Why the Asia-Pacific Needs a Regional Green Industrial Strategy

A world long shaped by globalisation is rapidly fracturing under geopolitical rivalry and rising protectionism. For trade-dependent Asia-Pacific economies, retreating into isolationism is not the solution — but neither is clinging to outdated, fossil-fuelled growth. The region’s cleantech boom offers a chance to redefine its future, but success hinges on turning this export-led momentum into a homegrown cleantech revolution.

One practical solution is to build green industrial parks that link upstream mineral suppliers — such as Australia and Indonesia — with emerging manufacturing bases in Malaysia, Thailand, and Vietnam. These parks can also draw on China’s cleantech expertise, Japan’s industrial capabilities, and Singapore’s financial strength.

The global surge in clean energy demand has sparked a cleantech race across Asia-Pacific. Southeast Asia has already established itself as a major solar module producer, with Malaysia, Thailand, and Vietnam advancing into higher-value cell and polysilicon manufacturing. India, too, has made significant progress and looks set to surpass Southeast Asia in module output by 2025. And the momentum goes beyond solar: Indonesia, home to 42 per cent of global nickel reserves, launched its first EV battery plants in 2024, while Vietnam’s Vinfast is ramping up battery output for its expanding EV lineup.

Yet these gains rest on shaky foundations. Southeast Asia’s solar manufacturing boom has largely been driven by demand from the US and Europe. Even before the latest US tariff hikes, lobbying by American manufacturers had already slashed solar exports from Cambodia, Thailand, Malaysia, and Vietnam. India, for its part, shipped over 90 per cent of its solar modules abroad in 2023-24.

Here lies the paradox: The Asia-Pacific accounts for nearly half of the world’s energy demand and over 80 per cent of its growth — a trend likely to continue in the near future. Yet fossil fuels still provide more than 80 per cent of the region’s primary energy, despite rapid renewable uptake.

The region’s vast, energy-hungry markets offer a natural hedge against external volatility, but unlocking this potential remains fraught. Beyond entrenched fossil fuel interests, a deeper challenge lies in legacy energy systems designed for the fossil-fuel era. From network infrastructure and regulatory frameworks to industrial processes, much of the energy system remains structurally ill-suited for renewables at scale.

Unlocking domestic demand for renewable energy, therefore, requires a fundamental transformation in how Asia-Pacific societies produce, transport, and consume energy — a task too complex for any single country to tackle alone. Recognising this, many countries have turned to external partners, leading to a proliferation of bilateral deals, multilateral agreements, and regional partnerships, all promising to accelerate domestic energy transitions.

Yet too often these initiatives operate like a disjointed orchestra rehearsal: each section playing in its own tune, rarely building into a symphony. Initiatives shaped by external geopolitical agendas complicate matters further. As donor priorities shift, support wanes — exemplified by the uncertainty following Washington’s withdrawal from Just Energy Transition Partnership (JETP) agreements with Indonesia, South Africa and Vietnam.

One solution is consolidation: creating a region-wide “umbrella” agenda to coordinate energy transition efforts. But as past trade negotiations show, sweeping, top-down cooperation rarely succeeds in a region as diverse as the Asia-Pacific. Too much flexibility, on the other hand, risks perpetuating the status quo — a patchwork of siloed frameworks where progress in one area is undermined by inertia elsewhere.

More critically, this disarray has left the region’s industrial players increasingly vulnerable to decarbonisation pressures. A recent poll found that half of the world’s executives are considering relocating operations in search of greater renewable energy access in the next five years.

Geopolitical headwinds and rising protectionism threaten to derail Asia-Pacific’s cleantech momentum, risking deeper fossil fuel lock-in. Regional net-zero industrial parks offer a strategic response to these headwinds.

That is where a network of net-zero industrial parks could act as the Asia-Pacific’s transition landing zones. By clustering large industrial consumers, these parks lower the unit costs of grid infrastructure and energy storage. Many industrial parks, which are historically off-grid or weakly connected, could circumvent the constraints of incumbent, fossil-based systems that often delay renewable projects for years.

These green industrial parks could bring together the region’s diverse industrial and resource strengths. For example, linking Australia’s green aluminium and steel with manufacturing bases in Southeast and East Asia, China’s cleantech expertise, Japan’s industrial know-how, and investment capital from the Gulf and beyond.

This approach is not without challenges. Some key questions remain: Can platforms like the East Asia Summit — built on ASEAN’s long-established neutrality — broker cooperation among major regional powers? To what extent can recent commitments from China, Japan, and South Korea to revive regional cooperation translate into tangible progress on clean energy after years of inertia? And can existing trade frameworks like the Regional Comprehensive Economic Partnership (RCEP) be leveraged to promote free trade in clean goods and products?  

Answering these questions requires deeper research — but that is not our aim here. Our goal is to highlight the potential of a regional green industrial strategy and spark broader debate on how it might be realised.

The stakes transcend climate. Geopolitical headwinds and rising protectionism threaten to derail Asia-Pacific’s cleantech momentum, risking deeper fossil fuel lock-in. Regional net-zero industrial parks offer a strategic response to these headwinds. By fostering markets for homegrown clean energy solutions, these parks will support industries, create jobs, and attract investment. When people experience these benefits firsthand, they are more likely to believe in the transformative potential of the energy transition. This could, in turn, foster broad-based support for deeper energy transition, and reinforce the region’s growing-by-greening path to a clean and prosperous future.

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