THE STATE OF

CARBON PRICING
IN SOUTHEAST ASIA

OCTOBER 2023
 The State of Carbon Pricing in Southeast Asia

OCTOBER 2023

© The Asia Foundation 2023

All rights reserved.
No part of this report may be reproduced without
the written permission from The Asia Foundation.
Printed in Kuala Lumpur, Malaysia.
For more information, please contact:
malaysia.general@asiafoundation.org
CONTENTS

1. Introduction 1
1.1 Objective and Structure of the Report 3

2. Unpacking Carbon Pricing Instruments 4

2.1 What are CPIs and what are they trying to solve? 4
2.2 How are CPIs used? 6
2.3 Enablers and constraints towards CPI implementation 12

3. ASEAN: The State of Climate Change 19

3.1 Greenhouse gas emissions 19
3.2 Low-carbon energy development 24
3.3 Climate change mitigation in ASEAN 25

4. Carbon Pricing across ASEAN 29

4.1 Overviewing the state of play 29
4.2 National status of carbon pricing across ASEAN 32

5. Conclusion 43

6. References 45

7. Appendix 51
Glossary of Key Terms

Article 6.4 emissions reductions (A6.4ERs)

Carbon credits generated through collaborative actions between public and/
or private sector actors assisting a host nation to avoid, reduce, or remove
greenhouse gas (GHG) emissions. International trade in these credits is permitted
subject to the approval of the host country and application of corresponding
adjustments. These can be used to meet the purchasing country or corporation’s
climate targets. If not traded internationally, credits can be used to meet the host
country’s climate targets or corporations’ domestic regulatory requirements, such
as compliance market carbon pricing instruments (CPIs) or voluntary targets.

Carbon Credit
A tradeable financial instrument that represents a single ton of avoided, reduced,
or removed GHGs as a result of a particular offsetting project (e.g., reforestation).

Carbon dioxide-equivalent, CO2(e)

A commonly used unit of measurement that converts the global warming potential
(GWP) of various GHGs, including methane (CH4) and nitrous oxide (N2O) into units of
CO2.

Carbon Offset
Refers to the avoidance, reduction, or removal of GHGs resulting from an
intervention used to compensate for emissions from other, typically difficult-to-
abate activities.

Carbon Pricing Instrument(s), CPI(s)

Economic instruments, usually referring to compliance market instruments such
as carbon taxes and emissions trading schemes, which associate a price or cost to
GHG emissions. Can be defined to also encompass carbon credits.

Corresponding Adjustment(s)
An accounting correction required to be made to the GHG inventory of a host
country authorizing the sale of Internationally Transferred Mitigation Outcomes
(ITMOs) or Article 6.4 Emissions Reduction (A6.4ERs) to prevent the double-
counting of emissions reductions by both host and purchasing nations.

Greenhouse Gas(es), GHG(s)

Heat-trapping gases such as CO2, CH4, and N2O, whose increasing atmospheric
concentrations increase surface-level temperatures and exacerbate climate
change.

Internationally Transferred Mitigation Outcomes (ITMOs)

A type of carbon credit which can be traded between countries and used towards
the achievement of the purchasing nation’s Nationally Determined Contributions
(NDCs), provided the application of corresponding adjustments in the host nation’s
GHG inventory.

Nationally Determined Contribution(s), NDC(s)

The targets set by individual nations party to the Paris Agreement regarding the
mitigation of GHG emissions and adaptation to the consequences of climate
change. These are updated every five years.inventory.

Social Cost of Carbon, SCC

A measurement of the costs of each metric ton of GHG emissions, based on
scientific evidence of the projected physical impacts of climate change; the
translation of these physical impacts into economic damages; and the conversion
of future damages into present-day economic costs.
EXECUTIVE
SUMMARY

C
arbon pricing is rapidly emerging as
a popular policy tool to support low-
carbon economic transitions and reduce
greenhouse gas (GHG) emissions. Since
2012, the number of carbon tax or emissions trading
systems in place globally has risen from under 12 to
over 70, complemented by rapid growth in carbon
crediting activities encompassing both voluntary
and regulatory markets. Several factors explain
the contemporary popularity of carbon pricing
instruments (CPIs).

Despite widespread use of industry-, sector-, or

technology-focused policies and policy instruments
to support decarbonization, scientific evidence
paints a picture of worsening climate change. Reports
published since 2021 under the Intergovernmental
Panel on Climate Change (IPCC)’s Sixth Assessment
Report call for global GHG emissions to peak by
2025 in order to limit global heating to no more than
1.5°C above the pre-industrial average, in contrast
to existing policies and targets which put the world
on track for an increase in average surface-level
temperatures closer to 3°C. It is clear that stronger
action is needed. Carbon pricing, long proposed by
economists and scientists as a necessary component
of climate action, can provide incentives for an
economy-wide low-carbon transition.

Many CPIs implemented today complement

an ecosystem of climate change policies and the importance of implementing national CPIs.
policy instruments already in place to support In 2022, carbon taxes and emissions trading
decarbonization. Fundamentally, they associate systems generated some USD 95 billion in revenue
a direct cost with the GHG emissions arising from globally; 40% of which was redirected towards
fossil fuels or other “climate bads” (for example, low-carbon investment and spending. Prevailing
deforestation), making activities which emit GHGs less global macroeconomic conditions only enhance the
financially appealing. This complements the approach attractiveness of this alternative source of public
of many existing policy instruments, which incentivize finance.
low-carbon practices and technologies, such as
National-level movement towards CPI adoption is also
energy efficiency and renewable energy.
hastened by a rising global appetite for climate action
Beyond these immediate impacts, CPIs can become itself. Progress towards the operationalization of Paris
an important source of public revenue to boost Agreement’s Article 6 mechanism, which will support
climate efforts or support other economic needs and facilitate collaborative approaches towards
and priorities. Climate finance being in short supply, emissions reductions across public and private
particularly in the developing world, adds weight to sectors, will continue at COP28 in November 2023.

i
 capture revenues otherwise lost to their trading
partners.

All these pressures are increasingly felt across

Southeast Asia, a region highly vulnerable to a host
of climate-related impacts. There is strong evidence
of rising climate ambition and action across the
region, with all ASEAN Member States (AMS, with
the exceptions of Cambodia, Laos, and Myanmar)
presently either assessing, designing, implementing,
or having already implemented compliance market
CPIs. In all cases, these CPIs would serve to
complement a raft of existing low-carbon initiatives
and policies.

The two operational CPIs across ASEAN as of August

2023 are Indonesia’s ETS, which was launched in
February 2023 and currently covers only emissions
from state-owned coal-fired power plants; and
Singapore’s carbon tax, launched in 2019 and which
covers emissions from its 50 largest emitters,
accounting for roughly 80% of national emissions.
Thailand, meanwhile, is planning to launch a carbon
tax over the coming years, covering activities
within the energy, transport, and industrial sectors.
Brunei, Malaysia, the Philippines, and Vietnam are
all considering the implementation of carbon taxes
or ETS, and are currently assessing their feasibility
and practicality for adoption, as well as designing
these instruments. Carbon crediting programs or
initiatives have been ongoing across all AMS except
Brunei, largely since the establishment of the Clean
Development Mechanism (CDM).

At the regional level, a number of platforms have been

established to support climate change activities
and carbon pricing implementation. These operate
through several institutions, including the ASEAN
Secretariat, specifically the ASEAN Working Group
on Climate Change; the United Nations Framework
This is likely to drive another wave of attention Convention on Climate Change (UNFCCC)’s
towards carbon pricing. Recent private sector efforts, Collaborative Instruments for Climate Action, or
typically expressed in the form of net-zero emissions CiACA, and Article 6 mechanisms moving forward;
targets, has added to demand for carbon credits. One multilateral development agencies, such as the Asian
way for governments to regulate and legitimize these Development Bank and the World Bank; or through
activities, while ensuring they do not compromise bilateral channels, such as the Enhanced Regional
upon national-level climate priorities and targets, is to EU-ASEAN Dialogue Instrument (E-READI). Within this
envelop them within the framework of an overarching highly-dynamic policy arena, the coming years will be
compliance market CPI. Beyond crediting, the crucial as many AMS continue ongoing processes of
proliferation of CPIs can itself be a self-sustaining designing and establishing compliance market CPIs.
cycle. Countries that have adopted carbon taxes Combined with expected progress towards finalizing
or ETS’ have strong incentives to apply these same Article 6 of the Paris Agreement, rising private sector
regulations on imports, to address carbon leakage and action, and the establishment of a number of national-
competitiveness concerns, through the application of level carbon marketplaces, it is likely that the current
border carbon adjustments (BCAs). BCAs incentivize focus across AMS governments on carbon pricing will
exporters to themselves implement CPIs, in order to continue strongly throughout the 2020s.

ii
1. INTRODUCTION

1
From an economic perspective, the worsening of climate change is the result of
several market failures. The most prominent of these are greenhouse gas (GHG)
emissions, negative externalities arising primarily from the combustion of fossil
fuels and through chemical and natural processes. These emissions contribute to
the rising atmospheric concentration of GHGs and lead to an increase in average
surface-level temperatures. Rising temperatures are in turn the chief cause of
sea-level rise, extreme changes to weather patterns, and a host of other related
consequences (IPCC, 2021).

Without regulation, GHGs are both theorized to be and are in reality ‘overproduced’
(Metcalf, 2019), manifesting in climate change. Additionally, a lack of regulation
indirectly causes an ‘underproduction’ of positive externalities, evidenced by long-
term underinvestment in low-carbon technology, as well as the unsustainable use
of natural capital and factors of production.

Carbon pricing has its origins as a theoretical solution to the premise that climate
change reflects a lack of market-correcting interventions accurately recognizing
the damages caused by GHG emissions. By making emissions-intensive activities
more costly, carbon pricing promotes the adoption of low-carbon technologies
ahead of fossil fuels, or conservation ahead of exploitation, wherever it is most
profitable.

As a solution to the market failure, carbon pricing instruments (CPIs), such as

carbon taxes and emissions trading schemes, are considered to be a foundational
step towards addressing climate change. The potentially far-reaching impacts of
CPIs mean it could even enhance economic efficiencies beyond just the scope of
climate policy, making it an attractive policy lever in general.

Governments are increasingly taking note. Since 2010, the number of carbon
taxes or emissions trading systems (ETS) globally has risen from under a dozen,
concentrated in Europe, to over 70 today (World Bank, 2023). Voluntary carbon
market activities have also seen significant growth in recent years. While carbon
crediting and trading has a long ‘effective’ history through the Clean Development
Mechanism (CDM) and later Reducing Emissions from Deforestation and Forest
Degradation (REDD+), growth has been spurred by the growing establishment
of corporate net-zero targets, development of the Paris Agreement’s Article 6
rulebook, and increasing consciousness of the risks of climate change as well
as the need for immediate action. Growth continues to play out in compliance
markets, with 19 jurisdictions currently in various stages of considering, designing,
and implementing a carbon tax or emissions trading scheme, including many
ASEAN member states (AMS).

An assessment of the evidence suggests that climate change is increasingly

becoming a key policy priority across AMS. First, Southeast Asia remains highly
vulnerable to the impacts of climate change (Eckstein et al., 2021; Kompas et
al., 2018; ND-GAIN, 2021), necessitating action across climate change mitigation
and adaptation. As this report later highlights, all AMS have in recent years
enhanced international commitments to the UNFCCC by setting more stringent
emissions reductions targets. Eight of 10 AMS have set a target to achieve net-
zero emissions, by 2050 or later. This has been accompanied by a raft of targets
to improve energy efficiency, deploy renewable energy, reduce deforestation, and
policies that will serve towards the region’s low-carbon development.

Against this dynamic scientific and policy landscape, it is important for regional
actors to build an understanding of carbon pricing and CPIs, their rationale, risks,
and challenges, and the roles they play – and may continue to play – in enhancing
regional efforts to address climate change. Developing this fundamental
understanding of carbon pricing will allow for a more balanced assessment of
ongoing efforts across AMS to introduce carbon pricing, a fast-moving space likely
to be a centerpiece of economic and climate policy over the coming decades.

2
1.1 OBJECTIVES AND STRUCTURE OF THIS REPORT

Amidst a rapidly evolving and complex carbon pricing landscape, the ambition of this study is to
provide a review of carbon pricing frameworks across the 10-member Association of South East Asian
Nations (ASEAN).

This study considers the state of two broad categories of carbon pricing instruments: compliance
markets and voluntary market instruments. The former is comprised of carbon taxes and emissions
trading schemes, and the latter domestic and international voluntary carbon markets, that have either
been implemented or are in the process of implementation across ASEAN member states (AMS).
Overlapping both categories are carbon credits and offsetting. Recognizing that not only do these
instruments vary greatly, but that the national contexts differ too, our assessment will answer the
following seven prompts:

Which AMS have implemented or

are in the process of implementing 1 What is the extent of the
either voluntary or compliance regulatory frameworks and
2 legislation designed to support
market carbon pricing instruments?
carbon pricing implementation
in these countries?
Which countries have
timelines and budgets
earmarked for the 3 4 How are countries designing
implementation of CPIs? and implementing CPIs?

What are the key political, What regional or global

economic, and social drivers 5 platforms exist to support
and constraints for countries 6 the implementation of CPIs
seeking to implement CPIs? across countries, particularly
in the developing world?
7

How can CPI frameworks

avoid greenwashing?

To efficiently answer these questions while providing sufficient context and contributing to a
complete review of carbon pricing efforts across ASEAN, the remainder of this report is structured as
follows:

We begin with a discussion on the fundamental rationale behind CPIs, their roles in the economics of
climate change, and the various compliance and voluntary market instruments commonly employed.
This is followed by an assessment of the state of the climate across ASEAN; carbon pricing is primarily
a tool for mitigation, and so it is important to understand the sources of the chief cause of climate
change: GHGs. With much of these emissions the result of energy use, an appreciation of changes in
the use of fossil fuels and renewable energy technologies is key to understanding how policy priorities
are shifting across the region. To round off this foundational assessment, we provide a brief review of
key climate policy responses and targets across AMS. Finally, we present national-level assessments
of the status of CPI implementation across AMS, covering direct and indirect, compliance and
voluntary market activities.

