Integrating Asia’s carbon markets critical to global net zero goals, WEF-Bain reports

HONG KONG - September 11, 2025 - Asia accounts for more than half of global emissions and over 55% of global GDP, yet its carbon markets cover only 28% of regional emissions. A new report by the World Economic Forum and Bain & Company, Asia's Carbon Markets: Strategic Imperatives for Corporations, calls for urgent action to strengthen cooperation and integration across Asia's carbon markets. The report presents an overview of Asia's carbon markets and outlines strategic imperatives for businesses to accelerate decarbonization and drive growth in the low-carbon economy.

"The climate finance gap of APAC countries is $800 billion on an annual basis. Carbon markets can be a means to provide the resources needed to catalyze and secure a more orderly carbon transition process, especially in developing and emerging markets. This report calls on corporations to explore and integrate the use of carbon markets as part of their climate strategies to enable sustainable growth and low carbon transition efforts." Said Gim Huay Neo, Managing Director at the World Economic Forum.

Fragmented carbon markets in Asia but strategic cooperation opportunities available

Part of the challenge is the diverse development stages of carbon markets across Asia, but there is strong potential for regional synergy, the report finds.

Article 6 of the Paris Agreement holds significant potential towards globalization of carbon pricing through international cooperation. It facilitates linking regional and national systems through Internationally Transferred Mitigation Outcomes (Articles 6.2 and 6.4), promoting collaboration and reducing market fragmentation.

Asia, led by China, represents a substantial proportion of the Clean Development Mechanism credits that have applied for transfer to the new Article 6 mechanism. China operates the world's largest carbon market. Its emissions trading system (ETS) is forecast to cover 8.7-10.6 billion tonnes of emissions in 2028-2029, with a potential market size of $56-84 billion by 2030. The relaunched voluntary carbon market - Chinese Certified Emissions Reduction (CCER) - is expected to generate 300-500 million tonnes of demand potential by 2030, based on a 5% ETS offset limit on using emissions offsets. Together, these tools will make China's carbon market a cornerstone of global climate action.

Importantly, while China's carbon market exists within a robust framework, its potential hinges on deeper cross-disciplinary collaboration. Integrating tools such as green certificates with carbon credits and aligning organizational-level and product-level carbon accounting can unify standards and goals, reduce compliance costs and avoid conflicting decarbonization efforts.

The Asia region is also the leading issuer of Article 6.2 deals, with Japan, Singapore and South Korea among the most actively involved buyers. South Korea's ETS (K-ETS) covers 79% of national emissions and is now shifting towards increased proportion of sector-specific benchmarking allowance allocation to incentivize carbon abatement efforts. Japan, on the other hand, first launched its Green Transformation ETS (GX-ETS) in 2023 as a national-level voluntary system. While it did not introduce a carbon market, Singapore introduced a carbon tax that covers 80% of emissions. The carbon tax rate is expected to continue rising until 2030 to drive business actions to tackle climate change.

Emerging economies have the potential to become major carbon credit suppliers globally - leveraging their abundant natural assets for nature-based projects. Enhancing international connectivity and harmonizing with global standards are essential for the markets to capture opportunities, facilitate cross-border recognition, and strengthen their position in global carbon markets.

Each of these Asian markets has distinct characteristics and should follow its own development path, the report finds. However, they can achieve greater effectiveness by complementing one another, bridging their differences and optimizing outcomes.

Early signs of progress are emerging in efforts to accelerate the development of harmonized, interoperable carbon credit markets across Asia, for example: the ASEAN Common Carbon Framework; the Coalition to Grow Carbon Markets, launched by Singapore, UK and Kenya; and the JCM launched by Japan.

In the near term, deepening cooperation among neighboring markets lays the groundwork for longer-term global integration.

Carbon markets are strategic tools for businesses to accelerate decarbonization and boost competitiveness

The rapid evolution of Asia's carbon markets is profoundly reshaping the business landscape. Companies - whether directly involved, soon to be regulated or affected through supply chains - must reassess their market strategies. To navigate this dynamic environment, corporations must prioritize three strategic imperatives:

1. Overcome challenges on the net-zero journey - by engaging with carbon markets.

Companies need to be aware of their emissions baseline and set reduction targets. A Measurement, Reporting and Verification system integrates top-down and bottom-up data flows, and allows for robust emissions analysis, and progress tracking. Businesses should also systematically assess decarbonization technologies and levers that are tailored to their industry context. The marginal abatement cost curve framework can be used to identify cost-effective decarbonization levers by assessing abatement potential against costs.

Having established a robust framework, companies can drive value chain decarbonization to enhance supply chain resilience and customer engagement. Then corporations should proactively discover their own carbon assets and strategically develop them. A good strategy on carbon credit portfolios can lead to cost-effective compliance and industry leadership.

1. Capture new business growth opportunities - empowered by carbon markets.

The growth of carbon markets fuels demand for low-carbon technologies and services, unlocking significant commercial opportunities. Companies can pursue these opportunities by strengthening core business - for instance, renewable energy firms accelerating scale and offering - or by developing "Engine 2 businesses" such as conventional energy or chemical companies expanding into green sectors. Four business model archetypes have emerged to seize these opportunities: a) delivering proven low-carbon technologies and solutions; b) establishing leadership in green service such as consulting, operations and maintenance and financial services; c) integrating digital tools to reduce costs, enhance efficiencies, build trust, unlock the value of data assets, enable smart trading and improve access to financing; d) investing in future technologies such as green hydrogen and Carbon Capture, Utilization, and Storage.

1. Actively build ecosystems - to unlock the full potential of carbon markets.

A vibrant ecosystem, underpinned by diverse stakeholders, is crucial to drive innovation, enhance

resilience and expand opportunities for all participants. Corporations should collaborate with more stakeholders involving direct participants, market enablers, regulators/policymakers, standard setters and convening platforms, to transform compliance-driven carbon markets to value-driven ones.

"These imperatives not only address cost and compliance challenges but also support market competitiveness. Corporations must adopt a holistic perspective when assessing the impacts of carbon markets. By understanding carbon markets, businesses can revamp decarbonization plans, drive enterprise-wide innovation and secure a competitive edge in the low-carbon transition.," said Yang Liu, partner at Bain & Company.

Media contacts:

Ann Lee (Singapore) - [email protected]

Rachel Ng (Kuala Lumpur) - [email protected]

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