COP30: Developing Carbon Credit Supply, Domestic Scheme Priorities for ASEAN

BELEM, Brazil — Countries in the Association of Southeast Asian Nations (ASEAN) have the potential to provide a supply of high-integrity carbon credits while also establishing and regionalizing their own domestic carbon pricing mechanisms, according to panelists on at the ASEAN Pavilion at COP30 on Thursday.

Renard Siew, the inaugural president of the Malaysia Carbon Market Association (MCMA), an association founded last year, told OPIS that a foremost goal is to grow the supply of high-integrity voluntary carbon credits in the country and, ultimately, the wider region.

Creating and strengthening this supply would be crucial not only to provide credits for the voluntary market, Siew said, but also to potentially integrate these in up-and-coming carbon compliance schemes.

Malaysia, for example, is currently considering the introduction of a carbon tax or an emissions trading system (ETS), according to Siew. This could initially apply to the iron and steel industries and the energy sector, he added.

“If you follow Singapore’s model where they have introduced a carbon tax, and they allow for 5% [usage] of allowance of carbon credits [for their obligations], if we were to do it domestically for domestic credits in Malaysia, we don’t have a lot of projects that [supply] that,” Siew said. “So, our role is really to spur higher demand, and we have to build up capacity and understanding on that front.”

Natalia Marsudi, deputy chair of intra-ASEAN relations at the ASEAN Alliance on Carbon Markets (AACM), told OPIS that the alliance had gathered more than 70 members representing the public and private sectors since it was founded in 2023.

“Our focus and our value to the private sector and the governments is to show what the carbon market is. Southeast Asia [has many] nature-rich countries and these typically become carbon credit suppliers,” Marsudi said.

In order to make the carbon markets thrive in southeast Asia, Marsudi said that the AACM showcases to governments in the region how some countries are establishing and creating their own schemes, whether it’s a carbon tax or an emissions trading system.

“We try to showcase how these work,” Marsudi said.

A priority for the alliance is to demonstrate to governments where the demand is for carbon credits so that policymakers can see what is most effective as different countries could have varying approaches for their domestic schemes, Marsudi added.

There are 11 countries in ASEAN, including: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam, and Timor-Leste. Of these, only Singapore and Thailand have established carbon pricing policies as other countries are considering their respective systems, according to the ASEAN Climate Change and Energy Project.

Different Types of Carbon Removals and Integration into Compliance Schemes

Siew’s comments come at a time when both established and new compliance carbon markets like the European Union emissions trading system (EU ETS) are considering the integration of carbon removals into the scheme. There is, however, a rift between what types of carbon removals should be integrated into these schemes.

For example, the European Commission has previously stated that only domestic and permanent carbon removals could be allowed into the EU ETS though policymakers are still working on finalizing what types of removals — nature-based or technology-based — would be allowed and in what designated amounts.

Another case is the U.K. carbon scheme (UK ETS), which is also considering integrating greenhouse gas removals technologies (GGRs) but with a more direct emphasis on technology-based removals like direct air carbon capture and storage (DACCS) and bioenergy with carbon capture and storage (BECCS). In an announcement earlier this year, the British government said that it would create GGR allowances to be on a one-for-one basis with U.K. carbon allowances by 2029.

Brazil’s carbon market, which was legislated in late 2024, but has yet to be fully designed, will likely allow for the use of nature-based credits in its scheme though policymakers have yet to determine which credits will be available for use.

In Malaysia’s case, with a yet-to-be-defined carbon scheme, it’s likely that policymakers might focus on nature-based carbon removals and to make sure they align with high-integrity standards such as the ones espoused by the Integrity Council for the Voluntary Carbon Market (ICVCM), Siew said.

However, there is room to expand the technology-based removals, according to Siew.

“I think ASEAN, as a collective, should not discriminate between both approaches,” Siew said. “My opinion is that Malaysia should only have one standard and then you can have different methodologies. It shouldn’t split into nature or tech-based [carbon removals].”

–Reporting by Humberto J. Rocha, hrocha@opisnet.com; Editing by Jeremy Rakes, jrakes@opisnet.com