The Association of Southeast Asian Nations (ASEAN) has the potential to unlock a $3 trillion carbon market and remove 1.1 gigatons of carbon dioxide equivalent (CO2e) annually by 2050, according to a new report.
This requires member states to enhance and standardize domestic carbon market capabilities, leveraging the region’s rich natural resources and biodiversity, ASEAN said in a statement on Thursday.
ASEAN, the world’s fifth-largest economy, has vast carbon sinks and is home to three of the world’s 17 megadiverse countries: Indonesia, Malaysia, and the Philippines.
These assets could enable ASEAN to generate annual revenues of $27 billion in the REDD+ market, US$96 billion in blue carbon projects, and $143 billion in biochar initiatives.
However, the region has so far supplied only 7% of global carbon credit issuances between 2009 and 2024.
The report, developed by Abatable, the ASEAN Alliance on Carbon Markets (AACM), and Equatorise, emphasizes the need for robust regulations, institutional capacity, and standardized methodologies to maximize ASEAN’s carbon market potential.
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Dharsono Hartono, Chair of AACM, emphasized the opportunity to balance economic growth with environmental responsibility: “I am delighted to welcome the launch of the Carbon Markets Policy Report for ASEAN. Carbon markets have immense potential to serve as a cornerstone of a greener, more resilient future for the region, enabling us to balance economic growth with environmental responsibility.
This report highlights the significant opportunities ahead — projecting up to $3 trillion in economic benefits for ASEAN by 2050. It also provides a clear breakdown of various carbon credit project types and practical steps for policymakers and stakeholders to realise these opportunities. The challenge now is to transform this vision into action, ensuring ASEAN takes the lead in creating a more sustainable and prosperous future for its people.”
Valerio Magliulo, CEO of Abatable, highlighted the economic and environmental benefits of carbon markets by saying: “The report emphasises the immense potential of carbon markets in the ASEAN region to unlock essential climate finance, preserve nature, address climate change, and advance sustainable development. If implemented, the considerations will drive demand, grow investment, create more than 13 million new jobs and deliver decarbonisation pathways for ASEAN Member States. This would help position ASEAN as a global leader in carbon markets.”
Key recommendations in the report include:
- Establishing comprehensive carbon market regulations to attract investments and create market certainty;
- Building institutional and technical capacity through dedicated government offices and specialized university courses;
- Aligning ASEAN-wide standards with international best practices to enhance market credibility;
- Implementing domestic compliance schemes, such as emissions trading systems or carbon taxes, to drive demand for carbon projects;
- Promoting voluntary carbon market activities to enhance public engagement and position ASEAN as a global leader;
- Engaging with Article 6 mechanisms under the Paris Agreement to diversify demand.
With these strategies, ASEAN can pioneer a regional carbon market that attracts international and private finance, advancing climate goals and fostering low-carbon economies.
Read more: COP29: ASEAN Countries To Create Common Carbon Market Framework
