Interoperable Carbon Markets : A New Imperative for the ASEAN Economy

Interoperable Carbon Markets: A New Imperative for the ASEAN Economy

Gloyta Nathalang

Senior Executive Vice President, Sustainability Management and Corporate Communications Bangchak Corporation Public Company Limited

Chair, Thailand Carbon Markets Club

In recent years, climate change has shifted from being a subject of policy discussion to becoming central to the global economic system. What was once viewed merely as an environmental issue has now become a key determinant shaping trade, investment, and national competitiveness, particularly as mechanisms such as the European Union’s Carbon Border Adjustment Mechanism (EU CBAM) move closer to full implementation.

At the same time, Southeast Asia is undergoing a profound structural transformation. This change is not driven solely by economic or political factors, but also by the energy transition and climate-related challenges that are redefining the rules of global trade and competition. As a major global manufacturing base, the region faces increasing pressure from rising energy demand, digital transformation, and tightening environmental requirements imposed by trading partners, especially those in developed economies. As a result, carbon-related issues are no longer peripheral, but have become a decisive factor shaping regional competitiveness.

For this reason, carbon markets are no longer a distant policy concept. They are rapidly becoming a new form of economic infrastructure. Carbon markets have evolved from voluntary mechanisms into foundational systems that support decarbonisation. A functioning carbon market requires more than the buying and selling of credits; it depends on credible systems for measurement, reporting, and verification (MRV), cross-border data interoperability, and strong governance frameworks. Without these elements, carbon markets cannot effectively deliver real emissions reductions.

Across Southeast Asia, significant progress is already underway. Singapore has taken the lead by implementing a carbon tax and developing the Climate Impact X platform. Indonesia has launched a carbon trading system for the power sector and is expanding participation to other industries. Vietnam has begun piloting an emissions trading scheme, while Thailand and Malaysia continue to strengthen regulatory and institutional frameworks to support future market mechanisms. Together, these developments signal a regional shift toward more structured and credible carbon markets.

In Thailand, the Thailand Carbon Markets Club (TCMC) was established in 2021 by Bangchak Corporation Plc. and BCPG Plc., together with nine founding organisations. The initiative was created to support the development of voluntary carbon markets, enhance understanding of carbon accounting, and provide a platform for cooperation among stakeholders. TCMC has played an important role in building awareness, facilitating carbon credit trading, and supporting the development of tools for assessing both organizational and individual carbon footprints.

Over time, TCMC has worked to support collaboration among stakeholders across various sectors. In addition to awareness building, it has functioned as a platform for carbon trading, carbon offsetting, and the development of carbon footprint assessment tools. It has also focused on building practical readiness and deepening operational understanding, while coordinating closely with government agencies and private-sector networks to jointly advance the transition toward a low-carbon society.

In 2024, TCMC expanded its role from serving as a domestic knowledge-sharing platform to fostering regional collaboration by signing a Memorandum of Understanding under the ASEAN Common Carbon Framework (ACCF) with four carbon market organizations from ASEAN countries at COP29 in Baku, Azerbaijan. This marked a collective commitment by the private sector to strengthen regional cooperation on carbon markets.

In Thailand, TCMC has worked closely with key institutions including the Thailand Greenhouse Gas Management Organization (TGO), the Department of Climate Change and Environment (DCCE), the Stock Exchange of Thailand (SET), and the Climate Change Institute of the Federation of Thai Industries (CCI/FTI), among others. These collaborations aim to build capacity, raise awareness, support the development of MRV standards, and promote credible and transparent linkages between domestic and international carbon market mechanisms in a manner aligned with the regional context.

For the government-led initiative, the High-Integrity ASEAN Carbon Initiative (HACI) was established as to strengthen the integrity of carbon markets across the region. HACI focuses on enhancing regulatory coherence, improving institutional capacity, and ensuring the credibility of carbon market mechanisms. Through coordinated efforts among ASEAN member states, HACI seeks to reinforce trust, transparency, and consistency in regional carbon market development.

In addition, mechanisms under Article 6 of the Paris Agreement have opened pathways for countries to link carbon markets and transfer emission reduction outcomes across borders in an official and transparent manner. Such cooperation has begun to take shape through bilateral initiatives, including partnerships between Japan and countries in Southeast Asia, which have helped build practical experience in the development of regional carbon markets.

As ASEAN’s carbon markets continue to evolve, the region is moving from fragmented national approaches toward greater coordination and interoperability. This shift is being reinforced by external developments such as the EU CBAM, which is reshaping global trade by embedding carbon considerations into market access. In this context, frameworks such as the ACCF and the HACI serve not merely as policy responses, but as practical mechanisms to help ASEAN economies align standards, strengthen credibility, and participate more effectively in an increasingly carbon-conscious global economy. By building interoperable systems and shared governance foundations, the region can turn the challenge of decarbonisation into a strategic opportunity for long-term competitiveness.