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ASEAN previously believed that developed countries should bear more climate responsibility, but it has now begun actively promoting carbon pricing to drive corporate decarbonization. (Image: Unsplash)
Malaysia’s Sarawak has recently called for the establishment of a unified carbon market across ASEAN to boost carbon credit prices and address climate challenges.
The call comes amid delays in Southeast Asian countries’ efforts to implement carbon taxes and emissions trading systems (ETS), despite regional plans to align with the EU’s Carbon Border Adjustment Mechanism (CBAM).
Southeast Asia’s carbon pricing push faces repeated delays
ASEAN countries have stepped up efforts to introduce carbon pricing as part of their decarbonization strategy, shifting from their earlier stance that developed countries should bear primary responsibility for climate action.
The move reflects the bloc’s growing exposure to climate risks, as well as a warning from the World Bank that ASEAN economies could face losses of up to USD 18 billion over the next century without stronger climate measures.
Thailand and Malaysia are among the latest to announce carbon tax plans aimed at encouraging emissions reductions. Thailand approved a carbon tax of THB 200 per tonne (about USD 6.24) in January on producers of gasoline and aviation fuel. Malaysia plans to impose a carbon tax starting in 2026, targeting the steel and energy sectors, though the tax rates have yet to be published.
Progress on carbon pricing remains uneven across the region. Indonesia passed a carbon tax law in 2021, setting a rate of IDR 30,000 per tonne (about USD 2.13), but has repeatedly delayed implementation. Although the country launched a trial ETS in 2023, initially covering coal-fired power plants and planning to extend to gas-fired plants by 2025, its carbon tax has yet to be enforced.
