Carbon Market Insights

The document examines the evolution of carbon pricing globally and regionally, with a deep dive into Southeast Asian markets. It analyzes the impact of the EU's Carbon Border Adjustment Mechanism (CBAM) on regional exports and the progress of Article 6 of the Paris Agreement. Specific country updates detail Indonesia's operational ETS, the Philippines' legislative efforts toward a cap-and-invest system, and Viet Nam's pilot phase for a national compliance market.

• Global carbon pricing has become mainstream, with 43 carbon taxes and 38 emissions trading systems (ETSs) in operation by the end of 2025, covering over 23% of global greenhouse gas emissions.
• The European Union's Carbon Border Adjustment Mechanism (EU CBAM) entered its definitive phase in January 2026. While total export exposure for Indonesia, Viet Nam, and the Philippines is low (less than 1%), sectoral exposure is significant for iron, steel, aluminum, and cement.
• Implementation of Article 6.2 of the Paris Agreement has progressed with over 100 bilateral agreements, with Japan, Singapore, Switzerland, and South Korea acting as primary purchasing countries.
• The Paris Agreement Crediting Mechanism (PACM) under Article 6.4 has begun transitioning Clean Development Mechanism (CDM) projects, with 4,766 projects eligible for transition as of January 15, 2026.
• Indonesia is the only Southeast Asian country with an operational ETS. Regulation 110/2025 formally enables international carbon trading under Article 6 and introduces a carbon unit registry system, though the legislated carbon tax remains postponed.
• The Philippines is transitioning from debate to formal legislation, with several bills (such as HB 2055 and HB 3685) proposing a carbon pricing scheme combining cap-and-trade and cap-and-invest elements.
• Viet Nam's national compliance market is in a pilot phase (2026–2028) covering approximately 150 entities in steel, cement, and thermal power, representing about 40% of domestic GHG emissions. Trading has been postponed to the end of 2026.
• Canada withdrew its consumer fuel charge in 2025 due to public opposition, leaving industrial carbon pricing via the Output-Based Pricing System (OBPS) as its sole carbon price.

APA

Gass, P., Cordon-Navarro, F. J. J., Gabis-Reyes, M. G., Duong, M., Bonnet, A., Dünnenberger, S., Munda, J. L., Turano, G. E., & Nguyen, L. (2026). Carbon Market Insights. International Institute for Sustainable Development. https://www.iisd.org/system/files/2026-03/carbon-market-insights-volume-1-issue-1.pdf

Chicago

Gass, Philip, Francesse Joy J. Cordon-Navarro, Mary Grace Gabis-Reyes, Mai Duong, Antoine Bonnet, Simon Dünnenberger, Joanna Lyn Munda, Gelen Emil Turano, and Loan Nguyen. Carbon Market Insights. International Institute for Sustainable Development, 2026. https://www.iisd.org/system/files/2026-03/carbon-market-insights-volume-1-issue-1.pdf.

Wikipedia

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BibTeX

@techreport{gass2026carbon, author = {Gass, Philip and Cordon-Navarro, Francesse Joy J. and Gabis-Reyes, Mary Grace and Duong, Mai and Bonnet, Antoine and Dünnenberger, Simon and Munda, Joanna Lyn and Turano, Gelen Emil and Nguyen, Loan}, title = {{Carbon Market Insights}}, institution = {International Institute for Sustainable Development}, year = {2026}, url = {https://www.iisd.org/system/files/2026-03/carbon-market-insights-volume-1-issue-1.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }