On July 30, 2026, the Asian Foundry Federation (AFF) released the "2026 Asia-Pacific Green Foundry Development Report" in Bangkok. The report shows that in 2025, the carbon emission intensity per unit output value of the foundry industry in the Asia-Pacific region fell by 5.2% compared with 2019, ahead of other major global production regions, but the problem of lagging transformation among small and medium-sized enterprises remains prominent. The report recommends establishing a regional green foundry fund and promoting a cross-border carbon trading mechanism to accelerate the decarbonization process of the entire industry.
Green Transformation Achieves Staged Results
The report points out that in 2025, the total output of the Asia-Pacific foundry industry reached 58 million tons, accounting for 62% of global output, a year-on-year increase of 3.8%. Despite sustained output growth, the overall carbon emission intensity of the industry fell against the trend by 5.2%, mainly thanks to large-scale investments by large enterprises in technologies such as electric furnace substitution, recycled metal use and waste heat recovery. For example, leading aluminum casting companies in Japan and South Korea have increased the proportion of recycled aluminum used to over 70%, and energy consumption per unit of product decreased by 18% compared with 2019.
China, as the world's largest foundry producer, completed the elimination of 1,200 cupola furnaces in 2025, and the penetration rate of electric arc furnaces increased to 85%. Southeast Asian countries such as Thailand and Vietnam, driven by the demand for new energy vehicle die-cast parts, have also begun to upgrade local smelting equipment. Report data shows that the share of clean energy (including hydropower, wind power and photovoltaics) in the electricity mix of the foundry industry in the Asia-Pacific region has increased from 29% in 2019 to 41%.
SMEs Lag Behind: Dual Bottlenecks of Funds and Technology
However, behind the impressive data lies a significant dual polarization. The report surveyed 4,200 enterprises in the region and found that among large enterprises with more than 500 employees, 78% have adopted recycled metals or green electricity, while among small and medium-sized enterprises with fewer than 100 employees, this proportion is only 23%. SMEs generally use traditional cupola furnaces, lack funds to replace them with electric furnaces and supporting dust removal equipment, and face rising environmental compliance costs.
In Southeast Asia, about 60% of foundries are small family businesses, with profit margins persistently below 5%, making it difficult for them to afford green equipment upgrades often costing millions of dollars. Even in Vietnam, previously viewed as a "paradise for low-cost relocation", environmental regulations are also tightening rapidly, leaving some small enterprises in survival difficulty. AFF Secretary-General Rahman Aziz said at the press conference: "If SMEs cannot cross the threshold of green transformation, the emission reduction commitments of the Asia-Pacific foundry industry will become empty talk."
Policy Efforts: Indonesia and Vietnam Take the Lead
To break this deadlock, some countries have begun to introduce targeted support policies. On July 28, the Indonesian Ministry of Industry announced that it will provide a subsidy of up to 30% for equipment purchases to foundry enterprises adopting electric furnace smelting technology, and grant tax incentives to enterprises using scrap aluminum and scrap copper. Indonesia aims to reduce the carbon emissions of its national foundry industry by 35% before 2030.
The Vietnamese government issued a notice on the same day, planning to completely eliminate 500 obsolete cupola furnaces by 2027, while accelerating the construction of centralized "green foundry parks" to provide shared flue gas treatment systems and recycled metal supply services for SMEs in the parks. Deputy Minister of Industry and Trade of Vietnam Nguyen Thi Phuong Trang said that this move aims to maintain the country as an important global foundry processing base while realizing manufacturing upgrading.
Industry Insight: Green Foundry Becomes a New Investment Mainline
Industry analysts believe that the green transformation of the Asia-Pacific foundry industry is reshaping the competitive landscape and investment logic of the industry. On the one hand, green compliance costs will accelerate industry consolidation, and leading companies with financial and technological advantages are expected to gain higher market share. On the other hand, carbon tariffs and supply chain carbon footprint tracking (such as the EU CBAM) make "low-carbon capacity" a key threshold for cross-border procurement, and enterprises that have taken early steps to adopt green foundry practices can enjoy premium dividends.
Chen Zhiyuan, an analyst at carbon asset management company Greentech Advisory, pointed out: "The carbon emission intensity of the foundry industry is directly related to the export competitiveness of downstream industries such as automobiles, aviation and machinery. We estimate that green equipment investment in the Asia-Pacific foundry industry will exceed US$20 billion over the next three years, of which about 60% will flow to China, Japan and South Korea, and Southeast Asia will become the second growth pole."
The report recommends that Asia-Pacific countries establish a joint "green foundry fund" to provide low-interest loans and technical assistance to SMEs, while exploring cross-border carbon trading pilots to provide market-based incentives for energy conservation and emission reduction. This proposal may be further discussed at the APEC Business Leaders Summit this November.
Opportunities and Challenges Ahead
- Short-term highlights: The implementation effects of policies in Indonesia and Vietnam and whether they will drive more countries to follow suit.
- Technology outlook: Small-scale application of hydrogen smelting and carbon capture and storage (CCS) in the foundry industry is expected to start trials in 2027.
- Investment focus: Suppliers of aluminum and magnesium alloys with green metal certification, as well as integrated equipment companies providing electric arc furnace retrofit solutions.
Overall, the Asia-Pacific foundry industry is at a critical juncture of green transformation. The triple drivers of policy, technology and capital will determine the industry landscape over the next decade. For investors, tracking companies' performance on ESG indicators has become an important way to capture alpha returns in the Asia-Pacific foundry market.