3
 UNPACKING
2. CARBON PRICING
INSTRUMENTS
2.1 WHAT ARE CPIS AND WHAT ARE THEY TRYING TO SOLVE?

Climate change is primarily caused by the increase economic actors do not face the full costs of their
in the atmospheric concentration of GHGs (National actions, relative to their impacts. Increases in both
Oceanic & Atmospheric Administration, 2018). From emissions and the atmospheric concentration of GHGs
an economic perspective, it is the result of several are therefore predictable results of market failures.
market failures (as discussed in The Asia Foundation,
2023). Most prominently, in the absence of regulation Carbon pricing is simply a means to enforce a price
covering GHG emissions, GHGs are theorized to be upon the negative externality and internalize the
‘oversupplied’. This is evidenced by observed growth costs of ‘using’ the atmosphere (or ‘carbon budget’²),
in GHG emissions since the Industrial Revolution, and forcing economic actors to re-optimize profit- or
particularly since the 1940s (Friedrich and Damassa, utility-maximizing behavior by embedding the costs of
2014). It is clear that these emissions will cause GHG emissions into decision-making, thus addressing
significant current and future economic damage these market failures. This can be achieved through
through the intensification of climate change (IPCC, the use of CPIs.
2021). While estimates of the magnitude of these In practice, CPIs vary greatly across instrument
damages remain uncertain, they will be significant. type, price, quantity, scope, incidence, and rules
Kahn et al. (2019), for example, estimate potential over revenue use, amongst other factors. There is no
average annual losses equivalent to around 5.4% of one-size-fits-all policy, and countries tend to take
global GDP with each 1°C of warming. a range of localized economic, socioeconomic, and
A secondary market failure related to climate change environmental factors into consideration in designing
is that the atmosphere is a shared, global public good. and implementing CPIs. To illustrate this, consider
Indeed, GHG sinks, such as forests and soils, can in the wide variety in carbon prices under carbon taxes
this context also be classed as public goods¹. In the or emissions trading systems across the world,
absence of regulatory action or policy, these are from roughly USD 1 per ton of CO2 in Kazakhstan
theorized to be overexploited, since all environmental, and Shenzen, China, to over USD 130/tCO2 in some
social, and other non-private costs of exploitation European countries and in Uruguay. Closer to home,
are not absorbed by the benefitting party(ies). This Singapore’s carbon tax rate is currently just under USD
is evidenced by the rapidly increasing concentration 4/tCO2, with plans for this tax to rise to over USD 35/
of GHGs in the atmosphere and the conversion of tCO2 by 2030. Indonesia had previously planned to tax
forested land for agriculture or development. coal power plant emissions at a rate of just over USD
2/tCO2, before opting to implement an ETS instead.
Without tangible climate- or environmental-related Presently, the highest carbon prices in Asia can be
costs attached to natural capital exploitation or ‘use’ found in South Korea, where ETS prices averaged USD
of the atmosphere, emissions reductions and the 19/tCO2 during the first quarter of 2023 (World Bank,
conservation of GHG sinks are less appealing to any 2023). The use of CPIs in ASEAN is detailed in greater
individual or nation. Without appropriate measures to depth in Chapter 4.
correct for these imbalanced incentives, individual

1
This is because everyone benefits from a particular GHG sink’s capacity to absorb carbon, and thus contribute to the
mitigation of climate change, whereas their exploitation would generate economic rents only for the private actors
responsible for their removal.
2
The carbon budget is a term used to reflect the remaining quantity of GHGs that can be ‘safely’ emitted into the
atmosphere while ensuring that, with some significant probability, a particular temperature-limit will not be breached.
IPCC (2018), for instance, estimated the then-remaining carbon budget to be 1,170 billion tons of CO2 should we strive
to limit warming to no more than 2°C.

4
 These credits must be registered and certified by
verification bodies as being legitimate and having
met specific qualifying criteria⁴. Purchasers can then
use these to ‘offset’ firm-level emissions that are
hard to otherwise abate. Some compliance market
instruments allow the use of carbon credits to ‘offset’
liabilities under a carbon tax or ETS regime as well.
Through the combination of these voluntary and
compliance CPI approaches, much of the demand for
credits presently comes from the private sector.

The carbon credit ecosystem as a whole comes

with its own set of nuances and complexities, and
ongoing developments within this space are likely
to havesignificant implications for voluntary and
compliance carbon market activities in the future.
Most importantly, the Paris Agreement’s Article 6, in
the process of finalization, seeks to provide a platform
and order to the international trade of credits between
nations. It should be noted that some countries
have yet to issue formal positions on their intended
use of Article 6 mechanisms, and this remains an
ongoing matter of consideration for the respective
governments. Countries will need to balance the
meeting of their own national and international climate
objectives with the potential benefits of collaborative
Carbon credit and offset activities, meanwhile, largely approaches towards low-carbon outcomes. For now,
support private actors’ attainment of internal or this situation remains fluid given the nascency of the
voluntary climate targets. In some limited cases, they regional and global policy focus on carbon pricing
can be used to meet specific regulatory requirements and the roles CPIs may play in AMS climate efforts
and also play a role within compliance market moving forward, and ongoing progress towards the
CPI ecosystems. Voluntary carbon marketplaces operationalization of Article 6 itself. More clarity
specifically allow private actors to buy and sell carbon is expected by COP28 in November 2023. Box 2 of
credits generated by project developers whose Chapter 2.2.2 provides a more detailed review of the
interventions have led to the quantified and verified key concepts, terms and recent developments within
avoidance, removal, or reduction of GHG emissions³. the carbon credit ecosystem.

3
Projects contributing to the avoidance, reduction, or removal of GHGs are all eligible to generate carbon credits.
Avoided or reduced emissions are those not emitted as a direct result of interventions that contribute to a lowering
of a particular activity’s GHG emissions. Such interventions may include technology-switching, improvements to
energy efficiency (EE), or changes in land-use practices that contribute to reduced deforestation, amongst others. These
avoidances or reductions in emissions are reported relative to a baseline that establishes counterfactual emissions
trajectories in the absence of the intervention. Removed emissions, on the other hand, are those resulting from
interventions which remove GHGs from the atmosphere and store them in terrestrial or marine GHG sinks, or through
technological means. Such interventions may include afforestation and reforestation efforts, the improvement of forest
and agricultural management, direct air capture, or carbon capture-and-storage (CCS).
4
This encompasses satisfying the criteria of:
1) Additionality, meaning the project from which credits are generated must contribute towards emissions reductions that
would otherwise not have occurred;
2) Permanence, meaning the project from which credits are generated must contribute towards emissions reductions for a
prespecified period of time without being reversed; and
3) Accurate reporting, meaning the project from which credits are generated must rigorously estimate and report baseline
emissions, actual emissions, and emissions leakages, as well as ensure that credits or emissions reductions are not double-
counted or -claimed.

5
2.2 HOW ARE CPIS USED?

This assessment has identified two broad sets of CPIs through which prices can be ‘enforced’ on
carbon: compliance market instruments and voluntary market mechanisms. This section delineates
between these two groups, diving deeper into the basic concepts underpinning the various CPIs.
The most commonly used compliance market instruments are carbon taxes and emissions trading
systems, while carbon border adjustment taxes are increasingly under considered today, particularly
by countries who already have in place domestic CPIs. Under voluntary market instruments, we
discuss domestic and international carbon trading as well as the concept of internal carbon pricing.
We present clear, consistent definitions of key concepts such as carbon ‘crediting’ and ‘offsetting’,
which have implications across both compliance and voluntary market mechanisms.

2.2.1 COMPLIANCE MARKET INSTRUMENTS

CPIs can take many forms. The two most commonly This carbon price signal, which incentivizes the
used, direct forms of compliance market CPIs are adoption and deployment of less carbon-intensive
carbon taxes and emissions trading schemes (ETS). technologies and practices, ultimately determines
By directly targeting GHG emissions, these CPIs can, the extent of emissions reductions achieved across
in theory, fully internalize their negative externality economic activities subjected to the regulation. In this
costs. Other mechanisms such as fuel, congestion, regard, carbon taxes are not necessarily a guarantee
‘polluter-pays’ or environmental taxes or charges, of emissions reductions. Economic actors engage in
and fossil fuel subsidy rationalization provide emissions reductions activities (such as RE deployment
indirect (albeit incomplete) avenues towards such or the enhancement of EE measures) only if the
internalization. marginal costs imposed by the carbon tax exceed the
marginal costs of an abatement activity; in other words,
Carbon taxes are the most straightforward, setting if adopting low-carbon technology is cheaper than
an explicit price per unit of carbon emitted, with paying a tax. Extending this logic further, as the price of
each unit represented by a ton of CO2-equivalent⁵. carbon rises, a larger set of abatement activities fulfil
The incidence of carbon taxes tends to fall on either these criteria.
GHG emissions directly (downstream), or the carbon
content of fossil fuels or other products (upstream), Nevertheless, emissions reductions can be better
depending on the nature and structure of particular guaranteed through ‘target-based’ approaches to
industries or sectors (see Foramitti et al., 2021 for a carbon price selection. This can be achieved by
discussion on incidence). identifying minimum required carbon prices to
stimulate market shifts towards meeting specific
In some cases, additional costs from carbon taxation emissions reductions targets, such as to peak
may be passed through to consumers, although it is emissions — as has been set in Singapore, or reach
possible for safeguards to be put in place to either net-zero — a common target across all but two of AMS.
limit such cost pass-through or to ‘make up’ for rising This is discussed further in Chapter 3. For examples
consumer costs through improved social protection of this approach, CPLC (2017) estimates that a carbon
transfers or other similar mechanisms. Beyond this, price of USD 40—80/tCO2e is required to meet the
empirical evidence finds lower rates of cost pass- Paris Agreement’s target of keeping the average global
through in the presence of international trade and surface temperature increase to ‘well below’ 2°C. IMF
in concentrated markets where industry players (2019) estimates the country-level emissions reductions
exert their market power (Neuhoff and Ritz, 2019). achieved through carbon prices of USD 35/tCO2e
Decarbonization itself, whether as a result of the CPIs and USD 70/tCO2e, assessing how these can deliver
in question or other climate policy measures, further emissions reductions necessary to meet national-level
dampens such pass-through costs in the longer-term. Paris targets.

5
The various GHGs have different ‘global warming potentials’ (GWP), a measure of their energy-absorption potential.
CO2, the ‘reference’ gas, has a GWP of 1. CH4 has a GWP of between 27 and 30, while N2O has a GWP of 273. This
reflects the greater impact of a marginal ton of methane or nitrous-oxide emitted over that of carbon-dioxide. CO2-
equivalence, or simply CO2e, converts all GHGs to a single basic unit of measurement by taking into account the varying
GWPs.

6
around the world do ‘control’ prices, by imposing floor and ceiling prices for carbon, to ensure that broader
macroeconomic conditions and other exogenous factors do not hinder the effectiveness of these instruments (e.g.,
by limiting carbon price volatility). Such a stable and predictable carbon price would better facilitate an orderly low-
carbon transition.

Theoretical assessments of the taxes and ETS find that outcomes through the two instruments can be broadly
similar or even equivalent. Stavins (2019) argues that such equivalence can occur ‘in terms of emission reductions,
abatement costs, possibilities for raising revenue, costs to regulated firms when revenue-raising instruments are
employed, distributional impacts, and effects on competitiveness’. Carbon taxes and ETS share many similarities
and differences, as explained in greater detail by Stavins (2019). The key points are summarized below:

1 2
Both instruments incentivize the adoption All else being equal, both instruments shift
of low-carbon practices, technologies, and comparative advantages in favor of economies
other means of production by enforcing a with weaker carbon regulation, such as countries
price on GHG emissions. Incentives in favor with less stringent CPIs (or none at all), thus
of emissions abatement work equivalently promoting emissions ‘leakage’. This is the case
across mechanisms: firms maximize profits by regardless of the type of CPI used and is a driver
decarbonizing up to the point where marginal of growing consideration of border carbon
abatement costs are equal to the prevailing adjustments as a supplement to domestic-level
carbon price. The distinction is that carbon CPIs. Both instruments have implications for
prices are ‘set’ differently under the two international competitiveness, though there is
mechanisms – under a tax, this is set directly by little to suggest which mechanism would create
the administering authority, while under an ETS more adverse implications than the other.
this is variable and set through the ETS market.

4
3 Both support the deployment of low-carbon
While both determine prices and generate technology, and in doing so pose challenges to
revenues differently, the pricing of carbon future growth within carbon-intensive industries
itself serves the same purpose: enforcing an and sectors. Further, both can have broader
accounting of the costs of GHGs. Carbon tax economic consequences if not accompanied by
revenues are the product of the prevailing carbon mechanisms to limit any adverse impacts arising
price and the quantity of emissions subject to from the pricing of emissions. A just transition
regulation, while ETS revenues are generated plan needs to accompany the implementation of
through the auctioning of emissions allowances, any CPI.
with the carbon price dependent on matching
supply and demand.
6
ETS are typically more complex to both
5 design and administer, leading to higher costs
Both require stringent regulatory oversight, particularly in the process of establishing
beginning with the measurement, reporting the instrument and marketplace. Additional
and verification (MRV) of GHG emissions. Wider transaction costs arise in the process of
safeguards would be needed to prevent ETS allowance trading, such as through enlisting the
market misconduct and manipulation, whether services of trade brokers. These costs are much
financial or technological, and against carbon tax reduced in carbon tax systems.
evasion or arbitrage.

8
7 Carbon tax systems generally complement other
Carbon tax systems offer certainty in prices and climate-related policies well, and can assist in
uncertainty in emissions reductions, while ETS driving further emissions reductions sans the
systems offer certainty in emissions reductions establishment of emissions caps. This may not
and uncertainty in prices. Uncertainties around necessarily be the case under an ETS, which offer
rates of technological progression also impact little incentives for emissions reductions beyond
the clarity of market signals created by either what is established by the emissions cap.
instrument. There are advantages and drawbacks
to each instrument solely on this basis.

7
Traditionally, compliance market CPIs encompass these jurisdictions, and addressing ‘carbon leakage’
carbon taxes and emissions trading systems. This which occurs when countries shift production from
ecosystem is expanding, however. First, the role of jurisdictions with strict climate regulation to those
carbon credits is evolving, as highlighted in Box 2, under with a laxer set of regulations. Box 1 digs deeper into
Chapter 2.2.2. Second, as more countries implement the history of BCAs, which are taxes levied on the
national- or subnational-level CPIs, border carbon carbon content or intensity of products imported into
adjustments (BCAs) are growing in prominence in a jurisdiction, as well as the current status of BCAs and
climate policy debates. The objectives of these BCAs the roles they may play within the global climate policy
include mitigating the impacts of carbon pricing on the ecosystem moving forward.
international competitiveness of firms located within

Box 1: The rationale of ‘border carbon adjustments’

Recent years have seen renewed interest in the carbon taxes, or ‘adjustments’, that are applied to
imports within a particular jurisdiction that already has in place its own compliance market CPI. This
requirement for a domestic-level CPI is a key aspect of determining the legality of such mechanisms.
Much of the recent attention on border carbon adjustments or BCAs is driven by the European
Commission’s July 2021 announcement that it intends to impose a Carbon Border Adjustment
Mechanism (CBAM) on carbon-intensive imports into the European Union (EU) across select economic
activities (European Commission, 2021).

There are several reasons countries may impose BCAs. The most important rationale includes: 1)
avoiding carbon leakage; 2) addressing the impacts of carbon pricing on the relative competitiveness of
domestic producers; and 3) encouraging greater climate ambition across trading partners. This section
explores the interactions between this rationale and begins by highlighting the academic origins of
BCAs, their legality, and the roles they play within the framework of global climate economics and policy
more broadly.

We begin with economic fundamentals. Chapter 2 introduced the two key market failures driving climate
change: the role GHGs play as a negative externality of productive economic activity, and the nature
of the atmosphere as a global public good. Pricing GHGs is a step towards forcing an ‘internalization’ of
the externality costs of emissions: through CPIs, economic actors are forced to take into account the
costs of their GHG emissions in investment and production decisions. In doing so, both market failures
are addressed to a degree, depending on the carbon price used as well as the scope of the CPI. Yet a
complication arises from the nature of the atmosphere as a ‘global’ public good. If GHG emissions are
reduced in one jurisdiction but increase equivalently in another, any net effect in addressing global
climate change is nullified. To properly address global incentives to decarbonize, GHG emissions need
to be priced uniformly to equalize incentives across all jurisdictions. However, this is infeasible for a
number of economic and political reasons (discussed in greater depth in Chapter 2.3).

This is where BCAs enter the picture. BCAs are applied to imports into a particular jurisdiction that
already has its own CPI, and can be a way for nations to enforce the ambition of their climate regulations
upon trading partners. In doing so, BCAs can serve towards the attainment of carbon price equalization
across countries. For example, qualifying imports from a particular country to the EU would under CBAM
face additional costs based on: 1) the carbon content of these imports, and 2) the difference in the
prevailing carbon price between the EU and the country of origin. As more countries implement CBAM-
style BCAs, a greater proportion of global emissions would be subject to some form of compliance-
market CPI, and more countries would face incentives to begin applying CPIs in their own jurisdictions as
well.

