East Asia Leads the Green Transition – Lessons for New Zealand

Green economic goals are now at the core of the region’s economic renewal, industrial policy, and strategic planning. Retiring polluting industries is good news for the environment, quality of life in Asia’s major cities, and climate change mitigation. Green ambitions are genuinely held by policymakers but represent only part of the picture. Asia’s green transition is underpinned by a powerful economic logic whereby governments are fusing environmental transformation with the same developmental ambition that powered their rise as industrial powerhouses.

Japanese researchers, backed by government ambitions, are advancing perovskite solar cell technology—lightweight, flexible, and efficient enough to rival conventional silicon—to boost renewable energy and achieve 20 gigawatts of capacity by 2040. Photo: Japan Forward.

The story of why and how East Asia has gone all in on a green transition is the focus of a recent book by political scientists Elizabeth Thurbon, Sung-Young Kim, Hao Tan and John Mathews. They use the term developmental environmentalism to explain the East Asian approach. The state as central coordinator is key, with governments guiding markets, mobilising finance, building industrial ecosystems, and using major policy levers to deliberately accelerate the shift to a low-carbon economy. This state-led approach builds on the developmental strategies East Asian states used to drive export-focused industrialisation in the post-war period.

For Thurbon and colleagues, the driving force behind this form of green economic development comes from a commitment on the part of political elites to the idea that a green transformation can tackle several significant challenges at once: ensuring energy security in a complex geostrategic environment (including China’s “Malacca dilemma”), generating and maintaining technological and industrial capacity to capture first-mover advantage, creating economic security, delivering environmental progress, and – at a higher level – securing political legitimacy. The green transformation paradigm is therefore the favoured playbook for tackling economic, social, and geostrategic challenges.

Developmental environmentalist states are acting pragmatically, deploying state resources and capacity to speed up the green transition rather than seeking state control of the commanding heights for its own sake. This is a process of elites seeking to re-make existing industrial capitalism – and the energy system underpinning it – rather than replacing it. Thurbon and her colleagues draw on Joseph Schumpeter’s view of capitalist innovation as a cycle of “creative destruction.” Developmental environmentalist states are deliberately using state power to accelerate the “creative” (new green technologies, industries, and jobs) and are steely enough to accept the “destruction” of carbon-intensive industries despite the existence of powerful interests wedded to the status quo.

Are authoritarian states inherently more capable of achieving green transition? Thurbon and colleagues argue the persuasive power of the green transition paradigm as a coordinating raison d’être is the more important variable, noting that elites in democratic South Korea are as committed to the strategy as those in one-party China. While East Asia remains a major emitter of greenhouse gases, the early 2000s through mid-2010s focus on building green, future-oriented industries has provided the platform for a retirement phase now underway – coal power and fossil-fuelled transport are being wound down in favour of new, job-rich and globally competitive green industries.

East Asian states have used a range of policy instruments to guide and scale green development. The developmental environmentalist scholars highlight the critical role of state-led market creation (via procurement strategies and targeted subsidies), technology acquisition (including patent sharing and public credit), new firm creation, education and skills strategies, and “cluster building” (co-locating firms in industrial zones). East Asian elites view the state as the principal agent in crafting a desired green future, fostering economic dynamism with the explicit objective of bringing in the new and displacing the old.

By contrast, other advanced industrial nations have adopted fewer of these instruments, used them with less intensity, or – whether by design or inertia – relied on private enterprise and private capital to be the agents of change. Deeply held beliefs in the “neoliberal” or non-interventionist market state, still favoured in much of the developed world (including New Zealand), frame state leadership in a negative light. This limits the imagination of officials, politicians and the public when it comes to the progressive economic potential of state coordination, capacity-building, public financing, and de-risking. Policies like carbon taxes may unsettle fossil fuel incumbents, but they are not, on their own, a ticket to material industrial transformation.

The results of the two approaches are clear. East Asia is leading in renewable and green industrial transformation, while other nations are either slow to adopt the necessary policy instruments, waiting for private capital to organise itself, or doubling down on the status quo.

East Asia’s green industries are not only an environmental success story; they are a competitive challenge to countries like New Zealand. If we want to be more than a technology taker, we need to match their ambition. That means scale, coordination, and funding at levels considerably greater than at present – though initiatives such as the Glenbrook electric arc furnace and initial funding for supercritical geothermal exploration are important developments.

Even Australia is now considerably further ahead than New Zealand in a forward-leaning green development strategy, with its AU$1.7 billion Future Made in Australia Innovation Fund (supporting innovative green metal projects, clean energy technology manufacturing, and low-carbon liquid fuels), AU$2 billion Green Aluminium Production Credit, AU$1 billion Green Iron Investment Fund, a Hydrogen Production Tax Incentive, and significant state-level investments alongside strategic R&D funding. By contrast, New Zealand’s Hydrogen Action Plan promotes a “cost-effective, market-led transition to a low-emissions economy”.  

Competing means setting clear national priorities, mobilising public finance at scale, and being prepared to wind down industries that do not fit our vision for the future. One area where we have an opportunity to combine green industrial statecraft and diplomacy is in geothermal energy. Existing geothermal development partnerships with Indonesia and the Philippines show how technical cooperation can serve as both an export and a diplomatic asset. Scaling up our engineering and supply-chain presence in Asia and Africa relating to renewables offers significant potential – if we choose to pursue it.

In the coming years, green industrial capability will be a source of power as well as prosperity. East Asia understands this and other advanced nations are taking note. New Zealand must decide whether it wants to secure its place in this new green industrial order – and accept that older, familiar ways of organising our economy and state may need to go the way of the petrol car.

Jordan King is currently based in Western Australia working in the energy and minerals research sector. He is a former Senior Research Advisor for the Asia New Zealand Foundation and a current member of the Foundation’s Leadership Network. Jordan holds a PhD in sociology from the University of Auckland and a Master of Arts in China Development Studies from the University of Hong Kong.  

 -Asia Media Centre