Asia's Carbon Markets Strategic Imperatives for Corporations 2025

The Asian carbon market is of unique significance Globally, carbon markets cover 23% of GHG emissions and jurisdictions representing 58% of global GDP have certain carbon markets in place,6 with developed economies primarily leading. Asia, accounting for more than 50% of global emissions7 and 55% of GDP ,8 has carbon markets covering approximately 28% of regional emissions.9 Asia’s carbon markets are multi-layered and diverse. The region hosts quite advanced carbon markets (e.g. Japan, South Korea, Singapore) and is developing nascent systems (e.g. India, South East Asia), while China represents the largest carbon market in the world and is strategically expanding. Whether advanced or developing, each country is innovating its own institutional framework. Asian carbon markets are actively exploring various models and schemes, including high-potential voluntary carbon markets and interconnectivity mechanisms that are both regional (e.g. ASEAN’s Common Carbon Framework) and global. This focused evolution is accelerated by policies such as the Carbon Border Adjustment Mechanism (CBAM) of the European Union (EU) and has positioned the region as a critical contributor to global climate solutions, offering innovative models for other economies worldwide. The evolving Asian carbon market has strategic implications for corporations As 2030 approaches, Asian carbon markets will need to undergo a transformative integration of economic and environmental priorities, creating both challenges and opportunities for companies. Corporations should adopt a new carbon market-informed strategy to thrive in this evolving landscape, as carbon pricing will increasingly affect operational and product costs. Moreover, evolving carbon market and technological advancements will accelerate next-generation solutions, such as low-emission fuels and carbon capture, utilization and storage (CCUS), creating new profit pools. To succeed, corporations should help to foster a robust ecosystem by advocating for effective policies and enhancing market liquidity to lead in Asia’s low-carbon transition. About this insight report This insight report delivers a strategic analysis of selected Asian carbon markets, presenting actionable insights for corporations, financial institutions and policy-makers. As Asian carbon markets evolve, their interconnection emerges as a systemic endeavour requiring collaboration across these three sets of stakeholders. The report comprises two main chapters: –Chapter 1 examines the evolution of Asian carbon markets, with an in-depth focus on China’s system and developments in established markets (Japan, South Korea, Singapore), as well as in emerging markets (India, South East Asia). It highlights the importance of regional and international collaboration in scaling-up these markets. –Chapter 2 discusses strategic implications for corporations, detailing how businesses can integrate carbon market strategies to manage risks, seize opportunities and drive sustainable growth amid Asia’s low-carbon transition, supported by case studies from outstanding Asian corporations. By connecting policy, market dynamics and business strategy, this report equips corporate leaders and financial institutions to align their strategies with the transformative potential of Asian carbon markets and remain competitive in a low-carbon global economy. It also offers a fresh perspective for policy-makers, aiding them in designing policies that can foster market growth more effectively while aligning with broader climate and economic objectives.Globally, carbon markets cover 23% of GHG emissions and jurisdictions representing 58% of global GDP have certain carbon markets in place. Asia’s Carbon Markets: Strategic Imperatives for Corporations 7