While only gaining mainstream traction in recent years, BCAs have a long academic history and have
been discussed extensively in the context of global carbon pricing and climate change. For more detailed
early-stage assessments of BCAs, see Condon & Ignaciuk, 2013; Cosbey, 2008; and Metcalf & Weisbach,
2009. Indeed, there is little within the remit of BCAs that have yet to be explored, from a theoretical
standpoint. This includes assessments of: their roles within global climate policy; their legality (see
Pauwelyn, 2012 and Trachtman, 2016); their design (Kortum & Weisbach, 2016; Mehling et al., 2019); their
potential impacts (Branger & Quirion, 2014); as well as general guidance for their implementation (Cosbey
et al., 2019).

8
It is the legality of such mechanisms that is most often called into question.
Yet both Pauwelyn and Trachtman, as well as other studies in the literature,
identify avenues for the implementation of BCAs to ensure compliance
with World Trade Organization (WTO) rules. While there are many nuances
to consider, it is generally found that BCAs could have a strong legal basis
given requirements under the WTO’s General Agreement on Tariffs and
Trade (GATT). As long as imported goods are not taxed in excess of similar
domestically-produced goods (or substitutable domestic products), the BCA
will likely be deemed valid. In other, simpler words, it must be shown that
domestically-produced goods and imported goods face the same prevailing
carbon price. At a fundamental level, the legality of BCAs is then contingent
on the application of a CPI within the host (i.e., importing) jurisdiction, such
as in the EU.

BCAs themselves are designed to serve three key purposes, as previously

briefed. The most important of these is that it addresses ‘carbon leakage’,
which occurs when emissions-intensive activities shift from jurisdictions
with strict climate regulation to those with laxer regulations. The rationale for
such leakage is simple; if there are no rules in place to limit the relocation of
production, there is a clear fiscal incentive in favor of such relocation to avoid
additional costs incurred as a result of CPIs. BCAs circumvent this issue by
ensuring that anyone seeking to access a particular market are bound by the
same rules, whether they are a domestic producer, a foreign producer, or a
domestic producer domiciled overseas. This limits the possibility of leakage.

A second driver for the utilization of BCAs is the impact of CPIs on the relative
global competitiveness of domestic firms, particularly those in emissions-
intensive, trade-exposed (EITE) industries. CPIs place a progressive burden
based on a firm’s emissions: those with higher emissions face higher
regulation costs, meaning EITE firms are likely to face the hardest knocks to
their competitiveness against foreign or foreign-based firms. The imposition
of a BCA therefore represents an attempt to equalize the stringency of
regulations applying to EITE firms and their competitor importers.

Finally, the third and final driver for the implementation of BCAs is that they
can serve to ‘export climate ambition’. Recall that BCAs would in theory (and
from limited evidence based on the EU’s planned CBAM) levied on the basis
of the carbon price differential between two jurisdictions; if there is no
differential, there is no adjustment to be made. In this way, countries whose
exports would be subject to regulation at the border of the importing nation
would benefit from equalizing the stringency of their domestic regulations
with that of the relevant trading partner. Indeed, the exporting country would
benefit directly simply by virtue of collecting CPI revenues domestically
rather than have these revenues accrue to the importing country via the BCA.

From a practical standpoint, BCAs are in their infancy. The EU’s CBAM will
not be fully enforced until 2026, and it may be the case that certain design
aspects of the CBAM as it is presently planned are later adjusted in response
to consultations with trading partners. Regardless, it will likely be designed
in a manner that addresses the EU’s carbon leakage and EITE industry
competitiveness. More importantly, however, is that beyond the EU, every
country that has in place its own CPIs faces the same incentives to address
carbon leakage and competitiveness concerns. This means it is possible
for BCAs to become an important feature of domestic climate regulation
moving forward, especially if their legality can be clarified formally at the
international level as more countries implement CPIs.

9
2.2.2 VOLUNTARY CARBON PRICING MECHANISMS

To address climate change, there is a need for a projects in less-developed countries which contribute
broad range of interventions to reduce emissions and to the avoidance, reduction, or removal of GHG
preserve GHG sinks. Carbon pricing also plays a critical emissions. Developed nations would be able to claim
role by enabling voluntary market activities, largely these emissions reductions as part of their efforts to
through projects which contribute to the avoidance, mitigating climate change, with developing nations
reduction, or removal of GHG emissions. Such benefitting from greater investment and technology
efforts are given recognition in the form of ‘carbon transfer. REDD+ operates in a similar fashion, but
credits’. Carbon credits are tradeable instruments, focuses exclusively on promoting actions leading
each representing a certified avoidance, reduction, to the reduction in emissions associated with
or removal of one ton of CO2e. Carbon credits lay at deforestation and other unsustainable land-use
the heart of all voluntary carbon market activities, policies.
while also playing an important and growing role in
compliance markets. Today, as countries adopt CPIs and efforts to
address climate change broaden in their scope,
The generation and trade of carbon credits has a long the role of carbon credits – and the carbon credit
effective history, with a key development being the ecosystem more broadly – is rapidly expanding. New
adoption and enforcement of the Kyoto Protocol and terminologies are periodically introduced, and existing
the Clean Development Mechanism (CDM) between terms periodically revisited, especially as recent COP
1997 and 2005. The CDM supports international gatherings have seen significant progress on Article
collaboration in the delivery of low-carbon 6 mechanisms under the Paris Agreement. Box 2
outcomes across the developing world, encouraging provides an overview of the carbon credit ecosystem,
industrialized nations to invest in activities and focusing on credits and how they are used.

Box 2: Demystifying the carbon credit ecosystem

Definitions of Key Terms

1. Carbon credit: A tradeable financial instrument that represents a single ton of avoided, reduced, or
removed GHGs as a result of a particular offsetting project (e.g., reforestation).

2. Carbon offset: Refers to the avoidance, reduction, or removal of GHGs resulting from an intervention
used to compensate for emissions arising from other, typically difficult-to-abate activities.

3. Internationally transferred mitigation outcomes (ITMOs): Carbon credits which can be traded
between countries and used towards the achievement of the purchasing nation’s Nationally Determined
Contributions (NDCs) provided the application of corresponding adjustments in the host nation’s GHG
inventory.

4. Article 6.4 emissions reductions (A6.4ERs): Carbon credits generated through collaborative actions
between public and/or private sector actors assisting the host nation in avoiding, reducing, or removing
GHGs. International trade in these credits is permitted subject to the approval of the host country and
subsequent application of corresponding adjustments, and can be used to meet the purchasing country
or corporation’s climate targets. If not traded internationally, these credits can be used to meet the host
country’s climate targets or used by corporations to meet domestic regulatory requirements, such as
compliance market CPIs, if applicable, and/or voluntary targets.

5. Corresponding adjustments: An accounting correction required to be made to the GHG inventory of

a host country authorizing the sale of ITMOs or A6.4ERs to prevent the double-counting of emissions
reductions by both host and purchasing nations.

Carbon credit activities are becoming an increasingly important component within the CPI landscape.
Historically used in large part to support voluntary activities by fostering collaboration between state
actors, their roles now cut across both voluntary and compliance market instruments, formal and
informal processes, and public and private sectors. In a sense, credits support a broad set of activities

10
contributing to emissions avoidance, reduction, or removal, which come together to bridge lingering
gaps within the global climate change response and carbon pricing ecosystem. They achieve this by, for
instance, supporting emissions reduction projects in difficult-to-abate sectors, such as forestry, or in
sectors not covered by compliance market CPIs.

Carbon credits are tradeable financial instruments or assets representing a single ton of avoided,
reduced, or removed GHGs, usually measured in terms of CO2e. These are generated through projects
which contribute to emissions reductions. There are several ways that these credits can be ‘utilized’.
At present, and through voluntary market processes, credits are most commonly purchased by
corporations to ‘offset’ firm-level emissions, i.e., counting them against emissions arising from a firm’s
operations in carbon accounting and reporting processes, and thus towards the achievement of net-
zero targets.

Carbon offsetting refers to the process of a given economic actor utilizing credits to compensate for
emissions arising as a result of their activities. Once these credits have been used to offset emissions
from an activity (or set of activities, as would be the case if used to offset a firm’s annual emissions
from disparate sources), they are ‘retired’. As a result of the ongoing operationalization of Article 6
of the Paris Agreement, which strives to facilitate cooperative international approaches towards
achieving emissions reductions and provide order and structure to these processes, the carbon credit
ecosystem is undergoing an evolution as well as an expansion to its nomenclature. This has given rise to
new ways that credits may be utilized moving forward.

First, Article 6.2 allows countries to trade credits known as internationally transferred mitigation
outcomes (ITMOs) through bilateral or multilateral arrangements and count them towards the
achievement of the purchasing country’s NDCs or towards other purposes. In order to ensure these
emissions reductions are not double-counted, i.e., counted towards meeting the NDCs of both buying
and selling countries, corresponding adjustments have to be applied to the selling country’s GHG
inventory that account for the ITMO. Generally, ITMOs have broader implications for compliance market
CPIs and the achievement of NDCs than they do on voluntary markets.

Second, Article 6.4 creates a marketplace for both public and private sector actors to participate
in collaborative approaches towards achieving emissions reductions. This process begins with a
project developer who has generated ‘Article 6.4 emissions reductions’, known as A6.4ERs, through
activities in a host country. If the host country permits the international trade of the A6.4ER credit,
it can be purchased by another country to meet its own NDC, or used to offset overseas firm-level
or ‘international’ emissions. This means A6.4ERs may be used towards meeting net-zero targets or
international targets such as those enforced within international aviation upon signatories to the
Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). On the other hand, if the
host country does not permit the international trade of the A6.4ER, it can either be used to meet the
host’s NDC outright, or sold within domestic compliance markets to offset a firm’s liabilities within a
carbon tax or emissions trading system, for example.

It remains to be seen how Article 6.2 and 6.4 mechanisms will impact voluntary carbon markets moving
forward. But through the operationalization of Article 6, it is clear that carbon credit activities will have
a significant role to play in the global climate change response, by enabling international cooperation
towards the achievement of mitigation outcomes, as well as unlocking financing for low-carbon
development across the developing world.

11
2.3 ENABLERS AND CONSTRAINTS TOWARDS CPI IMPLEMENTATION
2.3.1 SCIENTIFIC RATIONALE AND ECONOMIC THEORY

The basis for carbon pricing is fundamentally drawn and studies may produce differing values for the SCC,
from scientific and economic realities. First, scientific there is a general consensus among scientists and
evidence has made it clear that climate change is economists that the SCC is positive, indicating a net
primarily driven by carbon-intensive anthropogenic cost imposed on society by each additional ton of CO2
activities that contribute to the increasing emitted.
atmospheric concentration of GHGs. This viewpoint
essentially puts carbon (the core ‘ingredient’ of these Yet, as highlighted in this report, the imposition of a
GHGs) at the center of the issue of climate change. high and scientifically-accurate SCC as the prevailing
Recognizing that these GHGs are ultimately the cause carbon price for compliance market instruments can
of climate change-linked economic damages in the have damaging economic and political consequences
present and the future, the social costs of emitting in the short-term. Nevertheless, the act of pricing
GHGs today have to be greater than zero. carbon itself through the implementation of CPIs is a
step in the right direction in itself.
The question is what exactly the social costs of
GHG emissions are. This in turn has implications on Taking this perspective further, scientific evidence
whether existing and mooted CPIs ‘fully’ address the also makes it clear that in order to limit the extent of
market failures previously introduced, by pricing climate change and consequent economic damages,
carbon appropriately. From an economic perspective, significant actions have to be taken across countries
this would only happen if the carbon price introduced towards decarbonization. Recognition of this need is
fully accounts for the social costs of current and noticeable through the growing ambition of national
future damages from climate change. Determining and subnational efforts to reduce emissions and
this social cost of carbon (SCC), a scientific measure shift towards less carbon-intensive practices and
of the cost of each ton of CO2e emitted, involves technologies. Carbon pricing fits seamlessly into this
complex modeling and analysis, considering factors overarching policy aspiration, because it provides
such as climate sensitivity, the time horizon of fiscal incentives in favor of a broad range of lower-
damages, discount rates, and socioeconomic carbon practices and technologies ahead of more
impacts (Interagency Working Group on Social Cost of carbon-intensive business-as-usual practices.
Greenhouse Gases, 2021). While different approaches

6
This is in reference to the Paris Agreement’s call to nations to pursue efforts towards limiting the average surface-level
temperature increase over pre-industrial levels to 1.5ºC.

12
For these reasons, carbon pricing is routinely
recommended by economists and scientists as a
fundamental component of the solution to climate
change. In 1997, over 2,600 economists, including 19
Nobel laureates, signed the Economists’ Statement
on Climate Change, calling for the introduction
of market-based policies as ‘the most efficient
approach to slowing climate change’ (see Arrow The favor held towards CPIs by economists extends
et al., 1997). The Statement specifies emissions to the scientific community as well. IPCC (2018)
trading agreements and carbon taxes as possible states that ‘policies reflecting a high price on
mechanisms that would allow the achievement of emissions are necessary […] to achieve cost-effective
‘climatic objectives at minimum cost’ while instilling 1.5°C pathways.’ Grubb et al. (2014) suggests that
a necessary cooperative approach among nations. ‘explicit carbon pricing […] (is) critical for deep
In 2019, over 3,500 economists, including 45 Nobel decarbonization pathways.’ IPCC (2022), in a special
laureates and former Federal Reserve chairs were report on climate change mitigation as part of its Sixth
signatories to the Economists’ Statement on Carbon Assessment Report cycle, is even more strident about
Dividends (see Climate Leadership Council, 2019). the potential roles of CPIs, stating that ‘economic
This declaration is more strongly-worded than the theory suggests carbon pricing policies […] are
1997 Statement, referring to carbon taxes as ‘the most more cost-effective than regulations or subsidies at
cost-effective lever to reduce carbon emissions at the reducing emissions’, with ‘high agreement that carbon
scale and speed that is necessary […] by correcting taxes can be effective in reducing CO2 emissions’.
a well-known market failure’. The 2019 Statement Extending this theoretical approach, IPCC (2022)
further expands on the economists’ ideal carbon further identifies that countries with CPIs show
pricing policy: a carbon tax that features a gradually- slower emissions growth rates, with higher carbon
rising carbon price, combined with carbon border prices leading to greater ‘carbon-efficiency’. With
adjustment taxes to protect domestic industries and this evidence, the position of economics and science
reduce leakage, and a system of lump-sum rebates to towards climate change and the potential roles of CPIs
households to account for any inflationary impacts of in addressing the causes of climate change are both
the tax itself. clear.

13
 States’ Republican opposition to the implementation
of CPIs. Indeed, while the Obama administration had
in 2012 established the use of the SCC for regulatory
cost-benefit analysis, one of the first acts of the
Trump administration upon taking office in 2017 was to
zero the SCC, in effect rendering it toothless in terms
of serving its intended purpose.

Another challenge lies in the highly uncertain nature of

projections of future damages and economic growth
likely to result from climate change itself. This tends
to fuel further skepticism about climate change as an
issue in need of rectification in the first place.

