Implementing Carbon Pricing in Southeast Asia

The document examines the progress of carbon pricing in three Southeast Asian nations. Indonesia has an advanced regulatory framework and a functioning carbon exchange (IDXCarbon) but struggles with low trading volumes and high emission allowances. The Philippines is in the early stages of designing an emissions trading system (ETS) and exploring voluntary markets. Viet Nam is piloting an ETS for power, steel, and cement sectors, driven by its 2050 net-zero commitment and the impact of the EU's Carbon Border Adjustment Mechanism (CBAM).

• Indonesia has established a comprehensive legal framework for carbon pricing, including the launch of the IDXCarbon exchange in 2023 and the implementation of an ETS for the power sector that covered 146 coal-fired power plants in 2024, representing 38% of the country's power generation capacity.
• Despite its regulatory progress, Indonesia's carbon market faces effectiveness issues: the legislated carbon tax of IDR 30,000/tonne remains unimplemented, and current ETS emission allowances are set too high to incentivize behavior change.
• The Philippines is in the early stages of carbon pricing development, with the government evaluating the feasibility of an ETS and the Department of Energy issuing a framework in September 2025 for carbon credits in the energy sector.
• In the Philippines, there is stronger political and business support for an ETS than for a carbon tax, due to concerns that taxes could increase electricity costs and reduce the competitiveness of the power sector.
• Viet Nam is piloting an ETS from mid-2025 to the end of 2028, covering approximately 150 entities in the power, steel, and cement sectors, with trading on the Hanoi Stock Exchange postponed to the end of 2026.
• Viet Nam's carbon pricing efforts are motivated by its 2050 net-zero target and the need to address the impact of the EU Carbon Border Adjustment Mechanism (CBAM) on its steel exports.

APA

McCulloch, N., Cordon-Navarro, F. J. J., Duong, M., & Dünnenberger, S. (2026). Implementing Carbon Pricing in Southeast Asia. International Institute for Sustainable Development. https://www.iisd.org/system/files/2026-03/carbon-pricing-southeast-asia.pdf

Chicago

McCulloch, Neil, Francesse Joy J. Cordon-Navarro, Mai Duong, and Simon Dünnenberger. Implementing Carbon Pricing in Southeast Asia. International Institute for Sustainable Development, 2026. https://www.iisd.org/system/files/2026-03/carbon-pricing-southeast-asia.pdf.

Wikipedia

{{cite report |last1=McCulloch |first1=Neil |last2=Cordon-Navarro |first2=Francesse Joy J. |last3=Duong |first3=Mai |last4=Dünnenberger |first4=Simon |title=Implementing Carbon Pricing in Southeast Asia |publisher=International Institute for Sustainable Development |date=March 2026 |url=https://www.iisd.org/system/files/2026-03/carbon-pricing-southeast-asia.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{mcculloch2026implementing, author = {McCulloch, Neil and Cordon-Navarro, Francesse Joy J. and Duong, Mai and Dünnenberger, Simon}, title = {{Implementing Carbon Pricing in Southeast Asia}}, institution = {International Institute for Sustainable Development}, year = {2026}, month = mar, url = {https://www.iisd.org/system/files/2026-03/carbon-pricing-southeast-asia.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }