The Invisible Infrastructure: What ASEAN's Carbon Market Needs Most

By Dr Citra Amanda, Economist for Transition Finance and Carbon Market: As governments step up efforts to cut greenhouse gas emissions, carbon markets are becoming a more 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 matters because 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 endowed with tropical rainforests, mangroves, peatlands, and growing renewable energy capacity-this presents significant opportunities.

By the end of 2024, Asia had cumulatively issued 2.978 billion carbon credits (56% 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 just 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 explain why this governance push is necessary. According to Climate Focus (2023, cited in the ASEAN Capital Markets Forum (ACMF) 2025 report, Southeast Asia and developing pacific had 284 carbon projects registered in the Voluntary Carbon Market (VCM) with cumulative carbon credit issuances totaling 171.5 MtCO2e. These issuances were highly concentrated in NBS, a category that the ACMF report identifies as carrying relatively high reversal and permanence risks in ASEAN. Although NBS projects accounted for only 5.3% of total projects, they generated 73% of total issuances.

Additionally, demand inside the region remains thin. From January 2007 to January 2025, only 1.73 MtCO2 of the 65.76 MtCO2 retired through ASEAN's carbon market projects was for entities within ASEAN-just 2.6% (AlliedOffsets, 2025, cited in ACMF, 2025). ASEAN has supply. ASEAN therefore does not lack project potential; but the governance infrastructure needed to convert supply into trusted regional (and international) demand.

The First Steps

In this regard, ASEAN's carbon market has been taking its early institutional steps. The Agreement on the Establishment of the ASEAN Centre for Climate Change (ACCC) is tasked with developing a database system to monitor climate projects, building capacity, and reviewing verified data. That institutional layer was being matched by market architecture.

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 timeliness and efficiency of validation and verification.

Some national signals show that this shift is already underway. 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. Then, Bursa Carbon Exchange's July 2024 auction marked the first sale of domestically generated Malaysian carbon credits on the exchange. Singapore, meanwhile, had signed implementation agreements under Article 6 with ten countries as of October 2025, showing that ASEAN-based governments are already building the legal plumbing for cross-border carbon transactions.

The Next Steps for ASEAN's Carbon Market

The next step is to connect these efforts. To start, ASEAN's carbon market development needs 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 built 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 to plug into 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. And ultimately, collective growth should mean the benefits are shared inclusively.

ASEAN has the natural capital, the political interest, and now the beginnings of a regional framework. What it needs most is the invisible infrastructure that makes a carbon market believable; it needs trusted data, connected registries, skilled verifiers, and institutions that can uphold common rules. After all, in carbon markets, the most valuable asset is one that cannot be traded: trust.

This opinion piece was written by Dr Citra Amanda, Economist for Transition Finance and Carbon Market, ERIA and has been published in Green Network.

Disclaimer: The views expressed are purely those of the authors and may not in any circumstances be regarded as stating an official position of the Economic Research Institute for ASEAN and East Asia.