This has essentially culminated in climate change

becoming a partisan issue in some countries, rather
than the existential threat that scientific evidence
suggests it is with great certainty. This much is
apparent in the United States, where there is an
evident disparity in the attitudes of Democrats
and Republicans towards climate change and the
subsequent need for ambitious climate action.
Stokes et al. (2015) found that such partisanship in
the climate arena even extends to countries such as
Australia, Canada, Germany, and to a lesser extent the
UK. More recently, Pew Research Center (2021) finds
that although concern over the impacts of climate
change is growing across many advanced economies,
there still remains a divide in the perceptions of the
ideological left and right, with leftists significantly
more likely to change their behaviors to address
climate change across many countries. Further
differences are apparent when considering the age of
respondents; age is inversely correlated with concern
over climate change. Interestingly, and surprisingly,
this disparity is most pronounced in Sweden, very
2.3.2 POLITICAL ECONOMY much a left-leaning society where climate action has
been an important policy consideration for a long
The political economy of carbon pricing is less time. Sweden, after all, was one of the first adopters
straightforward than the economic and scientific of carbon pricing in the 1990s and currently has one
perspective described previously. Indeed, political of the highest effective carbon tax rates globally. This
realities often obstruct effective carbon pricing reflects widespread attitudes towards climate policy
policy design and implementation, as evidenced by in a broader sense – that persuading economic actors
unsuccessful attempts at introducing or maintaining to forgo some degree of short-term material comfort
carbon pricing instruments across the world in recent in exchange for (very) long-term payouts is a tough
years (in Australia and the United States, for example) sell.
as well as the generally low carbon prices observed
Beyond domestic-level considerations, attention
under existing mechanisms (see World Bank, 2023,
must also be given to the international context
and the Chapter 2.1 discussion on carbon prices
when considering climate change and carbon
around the world).
pricing, due to the global public good nature of the
Generally speaking, there are a few reasons that the atmosphere. Action in one country or region towards
political economy of carbon pricing can be a deterrent reducing emissions is ineffective if matched by
towards the implementation of CPIs. The first and similar increases in emissions in other countries or
most fundamental form of opposition to CPIs arises regions; this is the basis for the need for cooperative
from the lack of acknowledgement that climate approaches towards addressing climate change. And
change is caused by human activities, and is instead it is in considering the international dimension of
a result of natural processes beyond human control. climate action that further challenges towards the
This, for instance, is a chief point behind United adoption of CPIs arise; this is deliberated upon next.

14
2.3.3 MACROECONOMIC IMPLICATIONS

A third feasibility test for the implementation of CPIs

comes from the practical, rather than theoretical,
side of economics: how these might affect economic
growth and the distribution of wealth and economic
rents more broadly. While carbon pricing can
stimulate low-carbon development, it is still likely to
cause short-term increases in the costs of living –
particularly in jurisdictions that are beginning their
carbon pricing journey with a high carbon price or
with a highly emissions-intensive economy. For this
reason, there is serious concern particularly amongst
the developing world that the adoption of CPIs today
would come at the expense of cost-effective growth,
given that generating economic development through
the use of fossil fuels is still usually cheaper and more
practical than through the use of low-carbon energy
and other technologies.

There is also the climate justice angle to carbon

pricing. This perspective argues against the
immediate adoption of CPIs amongst the developing
world on the basis that the developed world reached
today’s levels of wealth by using cheap, emissions-
intensive energy and technology. Why should
developing nations not benefit from the same tools
that worked before? This is a valid viewpoint widely
held across the developing world. It also contributed,
for instance, to the provision within the 1992 UNFCCC
Treaty on Climate Change that all nations will act
towards addressing climate change ‘in accordance
with their common but differentiated responsibilities
(towards climate change) and respective capabilities
(towards addressing climate change) […] developed
country Parties should take the lead in combating While CPIs are generally theorized to have short-
climate change and the adverse effects thereof.’ run inflationary impacts, evidence is growing that
Over 20 years since the treaty was enshrined, this these impacts are first of all limited in their extent⁷,
principle still bears weight today. Article 2 of the particularly in terms of headline inflation. Moessner
2015 Paris Agreement repeated similar language (2022), for instance, assess the impacts of carbon
around the concept of ‘common but differentiated pricing on inflation, finding that a USD 10/tCO2e rise in
responsibilities’, maintaining that developed ETS prices increases indexed energy costs by 0.8%,
nations should ‘take the lead’ across both mitigation with insignificant effects on food or headline inflation
and climate financing efforts. Expectations that rates. The effects of carbon taxes are found to be even
developing nations would show similar levels of more muted. These findings are widely corroborated
ambition in climate policy as developed counterparts by others in the economic literature.
are by this definition unrealistic.
Further, any inflationary or broader macroeconomic
Yet at the same time, in reality we are starting to impacts can be assuaged by careful instrument
see increasing CPI adoption or, at the very least, design. This includes imposing initial limitations
consideration, across the developing world. This on scope and price that are later relaxed, as well
is highlighted by dynamism in this space not just as a system of ‘rebates’ to compensate lower-
amongst AMS, but in developing countries across income households for any increases in costs of
Europe, South America, Africa, and Asia more broadly. living. Many CPIs imposed over recent years feature
In part, this is due to acknowledgement of the threat such stipulations, aimed at managing potential
of climate change, with developing nations in sub- macroeconomic implications. CPIs also have the
Saharan Africa, South Asia, and Southeast Asia are potential to generate significant public revenue
predicted to be amongst the most hard-hit by rising that can be reinvested towards achieving broader
temperatures. Sometimes, CPI implementation can economic objectives, which can have positive
even be driven by economic considerations. repercussions for the economy at large, in addition to

15
financing climate change mitigation and adaptation the impacts of CPIs are largely focused on developed
efforts. To illustrate this, in 2022, the 68 implemented nations starting from a lower-carbon intensity
compliance market mechanisms generated revenues baseline than AMS would, and so it is possible that
of some USD 95 billion despite covering only under a without careful management of the scope and price of
quarter of global emissions, up from USD 84 billion carbon under a CPI, macroeconomic impacts may be
the year before. In this way, careful instrument design larger than expected. It is refreshing to note, then, that
can play an important role managing and mitigating all existing and mooted CPIs across ASEAN do impose
any possible negative short-term macroeconomic limitations on their scope; Singapore taxes only the
implications of carbon pricing. largest-emitting facilities, while Indonesia presently
applies its ETS only to state-owned coal-fired power
One final point worth noting is that across AMS, fossil plants. Thailand will apply its carbon tax only to three
fuel use is very much prevalent today. While there is sectors initially; and it is possible that other schemes
little evidence to suggest deep, long-term negative currently being assessed or designed, including in
effects of CPIs on the health of the economy, it is Malaysia, Philippines, and Vietnam, will introduce
likely that these negative impacts will be concentrated carbon pricing in a similarly gradual manner.
in emissions-intensive sectors in which abatement
actions are costly, infeasible, or impractical. Given
swift movement in ambitions to decarbonize supply
and value chains, the intersection of emissions-
intensive and trade-exposed sectors becomes a
critical area for policymakers to consider in the design
of CPIs. Support mechanisms are needed to help
7
companies and workers adapt to a ‘new normal’ where Moessner (2022) assess the impacts of carbon pricing on inflation,
finding that a USD 10/ton increase in ETS prices increases indexed
the use of fossil fuels and carbon-intensive practices energy costs by 0.8%, with insignificant effects on food or headline
cannot go on unchecked as before. Existing studies on inflation rates, while effects of carbon taxes are even more muted.

16
2.3.4 THE DEVELOPING WORLD: CHALLENGES TO CPI IMPLEMENTATION

Data and MRV

A strong MRV ecosystem is an inescapable

foundational component of effective CPI
implementation, but can be challenging to
implement with great authority without the
appropriate finance, infrastructure, labor, and
technology. Steps are being taken to address
these gaps, through national and regional efforts
catered towards capacity-building centered
around MRV. Indeed, collaborative efforts at the Informal Economy
ASEAN and UNFCCC levels have included a strong
emphasis on MRV. It is likely that such support ILO (2018) reports that close to four-fifths of the
will have to be scaled up in the coming years as employed population of the ASEAN region operate
more CPIs are designed and implemented across within the informal economy. The aggregated,
the region. On a related note, steps are needed regional-level assessment obscures variations
to enhance data collection and harmonization, across countries, the rural/urban divide, age,
across industries, sectors, and geographic and gender. In less-developed AMS, the rural
regions. The immediate impact of these actions population, the youngest and the oldest age
may be felt more keenly at the national level by groups, and women are more likely to have a
supporting the development of robust national higher degree of involvement within the informal
emissions inventory accounting practices. In economy. Applying blanket, economy-wide CPIs
the longer-term, these efforts could form the can be both impractical and possibly detrimental
foundations for the development of an ASEAN- to the socioeconomic status of many who operate
level CPI. within the informal sectors, disadvantaging them
and even encouraging noncompliance due to
either a lack of awareness or capacity to minimize
any adverse effects of carbon pricing. Careful
policy design is one avenue towards ameliorating
this issue, but a clear understanding is needed of
the challenges associated with decarbonization
within the informal economy, as well as potential
solutions. The interrelatedness of modern supply
chains in an open region such as ASEAN poses
further challenges, intensifying the need to
formalize certain economic activities to best
regulate GHG emissions.

17
 Balancing Economic and
Climate-related Needs

A long-time constraint to effective climate action

is that it has historically been considered to be
at odds with achieving economic objectives. In
Heavy Fossil Fuel Dependency particular, climate or environmental action is
associated with the introduction of additional
costs, whether through charges, fees, or taxes.
AMS rely heavily on fossil fuels to support energy CPIs fall into this bracket as well. These additional
use needs, particularly across the electricity costs could act as a drag on profits, reducing the
and transport sectors. Transitioning away from scope for further investment and wage growth,
heavy fossil fuel use poses a few challenges for which have broader economic implications.
the still developing countries in the region. Most
importantly, the low-carbon energy transition Another concern, particularly pertinent to
will require substantive changes to each nation’s fossil fuel-producing and fossil fuel-intensive
energy sector infrastructure. Successfully economies, is the emphasis on emissions
deploying renewable energy (RE) at the scale reductions can lead to negative outcomes for
that is required necessitates significant funding these industries and its workforce. Not only
as well as technology advancement. Existing could this hamper overall economic growth, but
infrastructure catered towards the use of coal it could also contribute to rising unemployment if
and gas mainly will need to be upgraded and plans are not in place to retrain these workers to
modernized to best accommodate the use of support their transition to low-carbon industries.
solar, hydro, wind, biofuels, and other RE.
A third and final concern relates to international
A further complicating factor arises as many competitiveness. This reflects the challenges
AMS rely on the contributions of fossil fuels and of unilateral climate action; first-movers on the
fossil fuel industries towards economic growth. climate agenda risk making their industries less
The application of carbon pricing can threaten competitive on the international arena due to the
the prospects of these industries if steps are not increased costs of doing business in the relevant
taken to ensure an equitable and just transition, domestic market. Not only do local industries
including providing support towards companies lose out to exports that do not face the same
and workers it ‘leaves behind’. Any energy climate or environmental costs, but there is also
transition will have to be carefully managed to a risk of these industries relocating entirely to
minimize these risks. Further, addressing the jurisdictions with less stringent rules. This is
concerns of the (usually large) companies in the one of the driving factors for the EU’s decision to
fossil fuel industry can be an important avenue consider the implementation of border carbon
towards bringing them on board with the need adjustments.
for nations to pursue aggressive emissions
reductions and develop policy instruments to
achieve these goals, such as carbon pricing.

Finally, while ASEAN has taken significant steps to

address energy poverty, there is a risk that current
plans and initiatives may threaten overall energy
security. In the short-term, the shift towards RE
could involve dependencies being introduced
upon imported technology or resources, such
as solar panel components, which can engender
broader economic (or even political and
geopolitical) concerns. The swift ramping down
of fossil fuel power generation may also introduce
further energy security risks.

18
 3. ASEAN: THE STATE
OF CLIMATE
CHANGE
CPIs associate a cost to the GHG emissions externality and the processes that cause emissions
to accumulate in the atmosphere. At the same time, CPIs often co-exist with other climate or
environmental instruments, to enable broad avenues of support for low-carbon development across
industries and sectors. This chapter aims to provide some context on the ‘state of climate change’
across AMS in relation to carbon pricing. This chapter identifies the chief sources of GHG emissions
within ASEAN, the region’s fossil fuel and renewable energy use, and also reviews key low-carbon
efforts across AMS to understand common objectives and targets across the region.

3.1 GREENHOUSE GAS EMISSIONS

GHG emissions are byproducts of a wide range of MtCO2e, or roughly 3.8% of total non-LUCF emissions
economic activities. National-level circumstances – a of some 2.7 GtCO2e, in 2019.
function of varying cultural, economic, nature-based,
social, and technological factors – can play important The LUCF sector is treated separately to the 7S in this
roles in determining how these activities contribute report. Emissions within the sector are attributable
to emissions. To manage the scope of this section of to changes in land management; for instance, the
the analysis, this assessment considers only a subset removal of GHG sinks through deforestation, land
of national-level emissions: those arising from energy development, or natural disasters are reported as
use and non-energy use across seven sectors⁸ (7S) and increases in emissions. In some cases, emissions
land-use change and forestry (LUCF). Emissions from reductions from ecosystem restoration efforts exceed
energy use are straightforward: these are the result of emissions associated with less sustainable practices,
fossil fuel combustion. Non-energy use emissions are leading to net emissions removals within the sector.
the result of a number of factors, including land-use There is further concern about the robustness of LUCF
changes, and chemical and natural processes. sector emissions reporting across AMS, as reported
by ASEAN Secretariat (2021a), causing caution with
On the side of energy use emissions, the 7S reviewed drawing substantial conclusions from the LUCF data
include Electricity and heat; Fugitive emissions; reported by Climate Watch.
Manufacturing and construction (M&C); and Transport.
For non-energy use emissions, the 7S include Table 1 highlights how limiting the sectoral scope
Agriculture; Industrial processes and product use to the 7S still allows for an assessment covering the
(IPPU); and Waste. In terms of gases, our emissions majority of non-LUCF emissions across AMS. While
assessment covers key GHGs, including carbon- there is variation in the extent to which national-
dioxide (CO2), methane (CH4), and nitrous oxide (N2O). level emissions accrue to the 7S, particularly in the
Fluorinated gases, such as hydrofluorocarbons (HFCs), case of Laos⁹, this narrowed focus still allows for
perfluorocarbons (PFCs), sulfur hexafluoride (SF6), and an appreciation of at least 90% of AMS emissions
nitrogen trifluoride (NF3) are excluded in large part due sources. Note that where changes in emissions shares
to inconsistencies in reporting capacities – and thus are positive, a greater proportion of national-level
data availability – across AMS. Nevertheless, these are emissions has accrued to the 7S than previous time
small in quantity, accounting for just 102 period, and vice versa.

8
These are based on sector- or activity- level GHG emissions as per UNFCCC categorizations. The data is reported by
Climate Watch.
9
This is largely because Laos generated electricity through 2015 solely from hydropower, with the use of coal commencing
only then. This explains much of the increase in Laos’ emissions coverage under the 7S approach between the two time
periods.

19
Table 1: Average Shares of Total Non-LUCF Emissions Accruing to 7S
AVG SHARES OF NON-LUCF EMISSIONS
COUNTRY
2000-2009 2010-2019 CHANGE
Brunei 98.9% 98.6% -0.3%
Cambodia 95.8% 95.5% -0.3%

Indonesia 92.1% 95.2% 3.1%

Laos 39.9% 78.7% 38.8%
Malaysia 97.5% 97.4% -0.1%
Myanmar 94.9% 93.1% -1.7%
Philippines 94.7% 94.8% 0.1%
Singapore 98.9% 99.0% 0.2%
Thailand 94.3% 94.9% 0.6%
Vietnam 91.8% 94.6% 2.8%
Average 89.9% 94.2% 0.5%
Source: Author’s calculations, using data from Climate Watch (2023)

Table 2 considers aggregate sector-level AMS emissions across the 7S and LUCF, identifying key aspects of
the climate change mitigation challenge across the bloc. Emissions from LUCF are highest in absolute terms,
comprising roughly a third of the total across the two time periods assessed.

Table 2: GHG Emissions in ASEAN, by Sector

TOTAL (in MtCO2e) AVG ANNUAL GROWTH RATES
ACTIVITY
2000-2009 2010-2019 CHANGE 2000-2009 2010-2019 CHANGE
Electricity and Heat 362.4 599.3 236.9 4.8% 6.3% 1.5%
Energy Use

Fugitive Emissions 70.8 93.9 23.1 3% 1.8% -1.3%

M&C 201.9 277.4 75.5 5.6% 4.7% -0.9%
Transport 222 341.4 119.4 3.2% 4.7% 1.5%
TOTAL ENERGY USE 857.1 1,312 454.9 4.3% 5.1% 0.8%
Agriculture 441.9 494.6 52.7 1.7% 0.5% -1.2%
Non-energy Use

IPPU 85.7 169.5 83.8 5% 8.9% 3.9%

Waste 219.5 199.6 -19.8 -2% 0.7% 2.7%
LUCF 847.9 977.4 129.5 13.2% 5.2% -8%
TOTAL NON-ENERGY USE 1,595 1,841.1 246.2 5.0% 2.8% -2.21%
TOTAL EXCL. LUCF 1,604.2 2,175.8 571.6 4.1% 3.5% -0.6%
TOTAL INCL. LUCF 2,452.1 3,153.2 701.1 2.7% 3.8% 1.1%
Source: Author’s calculations, using data from Climate Watch (2023)

Emissions from electricity generation grew the most in absolute terms between the 2000s and 2010s. It is
now the second-largest source of emissions across AMS, followed closely by agriculture. The next largest
contributors are transport (which exhibits a rising emissions trend); M&C (falling); and IPPU (rising). While
agriculture continues to be a significant contributor to total emissions, the sector’s emissions growth rate
is slowing and its share of non-LUCF emissions is falling (as further evidenced by Table 3). This is caused in
part by economic diversification across AMS, which is instead driving emissions growth in other key sectors,
as well as the adoption of sustainable agricultural and sectoral land-use practices that contribute towards
outright reductions in agriculture sector emissions.

20
Table 3, which presents sectoral shares of total non-LUCF emissions across AMS, further highlights the
increasing significance of electricity sector emissions, largely a result of economic development and rising
demand for electricity. These economic conditions are also likely drivers of increased emissions accruing to
IPPU, M&C, and transport sector activities.

Table 3: Sectoral Shares of Total Non-LUCF Emissions Across ASEAN

Activities 2000-2009 2010-2019 CHANGE
Electricity and Heat 22.0% 27.6% 5.6%
Energy Use

Fugitive Emissions 4.7% 4.1% -0.6%

M&C 8.5% 9.5% 1.0%
Transport 11.6% 13.0% 1.4%
Total Energy Use 46.7% 54.3% 7.6%
Non-energy Use

Agriculture 31.9% 27.1% -4.8%

IPPU 5.0% 7.7% 2.7%

Waste 6.2% 5.2% -1.0%

Total Non-energy Use 43.2% 39.9% -3.3%

Source: Author’s calculations, using data from Climate Watch (2023)

Table 5, meanwhile, presents the same information in

terms of shares of total emissions accruing to each
sector. Excluding LUCF, the largest sectoral sources
of emissions across AMS in 2019 are electricity
generation, followed by agriculture and transport10.
Across all member countries, electricity is the largest
source of GHGs, except in Cambodia (3rd highest) and
Myanmar (2nd highest).

Agricultural activities are the largest sources of

emissions in Cambodia and Myanmar, the second-
largest in Indonesia, Laos, and the Philippines, and
third-largest in Vietnam, broadly correlating with
expectations based on the comparatively high shares
of agricultural activity within employment and GDP
across these countries. For instance, Myanmar
generates 22% of GDP from agricultural activities,
and Cambodia over 17%. In contrast, Malaysia and
Thailand rely on the sector for just 7.1% and 6.3% of
GDP respectively.

The transport sector is another important regional

contributor to emissions; only in Myanmar, Singapore,
and Vietnam does transport not feature as one of the
The aggregated approach taken so far is useful in three most emissions-intensive sectors. Fugitive
determining regional trends and challenges vis-à-vis emissions are largest in oil and gas-producing
climate change mitigation, but may obscure national- countries, including Brunei, Indonesia, Malaysia,
level nuances in the data. Table 4 presents a more Thailand, and Vietnam, while waste sector emissions
detailed approach, focusing on GHG emissions in are highest in Indonesia, accounting for over 60%
2019 across the 7S within each country. The highest of the AMS’ waste sector total. Finally, much of
emitting sectors in each country are highlighted in AMS’ LUCF emissions are the result of activities
gold, followed by the second-highest in silver, and in Indonesia, and to a lesser extent, Myanmar and
third-highest in bronze. Malaysia.

10
In fact, this ordering, of the three most emissions-intensive sectors, persists even when considering average emissions
from 2010 to 2019.

21
Table 4: Sectoral Emissions by AMS, 2019
Energy Use (in MtCO2e) Non-energy Use (in MtCO2e)
Country Fugitive
Elec. M&C Transport Agri. IPPU Waste LUCF
Emissions
Brunei 4.8 1.8 0.4 1.4 0.1 0.6 0.2 0.3
Cambodia 4.7 - 1.1 5.9 21.3 4.3 0.6 31.7
Indonesia 258.2 54.2 149.5 154.7 176.9 38.9 136.0 957.4
Laos 14.1 0.0 0.7 2.5 9.6 1.7 0.2 10.2
Malaysia 130.0 15.7 37.1 65.3 14.4 22.9 21.0 83.1
Myanmar 12.6 0.2 8.9 6.6 86.9 1.6 5.2 109.7
Philippines 72.9 1.1 14.8 37.8 60.3 20.0 14.0 2.5
Singapore 26.1 1.0 14.0 7.0 0.0 15.2 3.3 0.0
Thailand 109.4 8.4 54.7 75.9 65.5 78.5 12.8 15.1
Vietnam 155.2 14.1 73.9 42.7 69.3 60.7 20.6 (12.0)
TOTAL 788.1 96.5 355.0 399.8 504.4 244.4 213.9 1,197.9
Source: Author’s calculations, using data from Climate Watch (2023)
Legend: Sectors highlighted in Gold generate the most emissions in the respective country, Silver the second-most, and
Bronze the third-most.

Table 5: Sectoral Emissions Shares by AMS, 2019

Energy Use Non-energy Use

Country Fugitive
Elec. M&C Transport Agri. IPPU Waste LUCF
Emissions
Brunei 51.4% 19.2% 4.4% 14.6% 1.3% 6.2% 1.8% 3.7%
Cambodia 11.7% 0.0% 2.8% 14.7% 53.3% 10.7% 1.4% 79.2%
Indonesia 25.8% 5.4% 14.9% 15.4% 17.7% 3.9% 13.6% 95.5%
Laos 48.0% 0.0% 2.3% 8.6% 32.8% 5.7% 0.8% 34.7%
Malaysia 41.5% 5.0% 11.9% 20.9% 4.6% 7.3% 6.7% 26.5%
Myanmar 9.5% 0.2% 6.7% 5.0% 65.2% 1.2% 3.9% 82.3%
Philippines 31.1% 0.5% 6.3% 16.1% 25.7% 8.5% 6.0% 1.1%
Singapore 38.9% 1.5% 20.8% 10.4% 0.0% 22.7% 4.9% 0.0%
Thailand 25.9% 2.0% 13.0% 18.0% 15.5% 18.6% 3.0% 3.6%
Vietnam 34.5% 3.1% 16.4% 9.5% 15.4% 13.5% 4.6% -2.7%
AVERAGE 29.2% 3.6% 13.1% 14.8% 18.7% 9.0% 7.9% 44.4%
Source: Author’s calculations, using data from Climate Watch (2023)

22
Finally, Table 6 focuses specifically on energy use, focusing on GHG emissions by energy source across
all sectors beyond 7S and energy use categories from Climate Watch data. This is useful in highlighting
differences between AMS vis-à-vis the sources of fossil fuel energy used, as well as trends observed across
AMS between the 2000s and 2010s.

Table 6: Average Shares of Emissions by Energy Source Across AMS

Natural Gas Coal Oil Biofuels and Others

Country
2000–2009 2010–2020 2000–2009 2010–2020 2000–2009 2010–2020 2000–2009 2010–2020

Brunei 74.4% 68.3% 0.0% 3.1% 25.6% 28.6% 0.0% 0.0%

Cambodia 0.1% 18.9% 79.1% 71.7% 20.8% 9.4% 0.0% 0.0%

Indonesia 16.8% 15.6% 26.3% 37.3% 52.2% 44.7% 4.8% 2.4%

Laos 0.0% 0.0% 7.3% 52.7% 66.3% 38.8% 26.4% 8.5%

Malaysia 40.0% 29.1% 16.2% 33.5% 43.7% 37.3% 0.1% 0.1%

Myanmar 21.4% 25.1% 11.8% 9.9% 39.2% 46.7% 27.5% 18.3%

Philippines 7.6% 7.4% 29.2% 45.8% 61.4% 44.7% 2.7% 2.2%

Singapore 26.8% 42.9% 0.0% 3.0% 71.2% 51.3% 2.0% 2.7%

Thailand 29.9% 32.6% 24.1% 27.1% 44.8% 39.1% 1.1% 1.2%

Vietnam 10.8% 10.9% 40.6% 58.6% 43.0% 28.6% 5.5% 1.9%

AMS AVG 22.8% 25.1% 23.5% 34.3% 46.8% 36.9% 7.0% 3.7%
Source: Author’s calculations, using data from IEA (2021)
Legend: The largest source of emissions in each time period in each country are highlighted in gold.

Across much of ASEAN, oil remains the largest Finally, while natural gas is widely considered to be an
contributor to GHG emissions due to its widespread effective ‘transition fuel’ because it is roughly half as
use across the transport and industrial sectors (IEA, emissions-intensive as coal, there is little evidence to
2022). The 2010s also witnessed large increases in suggest that a shift from coal or oil to gas is apparent
the region’s use of coal; accordingly, the share of across ASEAN, though this may be the result of policy
emissions accruing to coal combustion are observed lag given the nascency of low-carbon energy transition
to have increased over the decade prior across all efforts. Only in Cambodia, Myanmar, Singapore, and
AMS except Cambodia and Myanmar. It is worth noting Thailand have natural gas emissions increased by
that almost three-quarters of Cambodia’s emissions a tangible degree, showing increased usage in the
are the result of coal use, while reductions in the coal 2010s.
emissions share in Myanmar are minimal. Indeed, the
shares of emissions accruing to coal rose significantly
between 11% and 45% in Indonesia, Laos, Malaysia,
Philippines, and Vietnam, almost exclusively the result
of a sharp increases in electricity demand and in the
use of coal in electricity generation across AMS.

23
3.2 LOW-CARBON ENERGY DEVELOPMENT
The assessment of GHGs has thus far has affirmed that electricity. This is dependent on matching supply
energy use plays a significant role in determining the and demand for electricity, the source(s) of baseload
region’s emissions. Within this subcategory, electricity power and the cost-effectiveness of utilizing each
generation, fugitive emissions, manufacturing and energy source at a particular time. This, in turn, has
construction (M&C) and transport contributed to implications on sectoral GHG emissions.
over 1,630 MtCO2e of the ASEAN-level total of just
over 2,700 MtCO2e in 2019. Projections of rising To illustrate this, consider the examples of Cambodia,
electrification across industries and sectors, including Malaysia, Philippines, Thailand, and Vietnam. In
M&C and transport makes it important for AMS to these countries, the share of RE in total installed
continue enhancing energy efficiency (EE) measures capacity overshadows that of RE in actual electricity
and investing in the development and deployment of generation. This is likely due to the fact that to meet
low-carbon energy technologies, such as renewable excess demand at any given time, there are cheaper
energy (RE). energy sources such as coal or natural gas available
to electricity market operators than RE sources. To
This section aims to take stock of the key low-carbon reduce actual emissions, however, it is not just the
targets and outcomes across AMS, focusing on the capacity share of RE that has to increase but the
past decade of climate-related activity. This will allow generation share as well.
readers to understand key ongoing national-level
climate efforts and targets that are relevant to carbon Nevertheless, it remains clear that AMS are taking
pricing and GHG emissions reductions. steps towards enhancing the contributions of RE
relative to fossil fuels (as expressed by Table 8).
Table 7 provides an overview of RE use across AMS, Across all countries except Indonesia, Laos, and the
focusing on two key metrics: the share of RE in total Philippines, the share of installed capacity accruing to
installed electricity generation capacity as well as RE has risen, signaling that many AMS are successfully
the share of RE in actual electricity generation. The deploying RE. The continuous enhancement of these
purpose of highlighting both metrics is to establish targets, as overviewed later in Table 9, makes it clear
that targets to increase the installed capacity of RE do that this will remain a policy priority across the region
not necessitate increases in the use of RE to generate in the future.

Table 7: RE Shares of Electricity Capacity and Generation Across AMS, 2000–2019

RE: Installed Capacity RE: Electricity Generation

Countries
2000–2009 2010–2020 2000–2009 2010–2020

Brunei 0.0% 0.1% 0.0% 0.0%

Cambodia 6.1% 51.2% 5.1% 42.2%
Indonesia 18.4% 15.8% 17.5% 16.1%
Laos 100.0% 87.0% 100.0% 94.1%
Malaysia 12.0% 19.9% 7.9% 12.1%
Myanmar 42.5% 64.4% 51.3% 64.4%
Philippines 30.1% 28.1% 33.9% 24.4%
Singapore 1.7% 2.2% 3.4% 4.0%
Thailand 15.0% 19.9% 6.7% 15.8%
Vietnam 41.6% 43.4% 40.9% 41.3%
Source: Author’s calculations, using data from IRENA (2022 and 2023)

24
Table 8: Total Installed Capacity of Various RE Sources Across ASEAN, 2000–2019

Average Installed Capacity (MW)

RE Source Growth Rate
2000–2009 2010–2019

Hydropower 17,000 38,681.5 128%

Wind 18.4 879 4,671%
Solar 21.1 2,888.3 13,622%
Bioenergy 2,980 6,536.3 119%
Geothermal 2,711.1 3,426.7 26%
TOTAL 22,730.5 52,411.8 131%
Source: Author’s calculations, using data from IRENA (2022) and IRENA (2023)

3.3 CLIMATE CHANGE MITIGATION IN ASEAN

3.3.1 NATIONAL NDCS AND KEY LOW-CARBON TARGETS

Table 9: Summary of NDCs and Key Low-Carbon Targets Across AMS

Country Scope of NDC 2030 NDC Targets: GHGs Other Key Low-Carbon Targets
Energy Intensity of GDP: 45% reduction by
Agri., Elec., GHG Emissions:
2035, relative to 2005
IPPU, LUCF, 20% reduction relative to
Brunei RE: 30% of installed electricity capacity by
Transport, BAU
2035
Waste
Net-Zero Target: 2050
Agri., Elec., GHG Emissions: Total Final Energy Consumption (TFEC): 20%
IPPU, LUCF, 41.7% reduction, with a 59% reduction by 2035, relative to BAU
Cambodia
Transport, reduction from LUCF, relative LUCF: 50% reduction in deforestation rates by
Waste to BAU 2026; achieve 60% forest cover by 2030
TFEC: Reductions of 17% for IPPU; 20%
GHG Emissions:
for Transport; 15% for Residential, 15% for
Agri., Elec., 31.89% reduction
Commercial, by 2025, relative to BAU
IPPU, LUCF, (unconditional), 43.2%
Indonesia RE: 31% of installed capacity by 2030
Transport, reduction (conditional),
LUCF: Net-sink by 2030
Waste relative to BAU
Emissions Peak: 2030
Net-Zero: 2060
Agri., Elec., GHG Emissions: 60% RE: 30% of total energy consumption by 2025,
IPPU, LUCF, reduction (unconditional), excl. large hydropower
Lao PDR
Transport, i.e., roughly 62 MtCO2e, LUCF: 70% forest cover, conditional, by 2035
Waste between 2020 and 2030 Net-Zero: 2050
Agri., Elec.,
GHG Emissions: 45% RE: 40% of installed capacity by 2035; 70% by
IPPU, LUCF,
Malaysia reduction in GHG intensity of 2050
Transport,
GDP, relative to 2005 baseline Net-Zero: 2050
Waste
GHG Emissions:Cumulative
Electricity Consumption: 20% reduction by
244.52 MtCO2e unconditional
Agri., Elec., 2030
Myanmar reduction, 414.75 million
LUCF RE: 47% of installed capacity by 2030.
MtCO2e conditional reduction
between 2021 and 2030
GHG Emissions:75% Energy Intensity of GDP: 40% reduction by
Agri., Elec., reduction, of which 2.71% 2040, relative to 2005
Philippines IPPU, Transport, reduction is unconditional Emissions Peak: 2030
Waste and 72.29% reduction is RE: 15.2 GW of installed capacity by 2030
conditional.

