(Photo: iStock)
As climate change accelerates, countries are adopting measures to reduce greenhouse gas emissions. Renewable energy certificates (RECs) and carbon credit markets have emerged as critical tools for achieving net-zero targets. While RECs promote renewable energy development, carbon credits use pricing mechanisms to curb total emissions. With overlapping goals, will these markets converge or diverge in the future? This report examines potential trends using Southeast Asia as a case study.
Overview of REC and carbon credit markets
Southeast Asia's renewable energy landscape
Southeast Asia boasts abundant renewable energy resources, forming the foundation of its REC market. Vietnam, for example, expanded its solar capacity from less than 1 GW in 2018 to approximately 16 GW by 2020, becoming the region's largest solar market. Thailand has achieved significant progress in biomass and small-scale hydropower. Falling costs of solar and wind technologies have further enhanced the competitiveness of renewables in power markets (see Figure 1).