ASEAN Report Identifies $3 Trillion Carbon Market Opportunity by 2050

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 would make ASEAN a leader in carbon markets and significantly impact the global fight against climate change.

ASEAN’s Rich Natural Resources and Biodiversity

ASEAN, which is the world’s fifth-largest economy, boasts abundant carbon sinks and is home to three of the world’s 17 megadiverse countries: Indonesia, Malaysia, and the Philippines. These natural resources offer significant opportunities to develop carbon projects that can drive economic growth while addressing climate change.

The region is projected to generate substantial revenue by leveraging various carbon credit initiatives:

• $27 billion in the REDD+ market
• $96 billion in blue carbon projects
• $143 billion in biochar initiatives

Current Carbon Credit Issuances and Market Challenges

Despite the potential, ASEAN has only supplied 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 the region’s carbon market potential.

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Key Recommendations for Advancing ASEAN's Carbon Market

The report outlines several strategies for building a successful regional carbon market:

1. Establish Comprehensive Carbon Market Regulations: This would help attract investment and create market certainty.
2. Build Institutional and Technical Capacity: Government offices and specialized university courses should be developed to strengthen the region’s expertise.
3. Align ASEAN Standards with International Best Practices: Ensuring market credibility is essential for attracting international finance.
4. Implement Domestic Compliance Schemes: Measures like emissions trading systems or carbon taxes can drive demand for carbon projects.
5. Promote Voluntary Carbon Market Activities: These activities will help engage the public and position ASEAN as a global leader in carbon markets.
6. Engage with Article 6 Mechanisms under the Paris Agreement: This will diversify demand for carbon projects and integrate ASEAN into global carbon markets.

ASEAN’s Carbon Market

Valerio Magliulo, CEO of Abatable, emphasized the immense potential of ASEAN’s carbon market. He stated that, if implemented, the report's recommendations could unlock climate finance, preserve nature, and drive sustainable development. He added that ASEAN could position itself as a global leader in carbon markets while advancing decarbonization.

The report also projects that successful implementation could create over 13 million new jobs and help the region meet its climate goals. By taking the right steps, ASEAN can lead the way in creating a low-carbon, sustainable economy.