25
Country Scope of NDC 2030 NDC Targets: GHGs Other Key Low-Carbon Targets
Agri., Elec., GHG Emissions: Reduce Emissions Peak: Before 2030
Singapore IPPU, LUCF, absolute emissions to 60 Net-Zero: 2050
Waste MtCO2e economy-wide
Energy Intensity of GDP: 30% reduction by
GHG Emissions: 20%
Agri., Elec., 2036, relative to 2010
unconditional reduction,
Thailand IPPU, Transport, RE: 30% of total energy consumption by 2036
25% conditional reduction,
Waste Carbon Neutrality: 2050
relative to 2005 baseline
Net-Zero: 2065
RE: 30.9% of generation mix by 2030; 67.5% by
Agri., Elec., GHG Emissions: 15.8%
2050, with specific targets by technology
IPPU, LUCF, unconditional reduction,
Vietnam Methane: 30% reduction by 2030 relative to
Transport, additional 43.5% conditional
2020
Waste reduction, relative to BAU
Net-Zero: 2050

Table 9 overviews all key current climate-related

targets across AMS, including GHG emissions targets
specified in national NDCs and key low-carbon targets
that will likely be implicated by and have implications
for CPIs, and how they are designed and implemented.
This remains a highly dynamic space, with AMS
upwardly revising their climate ambitions on a regular
basis.

Since 2020, all AMS have submitted ‘enhanced’ NDCs

to the UNFCCC, consisting of more ambitious targets
and coverage than NDCs previously submitted (in most
cases, this refers to those set during the passage of
the Paris Agreement). In terms of sectoral coverages,
all AMS NDCs cover activities across a broad range of
economic sectors, including key emissions-intensive
activities such as agriculture, electricity generation,
IPPU, LUCF, transport, and waste. The least coverage
is in Myanmar, whose NDC applies only to agriculture,
electricity, and LUCF activities.

Further, all AMS have imposed targets to guide

energy use, either in the form of targets applied to
energy consumption broadly, or renewable energy
specifically. Cambodia, Indonesia, and Laos have set
explicit targets for the LUCF sector. 7 of 10 AMS have
set targets to achieve net-zero emissions by 2050.
The exceptions are Indonesia, whose net-zero target
is set for 2060; Cambodia, which does not have such
a target; and Thailand, which aims to achieve carbon-
neutrality by 2050 and net-zero emissions by 2065.

In terms of absolute emissions, however, only

Indonesia and Singapore have set targets for
emissions to peak by 2030. This remains a pertinent
gap within ASEAN: IPCC (2022) calls for a global
peaking of emissions by as early as 2025 in order to
ensure a greater likelihood of limiting the climate
change-linked average global surface temperature
increase to no more than 2ºC above pre-industrial
levels.

26
3.3.3 PLATFORMS FOR REGIONAL CLIMATE ACTION AND CARBON PRICING SUPPORT

Addressing climate change necessitates global efforts to mitigate emissions, enhance resilience,
and improve the adaptive capacity of individual nations and regions. Recognizing the diverse need for
such support across nations, an increasing number of regional platforms aim to support and promote
cooperation towards achieving climate targets. In this section, we aim to briefly overview some of the
key regional climate change and carbon pricing support platforms relevant to AMS.

1. ASEAN Working Group on Climate Change

(AWG-CC)

Established in 2009, the AWG-CC acts a platform for

regional cooperation towards addressing climate
change. It reports to the ASEAN Senior Officials on
Environment (ASOEN), alongside six other topic-
focused environmental working groups11, which
serve to facilitate coordination and collaboration
across sectoral bodies and AMS. The AWG-CC’s work
encompasses key activities and sectors that include
agriculture, energy, forestry, and transport, amongst
others, with the view of enhancing integration
of climate responses across member nations.
Chairmanship of the AWG-CC, which convenes on an
annual basis, rotates between AMS every three years.
Malaysia is the current chair, having assumed the role
for the period of 2022 to 2025.

The AWG-CC is responsible for the development of key

guiding documents on climate change for the region.
This includes overarching frameworks and guidance,
such as the ASEAN Climate Change Strategic Action
Plan that is currently in development; the ASEAN
Climate Vision 2050, included as a component of the
ASEAN State of Climate Change Report; and bloc-level
communiques at the international stage, through the
ASEAN Joint Statement on Climate Change made 2. Collaborative Instruments for Ambitious
annually at UNFCCC Conferences of Parties, for Climate Action (CiACA)
instance12. The AWG-CC’s activities encompass eight
core themes, including long-term planning and NDC
assessments; MRV and GHG stocktaking; and climate The CiACA initiative was established by the UNFCCC
financing. Some of this has deep relevance to carbon following COP22 in 2016, assisting Parties to the Paris
pricing. For example, MRV is a foundational component Agreement in the development of CPIs to implement
towards the adoption of CPIs, which themselves can their NDCs13. CiACA operates alongside individual
form an important part of domestic and regional Parties, subnational jurisdictions, as well as through
climate finance frameworks. The AWGCC is explicitly Regional Collaboration Centres (RCCs), primarily by
working on carbon pricing through UNFCCC initiatives providing technical support and expertise, capacity-
and mechanisms, including Collaborative Instruments building, and financing. These RCCs represent
for Ambition Climate Action (CiACA) and Regional partnerships between the UNFCCC and leading
Dialogues on Carbon Pricing (REdiCAP), as described regional institutions. In ASEAN, work under the CiACA
next. initiative takes place in close collaboration with the
AWGCC under the RCC in Bangkok, Thailand.
11
This includes the ASEAN Working Groups on Nature Conservation and Biodiversity (which is also supported by the
ASEAN Center for Biodiversity); Coastal and Marine Environment; Water Resources Management; Environmentally
Sustainable Cities; Chemicals and Waste; and Environmental Education.
12
The latest such joint statement was made at COP 27 in November 2022 (ASEAN Secretariat, 2022).
13
See UNFCCC (2019a).

27
 CiACA’s first phase culminated in a study assessing options and assistance provided to develop facility-
level MRV across AMS, with a view that these form the basis for a potential regional carbon market
(UNFCCC, 2019b). This study proposed exploring the possibility of a regional ETS, though it is more likely
that support is directed to develop domestic CPIs. Further work is ongoing in the areas of capacity building
support and the development of a five-year roadmap for ASEAN-level cooperation on MRV and carbon
pricing, together with the UN Economic and Social Commission for Asia and the Pacific (UN-ESCAP).
Through CiACA, the UNFCCC also organizes Regional Dialogues on Carbon Pricing (REdiCAP), which
facilitates cross-country discussions on CPIs and experience-sharing.

3. Enhanced Regional EU-ASEAN Dialogue

Instrument (E-READI)

E-READI is an EU-funded development program

supporting cooperation between the EU and ASEAN
towards promoting inclusive and sustainable growth
(Koty, 2021). It is an expansion of its predecessor
program, READI, which operated between 2011
and 2015. Nine of the 34 identified policy areas for
cooperation towards the achievement of the ASEAN
Community Blueprints fall under a thematic pillar
on ‘Environment and Climate Change’; one of these
focuses explicitly on CPIs in ASEAN. Under E-READI,
a scoping study was launched in 2021, aimed at
supporting the development of long-term strategies
towards low-carbon development across AMS, in close
collaboration with the AWGCC and ASOEN (ASEAN
Secretariat, 2021b). This study identified that regional
cooperation efforts have thus far focused on carbon
pricing and MRV, amongst others. It recommends the
development of a regional network for carbon pricing,
as well as the commencement of discussions across
AMS with the view of creating regional carbon market
mechanisms, either within or beyond the scope of
Article 6 of the Paris Agreement. Indeed, CPIs are
recommended numerous times in this study as a
potential tool to aid the region’s energy transition and
long-term decarbonization strategies.

Other studies have also been conducted under the remit of E-READI, including work on identifying gaps in AMS
approaches towards circular economy and reducing the environmental footprint of waste, which are beyond the
scope of this study.

4. Partnership for Market Implementation (PMI), World Bank

The PMI is a World Bank program assisting countries in the study, design, piloting, and implementation of CPIs.
It commenced in 2021, as the successor program to the Partnership for Market Readiness, which in the decade
from 2011 provided funding and technical assistance to 23 nations to support the development and deployment
of CPIs. Over its planned 10-year life cycle, the PMI aims to support capacity-building in 30 jurisdictions
through implementing best international practices, facilitating multilateral sharing discussions with other
partner countries, and providing technical support for the operationalization of the Paris Agreement’s Article
6 mechanisms. At present, the PMI is also providing carbon pricing readiness support to Malaysia, as well as
implementation support to Indonesia and Vietnam.

28
 4. CARBON PRICING
ACROSS ASEAN
4.1 OVERVIEWING THE STATE OF PLAY
This chapter overviews the various compliance market and voluntary market CPIs in place across
ASEAN. These are summarized in Table 10, which considers a broad range of instruments within the
carbon pricing ecosystem. Specifically, it covers the following:

Compliance market instruments,

Legal instruments, such as acts, 2 namely carbon tax or emissions
1
laws, and regulations; trading systems;

Carbon credit activities, which Indirect carbon pricing

3 4
encompass compliance and instruments, such as fuel taxes;
voluntary markets; and

5
Fossil fuel subsidies, which
counteract CPIs.

29
Table 10: The State of Play of Carbon Pricing Across ASEAN, June 2023

Carbon Pricing Instruments

Countries
Law or Act Tax ETS Creditingα Indirectβ FF Subsidiesχ

Brunei
Cambodia
Indonesia
Laos
Malaysia
Myanmar
Philippines
Singapore
Thailand
Vietnam
Notes: Legend:
α Active
Includes carbon credit programs and voluntary market activities. See Table 11
for a detailed assessment. In Development
β
Includes indirect carbon pricing instruments, i.e., fossil fuel taxes and related Under Consideration
environmental taxes. Inactive
χ
Includes only explicit subsidies to final consumers, as reported by Parry et al.
(2021b)
Sources: AMRO (2022), Parry et al. (2021a), Parry et al. (2021b), So et al. (2023), World Bank (2023)

All AMS, except Cambodia and Myanmar, are either assessing, designing, implementing, or have implemented
compliance market CPIs. The only implemented compliance market CPIs across AMS as of June 2023 are
Indonesia’s ETS, launched in February 2023 and which currently covers only emissions from coal-fired power
plants; and Singapore’s carbon tax, launched in 2019 and which covers emissions from its largest emitters.

Thailand is planning to launch a carbon tax over the coming years, covering activities within the energy, transport,
and industrial sectors, and is currently engaged in studies to develop this mechanism. Brunei, Malaysia, the
Philippines, and Vietnam are all considering the implementation of carbon taxes or ETS, and are currently in various
stages of assessing their feasibility and practicality for adoption. Carbon crediting programs or initiatives are
ongoing across all AMS except Brunei. These are detailed further in Table 11.

30
This study notes a distinction between direct and subsidies. Recent years have seen the removal of
indirect carbon pricing instruments. Direct CPIs are fossil fuel subsidies in Thailand (to some extent) and
defined as those levied on a unit of CO2e; indirect CPIs Vietnam, offering a template to other AMS striving
those levied on (typically fossil) fuels, or the source of towards the same objective.
CO2e emissions, not emissions themselves. Indirect
CPIs14, commonly target carbon-intensive fuels such Next, we turn our attention to carbon crediting
as gasoline, are present in six of 10 AMS, and absent activities, overviewed in Table 11, which presents data
only in Brunei, Cambodia, Malaysia, and Myanmar. published by the Berkeley Carbon Trading Project
Although these are not strictly CPIs, they are levied on (see So et al., 2023). This database covers only carbon
sources of emissions that would otherwise be taxed offset projects listed by the American Carbon Registry
under a CPI regime and so are defined as relevant to (ACR), Climate Action Reserve (CAR), Gold Standard,
the context of this study. and Verra (VCS), while projects under the CDM are
included only if they have been transitioned into one
Finally, fossil fuel subsidies, which essentially of the aforementioned registries. A total of over 173
counteract CPIs by subsidizing the very fuels they million issued carbon credits (notionally covering
tax the emissions of, are still employed in Brunei, some 173 MtCO2e) have originated from AMS since
Indonesia, Malaysia, and Thailand. In preparation for 2004, with 99% of these generated through activities
the adoption of CPIs, consideration should be given in the agriculture, forestry, and other land-use (AFOLU)
towards the rationalization and removal of these and energy sectors.

Table 11: Overview of Carbon Credit Activities Across AMS, 2004–2023

Share of AFOLU15: Energy:

Countries No. of Projects Issued Credits Credits Share of Share of
Retired Issued Credits Issued Credits
Brunei 0 N/A N/A N/A N/A
Cambodia 26 47,437,139 34% 92% 4%
Indonesia 47 94,811,267 50% 81% 18%
Laos 29 1,450,456 38% 6% 82%
Malaysia 15 520,232 100% 98% 2%
Myanmar 36 436,381 85% 38% 62%
Philippines 16 691,571 87% 2% 98%
Singapore 5 1,285,477 10% 0% 100%
Thailand 81 17,200,902 60% 2% 43%
Vietnam 122 9,653,077 44% 0% 56%

ASEAN (Aggregated) 377 173,486,502 47% 70% 29%

Source: Author’s calculations, based on data from So et al. (2023).

In the absence of integration with compliance market CPIs, carbon credit activities are largely voluntary in
nature, and allow economic actors to offset emissions to meet internal, or non-CPI based regulatory targets.
Singapore is the only AMS with a compliance market CPI that has been in place for a significant period of
time. For this reason, it is inferred that carbon credit activities in other AMS to date have been voluntary in
nature.

14
For a more complete discussion of direct and indirect carbon pricing, their application globally, and arguments in favor
of one, the other, and combined approaches, see Pryor et al. (2023).
15
In the nomenclature of Chapter 3, AFOLU comprises activities under the Agriculture and LUCF sectors.

31
4.2 NATIONAL STATUS OF CARBON PRICING ACROSS ASEAN

4.2.1 BRUNEI

Table 12: Brunei – Carbon Pricing and Climate Policy Ecosystem

FF
Carbon Legal Basis Tax ETS Crediting Indirect
Subsidies
Pricing
Brunei
Institutional National Mitigation Adaptation Sectoral Budget
Climate Structure Policy Policy Policy Policies Tagging
Change

Legend: Active In Development Under Consideration Inactive

Sources: AMRO (2022), Parry et al. (2021a), Parry et al. (2021b), So et al. (2023), World Bank (2023)

■ Amongst Brunei’s key climate targets are its NDC, to reduce GHG emissions by 20% by
2030, relative to BAU projections. Beyond this, Brunei is seeking to reduce the emissions
intensity of its GDP by 45% by 2035, relative to 2005, by when it also aims to increase the
share of RE in installed electricity capacity to 30%. A target to achieve net-zero by 2050
has also been imposed.

■ Brunei’s intentions to introduce CPIs are highlighted in both its NDC as well as its National
Climate Change Policy (NCCP) (BCCS, 2020).

