A recent report from Abatable and co-authors, ‘The opportunity for carbon markets in ASEAN’, spotlights the significant opportunities available for growth and impact against climate change, estimating that the value of carbon market opportunities could hit $3 trillion by 2050. The low-range scenario of cumulative revenue is estimated to be ~$946 billion, a significant sum, and a significant opportunity.
A figure this high is inevitably going to raise some eyebrows. After all, the collective GDP of ASEAN nations is just over $3.4 trillion. Moreover, several reports have now spotlighted ambitious projected figures for the size of carbon markets.
While applying a critical lens to the headlines of the day is essential, the trend is unmistakable. The number of carbon pricing mechanisms, in various forms, are on the rise across the world, and it is relevant to business today. In 2023, carbon pricing revenues reached a record $104 billion, according to the World Bank’s annual “State and Trends of Carbon Pricing 2024” report.
More regionally, the Horizon at Grand View Research forecasts the Asia Pacific carbon credit market to grow from $36.7 billion in 2023 to $423.7 billion by 2030, at a compound annual growth rate of of 41.8%.
Carbon pricing already has direct and significant implications for businesses. Many economies around the world are replicating and adapting the success of the European Emissions Trading Scheme (EU ETS), which has direct impacts on the operation of heavy emitters in targetted sectors Europe. The World Bank reported that global carbon pricing revenues reached a record $104 billion in 2023, including both emissions trading schemes (ETS) and taxes, as well as other forms of carbon pricing, such as carbon crediting.
In ASEAN specifically, we have already witnessed the growth and revenue opportunities of these schemes for businesses –a joint report from UK and Singaporean universities, and published by the UK government, estimated that voluntary carbon markets (VCMs) in Southeast Asia have grown from less than $5 million in 2010 to over $100 million in 2020.
The scale of the challenge for ASEAN may be significant, but this is matched by the extent of the opportunities for businesses.
A Brief History of Carbon Pricing in Business
It’s worth noting that this opportunity didn’t appear overnight, and has been crystallising for two decades. The international carbon market emerged in the early 2000s under the Clean Development Mechanism (CDM), a framework established under the 1997 Kyoto Protocol (and operational by 2006). CDM allowed developed countries to finance emission-reduction projects in developing countries and earn carbon credits (CERs).
The CDM allowed developed countries to finance emission-reducing projects in developing countries through carbon credits (certified emissions reductions, CERs), with the private sector playing a key role in identifying, desining, and implementing the projects on the ground. A range of demand-side credit buyers also emerged together with developed country governments purchasing credits to meet compliance targets under the Kyoto Protocol.
Over the 2010s, voluntary carbon markets gained traction, particularly as corporate ESG agendas matured. Under standards like Verra’s VCS, Gold Standard, and Climate Action Reserve, businesses could purchase carbon credits to offset emissions from from operations ranging from direct emissions to flights.
While these efforts were voluntary, there has been an increasing shift in regulated carbon obligations, that is, businesses being required – by law – to price, report and abate or offset emissions. Singapore’s National Clime Change Secretariat has now committed to a steep increase:
- SGD $25/tCO₂e from 2024
- SGD $45/tCO₂e in 2026 and 2027
- SGD $50–80/tCO₂e by 2030, depending on market conditions
While Singapore is a comparatively small emitter, it holds considerable influence in the region, often pioneering change or catalysing regional pace. As such, a trend is expanding across ASEAN:
- Indonesia launched a national cap-and-trade pilot ETS for the power sector in 2023
- Vietnam will introduce a national ETS by 2028, as mandated by its Law on Environmental Protection.
- Thailand operates a voluntary crediting program (T-VER) and is developing a compliance market.
- Malaysia has committed to implemented a carbon tax by 2026 on the iron, steel, and energy industries.
What Does This Mean for You?
Whether it is tomorrow or in 5 years, businesses in ASEAN will soon be subject to carbon pricing regimes. These regimes could be via ETS, carbon taxes, or other means to take responsibility for emissions
To seize a competitive edge, businesses should act early, and act now. While new regulatory requirements present risks to businesses, the current trend illustrates that regimes can be flexible and even work across regions.
If we return to our case study of Singapore; authorities have developed a policy that has blended regulation with market flexibility, allowing emitters to either abate emissions or purchase offsets. By allowing international credits, it creates demand for projects in neighbouring ASEAN countries — particularly in nature-based solutions and clean energy. This model is attractive to governments with a balance of compliance and investor confidence and is likely to be replicated.
Fortunately, there are some tangible steps for businesses to take to position themselves ahead of this curve.
- Assess your exposure to carbon pricing risk. Evaluate whether your operations are—or will soon be—subject to a carbon tax or ETS in jurisdictions such as Singapore, Indonesia, or Vietnam. Quantify the financial impact of future carbon prices.
- Integrate carbon into core financial and investment planning. Develop an internal carbon price to guide capital allocation, especially for energy use, fleet management, and long-term infrastructure. Adjust ROI thresholds for new investments to reflect future carbon liabilities or savings from efficiency.
- Explore opportunities to reduce exposure or generate value. Cut emissions via energy efficiency, process improvements, or renewables. Identify potential for carbon credit generation, e.g., through land management, clean tech, or partnerships with project developers. Understand which voluntary credits are likely to be eligible for future compliance use.
- Build internal capabilities and external credibility. Upskill finance, legal, and procurement teams on carbon markets and climate disclosure. Communicate clearly and credibly—especially if purchasing offsets—to avoid greenwashing and build stakeholder trust.
These steps are practical, but to some businesses, the challenge may seem significant. That’s why we are building a network for regional sustainability in Southeast Asia, inFUSE, to support businesses navigating carbon pricing regulations, meet growing investor and stakeholder demands, and ultimately drive measurable sustainability outcomes.
Businesses are inviting to join one of our weekly workshops, hosted in Jakarta and Bangkok, to deepen understanding of key issues in this space. In the meantime, you can stay up to date through our Southeast Asia weekly Carbon News Digest.
Conclusion
The direction of travel is clear for carbon markets across the globe – and ASEAN is at the heart of these seismic shifts. Whether the cumulative revenue is $3 billion over the next few decades, or whether it’s several hundred million, businesses are being offered real opportunities. Business leaders should move beyond compliance exercises and take the reigns on demonstrating real corporate sustainability leadership – and lean into climate economics. Those who embrace the opportunity of carbon pricing will not just manage risk—but also seize the competitive advantage.
