This chapter conducts a systematic comparative analysis of the design, implementation, and effectiveness of climate and energy policies in China, South Korea, and Japan. The study reveals that the three nations have developed unique governance models based on their respective national contexts. A SWOT analysis finds that China’s strengths lie in its strong state mobilization capacity and vast market size, but its coal-dominated energy structure results in high abatement costs. Japan excels with its leading energy-saving technologies and sophisticated policy design, yet its policy style is relatively cautious. South Korea, meanwhile, demonstrates ambition aligned with international standards and a market-oriented approach, but its export-dependent economy faces significant competitiveness and volatility risks under carbon constraints. In terms of economic efficiency, the policy designs of the three countries lead to different cost impacts and market performance. South Korea’s higher share of auctioned allowances imposes direct cash-cost pressure on firms. China’s use of free quota allocation results in more moderate initial cost burdens. Japan employs cautious design to buffer impacts on key industries. These different allocation and price stabilization mechanisms reflect the distinct policy trade-offs each country makes. In terms of innovation incentives, China’s innovation driven by market needs, Japan’s innovation is often guided by national strategy, and South Korea adopts a “goal-oriented” catch-up model. This divergence is also reflected in green finance, where China has formed a vast market-driven ecosystem, Japan has constructed a state-led financing framework, and South Korea has demonstrated a path of coordinating administrative targets with market incentives. Regarding environmental effectiveness and industrial impact, China’s emission reduction path has focused on intensity reduction, South Korea’s on absolute caps, while Japan’s local practices have validated the feasibility of deep decarbonization in specific sectors. An analysis of heavy industries shows that carbon leakage risk and cost pass-through capability are highly dependent on an industry’s trade exposure, energy structure, and product characteristics. This has also given rise to different technological transformation pathways: China is promoting electric arc furnace (EAF) short-process steelmaking, South Korea is betting on cutting-edge hydrogen-based metallurgy, and Japan is developing energy conservation and carbon reduction within existing processes. In conclusion, the climate policy practices of the three Northeast Asian countries are not replications of a single model. These differentiated governance experiences constitute a valuable regional exploration, providing a rich and diverse set of case studies for global climate governance.

Comparative Analysis of Market-Based Climate and Energy Policies in Northeast Asia

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发表日期：

2026年

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Ning Zhang

摘要

This chapter conducts a systematic comparative analysis of the design, implementation, and effectiveness of climate and energy policies in China, South Korea, and Japan. The study reveals that the three nations have developed unique governance models based on their respective national contexts. A SWOT analysis finds that China’s strengths lie in its strong state mobilization capacity and vast market size, but its coal-dominated energy structure results in high abatement costs. Japan excels with its leading energy-saving technologies and sophisticated policy design, yet its policy style is relatively cautious. South Korea, meanwhile, demonstrates ambition aligned with international standards and a market-oriented approach, but its export-dependent economy faces significant competitiveness and volatility risks under carbon constraints. In terms of economic efficiency, the policy designs of the three countries lead to different cost impacts and market performance. South Korea’s higher share of auctioned allowances imposes direct cash-cost pressure on firms. China’s use of free quota allocation results in more moderate initial cost burdens. Japan employs cautious design to buffer impacts on key industries. These different allocation and price stabilization mechanisms reflect the distinct policy trade-offs each country makes. In terms of innovation incentives, China’s innovation driven by market needs, Japan’s innovation is often guided by national strategy, and South Korea adopts a “goal-oriented” catch-up model. This divergence is also reflected in green finance, where China has formed a vast market-driven ecosystem, Japan has constructed a state-led financing framework, and South Korea has demonstrated a path of coordinating administrative targets with market incentives. Regarding environmental effectiveness and industrial impact, China’s emission reduction path has focused on intensity reduction, South Korea’s on absolute caps, while Japan’s local practices have validated the feasibility of deep decarbonization in specific sectors. An analysis of heavy industries shows that carbon leakage risk and cost pass-through capability are highly dependent on an industry’s trade exposure, energy structure, and product characteristics. This has also given rise to different technological transformation pathways: China is promoting electric arc furnace (EAF) short-process steelmaking, South Korea is betting on cutting-edge hydrogen-based metallurgy, and Japan is developing energy conservation and carbon reduction within existing processes. In conclusion, the climate policy practices of the three Northeast Asian countries are not replications of a single model. These differentiated governance experiences constitute a valuable regional exploration, providing a rich and diverse set of case studies for global climate governance.