■ The NCCP delineates ambitions for the Brunei’s carbon pricing strategy, stating that
the implemented CPI would be introduced by 2025 and cover high-emitting industrial
facilities that meet or exceed a specified GHG threshold. It also cites ambitions to develop
a mechanism for the redistribution of carbon revenues towards meeting national climate
change mitigation and adaptation priorities.

■ In order to achieve these ambitions, Brunei plans to conduct assessments to determine

optimal design features of the mooted CPI, covering aspects such as instrument choice,
emissions thresholds, and carbon price levels. It is anticipated that this assessment will
necessitate a close working relationship between Government and industry players.

■ Brunei also seeks to establish a robust monitoring, reporting, and verification (MRV) system
for GHG emissions, based on international best practices, to ensure the accuracy and
veracity of the nation’s baseline emissions as well as future emissions projections.

■ Steps are being taken further carbon credit activities by establishing carbon trading as a
tool to support Brunei’s efforts to address climate change. The mooted Domestic Voluntary
Carbon Offset mechanism is being presently established (Abdul Ghani, 2023).

■ Brunei does not currently utilize any form of indirect carbon pricing.

■ Brunei subsidizes the use of fossil fuels, including gasoline, diesel, kerosene, liquefied
petroleum gas (LPG), and natural gas (Parry et al., 2021a; Parry et al., 2021b).

■ IMF (2019) estimates that a carbon price of USD 35/tCO2e would reduce Brunei’s emissions
by 6% below BAU by 2030, while a price of USD 70/tCO2e would reduce emissions by 11%.

32
4.2.2 CAMBODIA

Table 13: Cambodia – Carbon Pricing and Climate Policy Ecosystem

FF
Carbon Legal Basis Tax ETS Crediting Indirect
Subsidies
Pricing
Cambodia
Institutional National Mitigation Adaptation Sectoral Budget
Climate Structure Policy Policy Policy Policies Tagging
Change

Legend: Active In Development Under Consideration Inactive

Sources: AMRO (2022), Parry et al. (2021a), Parry et al. (2021b), So et al. (2023), World Bank (2023)

■ At present, Cambodia has no plans to introduce compliance-market CPIs.

■ The nation has nevertheless imposed relatively ambitious climate targets, with its NDC
aiming for a 41.7% reduction in GHG emissions by 2030, relative to BAU, with a 59%
reduction in LUCF emissions. Supplementing the NDC are targets to reduce total final
energy consumption (TFEC) by a fifth by 2035, again relative to BAU, as well as to reduce
deforestation rates by 50% and achieve total forest cover of 60% by 2030 (Government of
Cambodia, 2020).

■ Cambodia remains an active participant in carbon credit activities, accounting for over a
quarter of credits issued across AMS since 200416. The vast majority of these credits are
the result of emissions avoided, reduced, or removed from the agriculture, forestry, and
land-use (AFOLU) sector.

■ Cambodia does not utilize indirect forms of carbon pricing, nor does it provide subsidies for
fossil fuels (OECD, 2022; Parry et al., 2021a; Parry et al., 2021b).

■ IMF (2019) estimates that a carbon price of USD 35/tCO2e would reduce Cambodia’s
emissions by 16% below BAU by 2030, while a price of USD 70/tCO2e would reduce
emissions by 25%.

16
Do note that this is not representative of all credit activities, only those that are covered by So et al. (2023) as described
in Chapter 4.1.

33
4.2.3 INDONESIA

Table 14: Indonesia – Carbon Pricing and Climate Policy Ecosystem

FF
Carbon Legal Basis Tax ETS Crediting Indirect
Subsidies
Pricing
Indonesia
Institutional National Mitigation Adaptation Sectoral Budget
Climate Structure Policy Policy Policy Policies Tagging
Change

Legend: Active In Development Under Consideration Inactive

Sources: AMRO (2022), Parry et al. (2021a), Parry et al. (2021b), So et al. (2023), World Bank (2023)

■ Indonesia has imposed a wide range of climate-related targets in recent years. Its NDC
aims for an unconditional 32% decrease in absolute emissions by 2030, relative to BAU,
rising to 43.2% conditional upon the receipt of international mitigation assistance. Other
key targets include reducing TFEC by up to a fifth across IPPU, transport, residential,
and commercial sector activities, as well as increasing installed RE capacity to 31% and
peaking absolute emissions by 2030. Beyond this, Indonesia seeks to achieve a net-sink
LUCF sector (i.e., one which sequesters more carbon than it emits) by 2030 and net-zero
emissions economy-wide by 2060 (Government of Indonesia, 2022).

■ Indonesia has shown high levels of activity in the context of establishing a regulatory
framework to support the implementation of CPIs. In 2017, the government issued a
regulation on environmental economic instruments, mandating the implementation of an
emissions or waste permit trading system by 202417 (Government of Indonesia, 2017).

■ Since 2021, a further four regulations have been issued with implications for carbon
pricing. The first of these, launched in 2021, provides a national framework for CPIs,
highlighting their envisioned roles towards the achievement of Indonesia’s NDC and GHG
emissions reductions (Government of Indonesia, 2021a). The second regulation, launched
in October 2022, presents guidelines for CPI implementation, provides the legal basis for a
cross-sectoral ETS. It covers a broad range of topics such as carbon trading and offsetting,
institutional arrangements, and MRV procedures (Government of Indonesia, 2022b).
The third regulation, launched in December 2022, focuses specifically on guidelines
for CPI implementation across the power sector and provides the legal basis for the
implementation of an ETS covering power generation activities (Government of Indonesia,
2022c).

■ With this strong legislative basis for CPIs, Indonesia launched an ETS in February 2023 that
covers power generation activities (Reuters, 2023). Indonesia’s ETS is comprised of three
phases: the first, currently ongoing phase runs through end-2024 and covers emissions
arising from 99 state-owned coal-fired power plants that account for over 80% of
Indonesia’s electricity generation capacity. During the second and third phases, scheduled
to be in effect from 2025–2027 and 2028–2030 respectively, Indonesia plans to extend ETS
coverage to encompass the use of natural gas and oil in power generation, as well as other
coal plants not owned by the state-owned utility Perusahaan Listrik Negara (PLN).

■ Indonesia has concurrently been considering the implementation of a carbon tax. It was
initially planned that this tax would be launched in April 2022, following the 2021 passage
of a law governing the harmonization of tax regulations, under which one of the clauses
introduces plans to enact a carbon tax (Government of Indonesia, 2021b). This planned
carbon tax has since been postponed to 2025.

17
Recall the high levels of emissions from Indonesia’s waste sector, both at the national level and compared against AMS peers.

34
 ■ In actuality, Indonesia’s plans can be more accurately described as a carbon cap-and-
tax scheme – the carbon tax would only apply, at least in its initial phases, to the same
activities covered by the ETS, namely coal-fired power generation. Economic actors who
exceed emissions allowances under the ETS are liable to pay the carbon tax for each unit
of GHGs emitted beyond their stipulated limit. The law cites a minimum carbon tax rate of
roughly USD 2/tCO2e, in line with prices under the ETS. Should ETS prices fall below this
threshold, this stipulated carbon tax rate shall act as a minimum carbon price. Indonesia
intends to extend the coverage of the carbon tax at a later date.

■ Indonesia has also launched regulation on the ‘Implementation of CCS and CCUS in
Upstream Oil and Gas Business Activities’, which is likely to have implications for carbon
credit activities within the sector (Government of Indonesia, 2023).

■ Indonesia has also implemented indirect forms of carbon pricing, including fuel excise
duties that covered roughly 14% of emissions in 2021 (OECD, 2022).

■ Indonesia still utilizes fossil fuel subsidies extensively. These cover roughly a third of
national GHG emissions, incentivizing the use of gasoline, kerosene, and LPG, as well as
natural gas and coal in power generation (Parry et al., 2021a; Parry et al., 2021b).

■ Indonesia is an active player in carbon credit markets, accounting for over half of all credits
issued by AMS since 2004. Over four-fifths of these originate from AFOLU activities, with
most of the remainder the result of low-carbon energy projects.

■ IMF (2019) estimates that a carbon price of USD 35/tCO2e would reduce Indonesia’s
emissions by 16% below BAU by 2030, while a price of USD 70/tCO2e would reduce
emissions by 24%.

4.2.4 LAOS

Table 15: Laos – Carbon Pricing and Climate Policy Ecosystem

FF
Carbon Legal Basis Tax ETS Crediting Indirect
Subsidies
Pricing
Laos
Institutional National Mitigation Adaptation Sectoral Budget
Climate Structure Policy Policy Policy Policies Tagging
Change

Legend: Active In Development Under Consideration Inactive

Sources: AMRO (2022), Parry et al. (2021a), Parry et al. (2021b), So et al. (2023), World Bank (2023)

■ Laos has implemented a number of key climate-related targets, led by its NDC to achieve
a 60% reduction in absolute emissions (i.e., some 62 MtCO2e) by 2030, relative to 2020
levels. It aims for RE to contribute 30% of total energy consumption by 2025 excluding
large-hydropower, while a target to achieve 70% forest cover by 2035 has also been set,
conditional upon the receipt of international support. Like a number of its ASEAN peers,
Laos also strives to achieve net-zero emissions by 2050 (Government of Laos, 2021).

■ Though reported by AMRO (2022) that Laos is considering the implementation of CPIs,
no other evidence suggests that the republic is currently doing so. The National Green
Growth Strategy of Lao PDR indicates the consideration of transport fuel taxes and other
measures to discourage the use of private vehicles, though in any case these are defined in
the context of this study as indirect CPIs.

35
 ■ Laos has engaged in carbon credit activities, through 29 listed projects with emissions
reductions amounting to just under 1.5 MtCO2e. Over 80% of these credits originate from
low-carbon energy programs.

■ Laos imposes taxes on transport fuels, namely gasoline and diesel, and does not subsidize
the use of fossil fuels (OECD, 2022; Parry et al., 2021a; Parry et al., 2021b).

■ Through its NDC, Laos has requested international support in the development of MRV
mechanisms and processes, its GHG inventory, and on carbon credit activities (Government
of Laos, 2021). All can be considered precursors to the implementation of compliance
market CPIs should the government choose to pursue such a course in the future.

4.2.5 MALAYSIA

Table 16: Malaysia – Carbon Pricing and Climate Policy Ecosystem

FF
Carbon Legal Basis Tax ETS Crediting Indirect
Subsidies
Pricing
Malaysia
Institutional National Mitigation Adaptation Sectoral Budget
Climate Structure Policy Policy Policy Policies Tagging
Change

Legend: Active In Development Under Consideration Inactive

Sources: AMRO (2022), Parry et al. (2021a), Parry et al. (2021b), So et al. (2023), World Bank (2023)

■ Through its NDC, Malaysia aims to reduce the GHG emissions intensity of GDP by 45% by
2030, relative to 2005. In 2023, Malaysia revised its RE targets and is now aiming for RE to
comprise 40% of the total installed electricity capacity by 2035, rising to 70% by 2050. A
net-zero target has also been set for 2050, at the earliest (Government of Malaysia, 2021a).

■ In 2021, the government launched the 12th Malaysia Plan, which introduced Malaysia’s
intention to assess the feasibility of implementing CPIs to support the achievement of
its domestic climate targets as well as its NDC (Government of Malaysia, 2021b). This was
the first public signal from the Government of Malaysia that such instruments are being
considered.

■ Malaysia has since been reported to be considering the use of both a carbon tax and ETS.
Studies assessing the feasibility of adopting a carbon tax are being led by the Ministry
of Finance with support from the World Bank’s PMI, while work on the ETS is led by the
Ministry of Natural Resources, Environment, and Climate Change (Aziz, 2021; Bernama,
2023; Ministry of Economy, 2023).

■ Bursa Malaysia, the national stock-exchange regulator, launched Malaysia’s voluntary

carbon exchange, the Bursa Carbon Exchange (BCX) in December 2022 (Bursa Malaysia,
2022). BCX held its inaugural auction in March 2023, which saw the trade of 150,000 credits
across the energy and AFOLU sectors (Hazim, 2023). Credits sold were all generated
through international carbon offset projects.

36
 ■ Beyond this, Malaysia had previously engaged in carbon credit activities with 15 registered
projects covering over 0.5 MtCO2e. All these credits have been retired, i.e., used to ‘offset’
emissions either domestically or elsewhere, and almost all originated from AFOLU sector
activities (So et al., 2023).

■ IMF (2019) estimates that a carbon price of USD 35/tCO2e would reduce Malaysia’s
emissions by 14% below BAU by 2030, while a price of USD 70/tCO2e would reduce
emissions by 21%.

4.2.6 MYANMAR

Table 17: Myanmar – Carbon Pricing and Climate Policy Ecosystem

FF
Carbon Legal Basis Tax ETS Crediting Indirect
Subsidies
Pricing
Myanmar
Institutional National Mitigation Adaptation Sectoral Budget
Climate Structure Policy Policy Policy Policies Tagging
Change

Legend: Active In Development Under Consideration Inactive

Sources: : AMRO (2022), Parry et al. (2021a), Parry et al. (2021b), So et al. (2023), World Bank (2023)

■ Myanmar has set its NDC purely in terms of absolute emissions reductions targets, aiming
for an unconditional decrease in emissions of roughly 245 MtCO2e by 2030, relative to 2021
levels, with this target rising to 415 MtCO2e conditional upon the receipt of international
support. Myanmar also aims for a reduction in total electricity demand of 20%, and for RE
to account for 47% of total installed electricity capacity, by 2030 (Government of Myanmar,
2021).

■ Myanmar is not considering the implementation of CPIs, nor does it use indirect CPIs to
advance environmental objectives (OECD, 2022).

■ Additionally, Myanmar does not utilize fossil fuel subsidies (Parry et al., 2021a; Parry et al.,
2021b).

■ Myanmar has had some exposure to carbon credit activities, through 36 listed projects
amounting to emissions reductions of just under 500,000 tCO2e since 2004. All these
credits have been issued as a result of activities across the AFOLU and energy sectors,
with the majority having already been retired (So et al., 2023).

■ IMF (2019) estimates that a carbon price of USD 35/tCO2e would reduce Myanmar’s
emissions by 10% below BAU by 2030, while a price of USD 70/tCO2e would reduce
emissions by 17%.

37
4.2.7 PHILIPPINES

Table 18: Philippines – Carbon Pricing and Climate Policy Ecosystem

FF
Carbon Legal Basis Tax ETS Crediting Indirect
Subsidies
Pricing
Philippines
Institutional National Mitigation Adaptation Sectoral Budget
Climate Structure Policy Policy Policy Policies Tagging
Change

Legend: Active In Development Under Consideration Inactive

Sources: AMRO (2022), Parry et al. (2021a), Parry et al. (2021b), So et al. (2023), World Bank (2023)

■ The Philippines’ NDC calls for a 75% reduction in the nation’s GHG emissions by 2030,
relative to a decade-long BAU scenario. Only 2.71% of this total represents an unconditional
target, with the remainder contingent on the receipt of international assistance for its
mitigation efforts. This is augmented by separate targets to peak emissions by 2030,
increase the capacity of RE to 15.2GW by 2030, and reduce the energy intensity of GDP by
40% by 2040, relative to 2005.

■ The Philippines is currently considering the implementation of compliance market CPIs.

It is studying the viability of a carbon tax as a measure to meet climate and environmental
needs and obligations, as well as support broader fiscal consolidation efforts (Simeon,
2022). Philippines is also reported by ADB (2021) and ICAP (2020) to have been considering
the implementation of an ETS, which is reportedly the preferred tool of the nation’s
Department of Finance (DOF).

■ Further, the Low-Carbon Economy Act of 2023 was proposed to the Philippine Senate
Committee on Environment, Natural Resources, and Climate Change in March 2023
(Legarda, 2023). It sets provisions for a national emissions trading system covering
industrial and commercial sectors, as well as broader low-carbon directives.

