As governments step up efforts to cut greenhouse gas emissions, carbon markets are becoming an increasingly established part of climate policy. The World Bank’s State and Trends of Carbon Pricing 2025 reports that carbon pricing instruments now cover nearly 28% of global emissions, with 80 mechanisms in operation and more than US$100 billion mobilized for public budgets in 2024. For ASEAN, this development matters: carbon markets are no longer experimental. They are becoming part of the global architecture for climate finance. Within this expanding landscape, the region has compelling reasons for confidence, but the next steps will determine the success of ASEAN’s carbon market.

Carbon markets enable countries and companies to trade credits representing verified emissions reductions, creating economic incentives for climate action. For ASEAN—a region rich in tropical rainforests, mangroves, peatlands, and expanding renewable energy capacity—this presents significant opportunities.

By the end of 2024, Asia had cumulatively issued 2.978 billion carbon credits, accounting for56% of the global total, according to the Asia Carbon Credit Market Development Report 2024. Southeast Asia contributed a significant and growing share of those credits. 

Beyond ASEAN’s Carbon Market Momentum

Yet ASEAN’s opportunity is not simply to supply carbon credits. It is to build a market that buyers trust. The question now is of credibility and integrity. Ecosystem Marketplace’s 2025 State of the Voluntary Carbon Market found that global voluntary market transaction volume fell 25% in 2024 and market value fell 29% to US$535 million. In other words, supply alone is not enough.

Compliance markets can create domestic demand aligned with national decarbonization plans, while voluntary markets can bring earlier finance and project development. But both depend on whether credits can be measured, recorded, and verified credibly. 

Carbon credits are credence goods: their value depends on whether the underlying emissions reduction can be trusted. This is why the measurement, reporting, and verification (MRV) architecture of a carbon market is not simply a technical side issue—it is the foundation of market confidence. 

Regional Needs

The need for robust tracking will only grow. In January 2026, the UNFCCC began developing the digital registry infrastructure for Article 6 of the Paris Agreement to record, track, and verify transfers of mitigation outcomes between countries. As this system develops, ASEAN will need data and registry standards that can connect to wider international markets without sacrificing integrity.  

The regional data illustrate why this governance push is necessary. According to the ASEAN Capital Markets Forum (ACMF) 2025 report, Southeast Asia and developing pacific had 284 projects registered in the Voluntary Carbon Market (VCM), with cumulative carbon credit issuances totaling 171.5 MtCO2e as of 2023. However, supply has been concentrated in project types that require the strongest oversight. For example, nature-based solutions (NBS) projects, a category that the ACMF report identifies as carrying relatively high reversal and permanence risks, accounted for only 5.3% of total projects but generated 73% of total issuances.

Additionally, demand inside the region remains thin. Between January 2007 and January 2025, only 1.73 MtCO2 of the 65.76 MtCO2 retired through ASEAN’s carbon market projects came from entities within ASEAN—just 2.6%. ASEAN clearly has supply potential. What it lacks is the governance infrastructure needed to convert that supply into trusted regional and international demand.

The First Steps

In this regard, ASEAN’s carbon market is beginning to develop the institutional foundations needed to address this challenge. The Agreement on the Establishment of the ASEAN Centre for Climate Change (ACCC) assigns the ACCC with developing a database system to monitor climate projects, building capacity, and reviewing verified data. 

Regional market architecture is also taking shape. In November 2025, the ACMF released its Voluntary Carbon Market Development Plan and ASEAN VCM Guidance as part of the ACMF Action Plan 2026–2030. The guidance favors interoperable national registries over a single centralized ASEAN registry. Furthermore, it recommends connectivity with infrastructure, such as the Climate Action Data Trust, and encourages digital MRV to improve the speed and efficiency of validation and verification. 

Several national initiatives already signal this shift. Malaysia’s Further Tax Deduction for Carbon Projects offers up to RM300,000 for MRV and related carbon project development expenses for applications submitted through 31 December 2026. Meanwhile, Bursa Carbon Exchange’s July 2024 auction marked the first sale of domestically generated Malaysian carbon credits on the exchange. Singapore has also moved quickly. As of October 2025, the country had signed implementation agreements under Article 6 with ten countries, showing that ASEAN-based governments are already building the legal foundations for cross-border carbon transactions.

The Next Steps for ASEAN’s Carbon Market

The next step is to connect these emerging efforts. To start, ASEAN’s carbon market development requires three practical forms of cooperation. 

First, member states should align core digital MRV principles so credits generated in different jurisdictions can be compared and trusted. Traditional MRV cannot keep pace with markets that need to scale. For ASEAN, where nature-based solutions account for most credit issuances yet carry the highest permanence risks, aligning on shared data standards and digital verification protocols is the minimum condition for cross-border credibility. 

Second, national registries should be designed for interoperability from the start. The UNFCCC’s Article 6 registry infrastructure includes an interoperability hub designed to connect national and international systems through common standards. ASEAN member states that design their registries compatible with this architecture early will be better positioned to participate in international carbon markets. 

Third, capacity building has to be treated as market infrastructure, not as an afterthought. A two-speed market—in which a few member states can meet high-integrity standards while others cannot—would weaken ASEAN’s collective position. Regional market development will succeed only if its benefits are shared broadly across member states.

ASEAN has the natural capital, the political momentum, and now the beginnings of an institutional framework for a strong carbon market. What it needs most is the invisible infrastructure that makes a carbon market believable; it needs trusted data, connected registries, skilled verifiers, and institutions capable of enforcing shared rules. After all, the most valuable asset in carbon markets  is one that cannot be traded: trust.

The views expressed in this article are those of the author and do not necessarily reflect the views of the Economic Research Institute for ASEAN and East Asia (ERIA).

Editor: Nazalea Kusuma

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Citra Amanda

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Dr. Citra Amanda is an Economist at the Economic Research Institute for ASEAN and East Asia (ERIA), specializing in transition finance and carbon markets. Previously a Research Specialist at Bank Indonesia Institute, she focuses on climate finance policy for ASEAN's low-carbon transition.

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