technology, Environment and Climate Change (MESTECC) GreenTech has been repurposed to become a centre focusing on renewable energy for mitigating climate change.


According to the International Energy Agency (IEA), Thailand’s energy policy is geared toward reducing dependence on natural gas to enhance energy security.

With the cost reduction of variable renewable energy, conventional Thai power generation has started giving way to alternative sources. The country’s energy policy must evolve, however, to accommodate this change.

The country is already highly vulnerable to climate impacts at present levels of global warming of about 1°C above pre-industrial levels. Warming beyond 1.5°C would result in sea level rise of well over two meters in the long run – almost twice the sea level rise compared with staying below the Paris Agreement limit.

The Thailand Integrated Energy Blueprint (TIEB) is the most recent policy approach, which welcomes sector innovation and combining the use of renewable energy with energy effi ciency to satisfy increased energy demand, whilst managing environmental concerns.

Fossil fuels supply a significant and relatively constant share to meet Thailand’s growing demand. This does not only contribute to climate change but also deepens Thailand’s dependency on energy imports, especially as its own reserves of natural gas are running out.

According to the Nationally Determined Contribution, Thailand has committed to an unconditional 20% reduction in GHG by 2030, as well as a conditional reduction of 25%. The country also pledges to investigate and promote market mechanisms at various multilateral levels.

To slow down the increase in energy consumption in 2015, Thailand adopted the 20-Year Energy Efficiency Development Plan with the goals of reducing energy intensity by 30% and saving nearly 90TWh by 2036. Also, in 2015, Thailand’s Ministry of Energy adopted the Alternative Energy Development Plan (AEDP2015) with the goal of increasing the share of renewables in the electricity sector to between 15 and 20% in 2036.

It also set a 19.68 GW target of installed renewable energy capacity by 2036.

Therefore, the Power Development Plan (2018-2037) adopted in early 2019 included more ambitious targets for 2037: by then the installed renewable energy capacity should total almost 21 GW [The Diplomat, 2019].

In the meantime, leaders will be looking to the ASEAN Plan of Action for Energy Cooperation. This two-phased approach sees a series of medium-term measures to enhance energy security cooperation and to take further steps towards connectivity and integration.

Progress from Phase 1 is guiding ASEAN in charting the pathways and directives for Phase 2 (2021-2025).

South Korea

According to the IEA, Korea’s energy sector is characterised by a dominance of fossil fuels, a strong dependence on energy imports, and the dominance of industrial energy use – the highest share among IEA countries in 2018. The high reliance on foreign energy has led Korea’s energy policy to focus on security of supply.

The Third Energy Master Plan up to 2040, adopted in June 2019, together with the 2017 power sector plan for the period up to 2030, aims to increase the renewable electricity share to 20% by 2030 and 30–35% by 2040 – up from 3% in 2017.

The country is heavily reliant on coal and nuclear power. Coal could still account for more than a third of generated electricity in 2030 – at odds with the Paris Agreement’s 1.5°C temperature goal that requires an OECD phase-out of coal by 2030, and by 2050 globally (according to Climate Action Tracker).

Korea’s Renewable Portfolio Standard (RPS) is the main policy instrument to promote renewable energy. The scheme requires major electric utilities to increase their renewable and “new energy” share in the electricity mix to 10% by 2023.

One of the main cross-sectoral policy instruments implemented to date is the Korea Emissions Trading Scheme (ETS) launched in 2015. The ETS cap for Phase II (2018–2020) was announced in July 2018 and is set to increase from 1,686 CO2e in Phase I (2015–2017) to 1,796 CO2e in Phase II.

In the transport sector, the South Korean Government is pushing the uptake of EVs through subsidies and tax rebates and also investing in a programme to improve charging infrastructure.

The government has pledged investment of 76 trillion won ($61.9 billion) by 2025 to strengthen digitalisation, eco-friendly growth and social safety nets, in a sweeping move to reinvigorate the economy hit by the COVID-19 pandemic. This investment fits well with the New Korean Deal which will see old, fossil fuel-based utility systems replaced with high-efficiency green energy ones. The government will come up with 100 information technology systems to help resolve environmental issues, including tackling fine particles, low-carbon vehicle manufacturing, air quality management and environmental awareness education.

The deal will see 1.7 trillion won ($1.41 billion) spent to finance 100 SMEs with green, sustainable business models in stages; while 5.4 trillion won ($4.53 billion) will be spent to set up infrastructure for the utilisation of solar, wind and hydrogen energy.

What is next

Policy is indeed shifting; however, the slow pace of change in the regulatory arena is a hindrance to the global energy transition. Firm, transparent, collaborative engagement and commitment is needed from governments to do what is required to ensure a just energy transition and continued economic recovery. If action is not taken now, this post-pandemic green recovery would be an opportunity missed.

Surely the last of such an opportunity afforded us.

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