■ It has also been reported by Jocson (2023) that any recommended carbon tax proposal
submitted by the DOF would likely be taken up by the country’s legislature, indicating broad
recognition across government of the need for the Philippines to enact such instruments.

■ The Philippines, which does not subsidize fossil fuel consumption, already imposes indirect
CPIs (OECD, 2022; Parry et al., 2021a; Parry et al., 2021b). These are in form of taxes levied
upon five categories of fossil fuels: coal, LPG, diesel, gasoline, and bunker fuels, at varying
rates, through its Tax Reform for Acceleration and Inclusion (TRAIN) Law. Under TRAIN,
indirect carbon tax rates are estimated to range from between USD 1.60/tCO2 for coal to
USD 95/tCO2 for gasoline (Oposa, 2018).

■ Philippines has had some exposure to carbon credit activities, with 16 listed projects since
2004. Much of these have been credits issued from activities within the energy sector, and
in total cover emissions reductions of just under 700,000 tCO2e (So et al., 2023).

■ IMF (2019) estimates that a carbon price of USD 35/tCO2e would reduce the Philippines’
emissions by 20% below BAU by 2030, while a price of USD 70/tCO2e would reduce
emissions by 29%.

38
4.2.8 SINGAPORE

Table 19:Singapore – Carbon Pricing and Climate Policy Ecosystem

FF
Carbon Legal Basis Tax ETS Crediting Indirect
Subsidies
Pricing
Singapore
Institutional National Mitigation Adaptation Sectoral Budget
Climate Structure Policy Policy Policy Policies Tagging
Change

Legend: Active In Development Under Consideration Inactive

Sources: : AMRO (2022), Parry et al. (2021a), Parry et al. (2021b), So et al. (2023), World Bank (2023)

■ Singapore’s NDC calls for reductions in its absolute emissions to 60 MtCO2e. This is
augmented by targets to peak emissions before 2030 and reach net-zero emissions by
2050 (Government of Singapore, 2022a).

■ In 2018, Singapore issued the Carbon Pricing Act stipulating the implementation of a
carbon tax covering facilities with annual emissions of over 25ktCO2e (essentially the 50
largest emitters), at a rate of approximately USD 3.72/tCO2e (Government of Singapore,
2018). The carbon tax commenced in 2019, encompassing over 80% of Singapore’s annual
emissions.

■ An Amendment to Singapore’s carbon tax legislation was passed in 2022, formalizing the
government’s intention to progressively raise the price of carbon three times by 2028
(Government of Singapore, 2022b). Under the new regime, carbon prices will reach roughly
USD 18.60/tCO2e in 2024, USD 33.50/tCO2e in 2026, and between USD 37/tCO2e and USD 60/
tCO2e by 2028.

■ The Amendment to the Act included provisions for emissions-intensive, trade-exposed

industry players to offset a portion of their carbon tax liabilities by using transitory
allowances. To further cushion the impacts of rising carbon prices, this allows companies
to use internationally-purchased carbon credits to offset up to 5% of annual emissions.

■ In June 2023, Singapore launched its own carbon exchange market, Climate Impact X (CIX).
Jointly established by its stock market regulator (SGX), sovereign wealth fund (Temasek),
and financial institutions (DBS and Standard Chartered), it seeks to scale voluntary carbon
market activities by facilitating carbon credit transactions catered towards institutional
investors and multinational corporations.

■ Singapore utilizes indirect CPIs in the form of fuel excise taxes that cover the transport
sector, and does not subsidize the use of fossil fuels (OECD, 2022; Parry et al., 2021a; Parry
et al., 2021b).

■ IMF (2019) estimates that a carbon price of USD 35/tCO2e would reduce Singapore’s
emissions by 4% below BAU by 2030, while a price of USD 70/tCO2e would reduce
emissions by 8%.

39
4.2.9 THAILAND

Table 20: Thailand – Carbon Pricing and Climate Policy Ecosystem

FF
Carbon Legal Basis Tax ETS Crediting Indirect
Subsidies
Pricing
Thailand
Institutional National Mitigation Adaptation Sectoral Budget
Climate Structure Policy Policy Policy Policies Tagging
Change

Legend: Active In Development Under Consideration Inactive

Sources: AMRO (2022), Parry et al. (2021a), Parry et al. (2021b), So et al. (2023), World Bank (2023)

■ Thailand’s NDC calls for an unconditional 20% decrease in its absolute GHG emissions
relative to a 2005 baseline, with a further 5% decrease conditional on international
assistance. Supplementing its NDC are targets to reduce the energy intensity of GDP by
30% by 2036, by when the nation also strives to have 30% of total energy consumption met
through the use of RE. Finally, Thailand has imposed a carbon neutrality target for 2050 and
a net-zero target for 2065, though the implied distinction between neutrality and net-zero
remains unclear.

■ Thailand’s Excise Department has announced plans to implement a carbon tax covering
activities across the energy, transport, and industrial sectors at some point in the coming
years, with studies currently ongoing to assist in the development of this mechanism
(Chantanusornsiri, 2022).

■ The Ministry of Natural Resources and Environment has indicated that details on the
proposed carbon tax as well as on carbon credit activities will be included within the
nation’s upcoming Climate Change Act. This move has its origins in the 12th National
Economic and Social Development Plan 2017-2021, which stipulated that the Thai
government begin to develop economic instruments to incentivize GHG emissions
reductions (Government of Thailand, 2017). Concurrently, the government is also preparing
the Greenhouse Gas Reporting Law and the Emissions Trading System Law (World Bank,
2021).

■ Thailand has an extensive system in place to support domestic carbon credit activities
across a wide range of sectors. Notably, despite accounting for a tenth of credits issued
by AMS, it is the only nation where the majority of these credits originate from low-carbon
activities outside the AFOLU and energy sectors.

■ Since 2009, the Thailand GHG Management Organization (TGO) has been working towards
the development of the Thailand Voluntary Emissions Trading Scheme (T-VETS), which
aims to reduce GHG emissions through domestic voluntary carbon market activities (TGO,
2020). At the same time, it is working towards establishing robust MRV systems in line with
international standards.

■ T-VETS has been in place since 2015, in multiple phases, across a number of carbon-
intensive industrial activities, with targets set to reduce the emissions intensity of
activities from a 2012/13 baseline.

■ T-VETS allows participating organizations to ‘offset’ emissions through the nation’s

domestic crediting program, the Thailand Voluntary Emissions Reduction (T-VER) program
(TGO, 2016). T-VER also strives to achieve emissions reductions by promoting participation
in voluntary carbon market activities across domestic firms.

40
 ■ Thailand has announced that credits issued for a host of low-carbon activities,
predominantly across the energy and waste sectors, are eligible for use to meet
international objectives. This is provided that specific project characteristics are met and
these sales do not compromise its own international climate commitments.

■ In 2023, Thailand launched a carbon credit trading platform, FTIX, jointly developed by the
TGO and the Federation of Thai Industries, which will incorporate the T-VER and serve to
facilitate domestic trade in carbon credits and renewable energy certificates (The Nation,
2023). International trading may be permitted in the future.

■ Thailand has in place a variety of taxes covering the consumption of fossil fuels, as well
as automobile taxes designed to penalize the use of low fuel-efficiency private vehicles
(OECD, 2022).

■ Thailand also subsidizes fossil fuels, particularly for natural gas and petroleum products.
Retail prices for transport fuels are also capped (Parry et al., 2021a; Parry et al., 2021b).

■ IMF (2019) estimates that a carbon price of USD 35/tCO2e would reduce Thailand’s
emissions by 9% below BAU by 2030, while a price of USD 70/tCO2e would reduce
emissions by 16%.

4.2.10 VIETNAM

Table 21: Vietnam – Carbon Pricing and Climate Policy Ecosystem

FF
Carbon Legal Basis Tax ETS Crediting Indirect
Subsidies
Pricing
Vietnam
Institutional National Mitigation Adaptation Sectoral Budget
Climate Structure Policy Policy Policy Policies Tagging
Change

Legend: Active In Development Under Consideration Inactive

Sources: : AMRO (2022), Parry et al. (2021a), Parry et al. (2021b), So et al. (2023), World Bank (2023)

■ Vietnam is aiming for an unconditional reduction in GHG emissions of roughly 16% by 2030,
relative to its BAU scenario, with a further 43.5% decrease conditional upon international
mitigation assistance. It has imposed ambitious and detailed targets for RE deployment,
aiming for RE to comprise almost 31% of the electricity generation mix by 2030 and over
two-thirds by 2050. Vietnam has also imposed a target to reduce methane emissions by
30% by 2030 relative to 2020 levels, and a net-zero target for 2050.

■ Vietnam is currently in the process of assessing and designing an ETS, which has its
legislative origins in the 2022 revision of Vietnam’s Law on Environmental Protection.
This Law empowers the Ministry of Finance and the Ministry of Natural Resources and
Environment to design a domestic ETS. The system is mooted to allow for the inclusion
of domestic and international offsets to mitigate liabilities, as well as a national crediting
mechanism (NCM) (Government of Vietnam, 2022b).

41
■ This has since been followed up with a decree establishing regulations under the Law on
Environmental Protection as well as a roadmap towards ETS and NCM implementation
(Government of Vietnam, 2022c). The pilot NCM is slated for launch in 2024, initially
targeting the transport and waste sectors (World Bank, 2023). It is expected to support
the full operationalization of Article 6 crediting mechanisms by 2026. The pilot
ETS, meanwhile, will be launched on a voluntary basis in 2026 with full, mandatory
operationalization by 2028.

■ To support the implementation of the ETS, facilities with annual emissions of over 3,000
tCO2e are required to submit biennial GHG inventory reports.

■ The ETS will feature a declining emissions quota that corresponds to emissions reductions
targets under Vietnam’s NDC. It will initially cover carbon-intensive sectors such as steel,
cement, and thermal power generation before being expanded to cover further sectors.

■ Despite the fact that the NCM remains under development, Vietnam has previously
participated in carbon credit activities. It accounts for almost a third of the 377 listed
projects across AMS, although the size of emissions reductions achieved through these
projects is rather small; Vietnam accounts for just over 5% of the region’s issued credits
since 2004. None of Vietnam’s carbon credit projects to date cover emissions reductions
activities in its AFOLU sector (So et al., 2023).

■ Vietnam does not subsidize the consumption of fossil fuels, and imposes indirect CPIs in
the form of environmental taxes which are levied on the import and production of fossil
fuels (OECD, 2022; Parry et al., 2021a; Parry et al., 2021b).

■ IMF (2019) estimates that a carbon price of USD 35/tCO2e would reduce Vietnam’s
emissions by 21% below BAU by 2030, while a price of USD 70/tCO2e would reduce
emissions by 31%.

42
5. CONCLUSION

43
Over the past decade, carbon pricing has become an increasingly popular policy
measure used to support growing global efforts to address the causes of climate
change and adapt to its consequences. While historically the domain of climate
policy in the developed world, evidence shows that CPIs are now being seriously
considered across the developing world too. This trend extends to Southeast Asia,
where seven of 10 ASEAN member states are either considering, implementing,
or have implemented a mandatory carbon tax or emissions trading system, and all
AMS have been involved in carbon crediting activities in some capacity in recent
decades.

While individual countries may have specific objectives in mind through the
application of CPIs, part of the impetus towards the development of domestic
regulation on GHG emissions is driven by international developments.
Particularly important in this context are the finalization of Article 6 under the
Paris Agreement, which serves to facilitate international cooperation in the
achievement and trade of GHG mitigation outcomes, as well as the possible
implications of other cross-border instruments and mechanisms such as border
carbon adjustments. These international developments, coupled with the
global nature of the issue of climate change, put international cooperation and
coordinated efforts at the center of successfully navigating this challenge.

With the growing intensity of the climate challenge, the carbon pricing agenda
will likely continue to progress across AMS over the coming decade. At present,
such efforts remain in their nascency. This is in part due to the fact that CPIs
are complex, multidimensional policy instruments that can have implications
across a wide range of economic activities across many sectors. While general
guidelines exist for their implementation, rooted in both theory as well as practical
experience – largely in the developed world – unique national and subnational
circumstances mean that there cannot be a one-size-fits-all approach towards
CPIs. What works in Europe may not work as well in Southeast Asia, owing to
varying underlying economic and social conditions, political structures, and energy
systems.

This creates great scope for regional actors, including international development
organizations, to provide support and guidance to national-level governments
in the development of their CPIs, including ensuring the necessary foundational
elements of CPI implementation are in place. Indeed, much of the support
AMS have received at national and regional levels have thus far focused on the
development of robust MRV mechanisms for emissions, and studies to better
understand the potential impacts of pricing carbon, including direct and indirect
economic impacts.

Such work will need to continue so that AMS have a clear understanding of what is
required in ongoing efforts to implement and administer CPIs, and how to design
CPIs to ensure environmental objectives can be met without compromising on
bread-and-butter economic needs. In laying out the landscape of the climate
change challenge and the carbon pricing ecosystem across ASEAN, it is hoped
that this desk review provides regional actors with a basic understanding of
climate change economics, carbon pricing instruments, and the state of climate
change and low-carbon policy across AMS, using this information to facilitate
engagements with AMS governments in their ongoing and present endeavors
towards implementing CPIs.

44
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 7. APPENDIX
Table 22: RE Capacity Across ASEAN by Source, 2000–2019 (Climate Watch, 2023)
Avg Installed Capacity
Country RE Source
2000–2009 2010–2019
Hydropower 0.0 0.0
Wind 0.0 0.0
Solar 0.0 1.2
Brunei
Bioenergy 0.0 0.0
Geothermal 0.0 0.0
TOTAL 0.0 1.2
Hydropower 12.3 755.7
Wind 0.0 0.3
Solar 0.8 23.9
Cambodia
Bioenergy 2.0 33.7
Geothermal 0.0 0.0
TOTAL 15.1 813.6
Hydropower 3,510.3 5,070.9
Wind 0.1 30.6
Solar 3.7 62.3
Indonesia
Bioenergy 994.6 1,837.8
Geothermal 864.1 1,535.7
TOTAL 5,372.9 8,537.2
Hydropower 676.9 3,995.9
Wind 0.0 0.0
Solar 0.0 8.2
Laos
Bioenergy 0.0 40.9
Geothermal 0.0 0.0
TOTAL 676.9 4,045.0
Hydropower 2,101.1 4,835.9
Wind 0.0 0.0
Solar 0.2 282.0
Malaysia
Bioenergy 695.1 1,025.2
Geothermal 0.0 0.0
TOTAL 2,796.4 6,143.1

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 Avg Installed Capacity
Country RE Source
2000–2009 2010–2019
Hydropower 609.8 2,959.8
Wind 0.0 0.0
Solar 0.0 24.8
Myanmar
Bioenergy 36.0 49.9
Geothermal 0.0 0.0
TOTAL 645.8 3,034.5
Hydropower 2,475.5 2,887.0
Wind 16.5 261.9
Solar 1.2 380.2
Philippines
Bioenergy 12.7 210.6
Geothermal 1,846.7 1,890.7
TOTAL 4,352.7 5,630.4
Hydropower 0.0 0.0
Wind 0.0 0.0
Solar 0.2 74.3
Singapore
Bioenergy 150.5 178.2
Geothermal 0.0 0.0
TOTAL 150.6 252.6
Hydropower 2,977.5 3,053.0
Wind 0.7 455.0
Solar 13.2 1,517.4
Thailand
Bioenergy 964.1 2,965.4
Geothermal 0.3 0.3
TOTAL 3,955.9 7,991.1
Hydropower 4,636.5 15,123.3
Wind 1.0 131.1
Solar 1.7 514.0
Vietnam
Bioenergy 125.0 194.7
Geothermal 0.0 0.0
TOTAL 4,764.3 15,963.1

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