Asia's Carbon Markets Strategic Imperatives for Corporations 2025

Proactive exploration1.4 Emerging Asian economies – aiming for connected carbon markets Numerous emerging Asian economies are at the early stages of establishing local carbon markets, facing initial structural and regulatory challenges. They must balance carbon emissions mandates with economic growth and business vitality, while safeguarding development aspirations and natural assets. These countries are in the process of carefully refining regulatory frameworks and designing pilot schemes before they can fully implement national compliance markets (see Table 3). South East Asia’s voluntary carbon market outpaces compliance markets (see Table 4). Nations are actively developing infrastructure such as exchanges and registries to realize the significant potential of nature-based carbon credits. Advancement of compliance carbon markets in South East Asian economies TABLE 3 Country System Status Journey and outlook Indonesia ETS In force 2018: Published MRV guidelines for power plants, after emissions profiling and cost study 2021: Issued national framework for carbon pricing 2023: Launched mandatory ETS for coal-fired plants 2025-27: Expanding ETS coverage to oil and gas power plants India ETS In pilot 2012: Launched perform, achieve and trade (PAT) scheme for energy management 2023-24: Rolled-out carbon credit trading scheme (CCTS) and piloted trading 2025-26: Carbon trade begins Viet Nam ETS In development (initial target – steel, cement, thermal)2021: Established mandate to design national crediting mechanism (NCM) and domestic ETS 2022: Outlined sectoral roadmap 2025: Piloting ETS begins in power, iron, steel and cement industries Philippines ETS Under discussion 2025: Approved carbon trading framework for domestic enterprises, to accelerate ETS development Thailand ETS Carbon taxIn development (initial target – GHG- intensive industrial sectors)2013: Developed pilot MRV system with industrial sectors 2018: Established mandate to design pricing instruments 2022: Conducted capacity building activities 2025: Submitting the final draft of Climate Change Act; plans to implement carbon tax on petroleum products Malaysia ETS Carbon taxIn development (initial target – steel, energy)2021: Engaged state governments and corporate sector to align policy; explored mechanisms (e.g. carbon tax, ETS) 2026: Plans to impose carbon tax targeting steel and energy sectors Sources: Bain & Company et al., International Carbon Action Partnership (ICAP).39 Asia’s Carbon Markets: Strategic Imperatives for Corporations 18