Implementing Carbon Pricing in Southeast Asia
With emissions rising rapidly in Southeast Asia, governments are exploring carbon pricing to help reduce emissions. This brief examines progress in Indonesia, the Philippines, and Viet Nam—from Indonesia’s carbon exchange to Viet Nam’s emissions trading system (ETS) pilot and the Philippines’ emerging policy framework—highlighting key developments, challenges, and opportunities.
Policy Recommendations
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Governments can strengthen carbon pricing systems by improving systems to track and verify emissions, finalizing sector roadmaps, and ensuring carbon taxes and emissions trading systems create clear incentives for industries to reduce emissions.
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Ensure carbon pricing is both effective and equitable by setting appropriate rates, avoiding tax levels that weaken incentives to cut emissions, and using revenues to support clean energy, low-carbon investments, and protection for vulnerable households.
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Build the systems and capacity needed for carbon markets to function, including emissions tracking, carbon registries, and strong oversight, so carbon pricing programs are transparent, credible, and effective.
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Promote public understanding of carbon pricing through open dialogue and clear evidence of how well-designed policies can benefit the citizens of Indonesia, the Philippines, and Viet Nam.
Greenhouse gas emissions in Southeast Asia are rising rapidly. In 2024, Indonesia’s CO2 emissions from fossil fuels and industry reached 812 million tonnes, up from 281 million in 2000. Emissions in the Philippines and Viet Nam—at 175 million and 371 million tonnes, respectively—are smaller but have grown sharply over the past 2 decades. Emissions have nearly doubled in the Philippines and increased seven-fold in Viet Nam, driven largely by rapid economic growth and increased coal use in the energy mix. These trends highlight the urgent need for effective policies to help countries meet their commitments under the Paris Agreement.
To address these challenges, countries in the region are looking into carbon pricing, which places a cost on greenhouse gas emissions to encourage more efficient energy use and a shift toward lower-carbon technologies.
In 2023, Indonesia launched IDXCarbon, the country’s first official carbon exchange. The Philippines is evaluating options for introducing an ETS, with several legislative proposals under discussion. Viet Nam launched its pilot ETS in mid-2025, with trading expected to begin on the Ha Noi Stock Exchange by the end of 2026 and full operation planned by 2029.
This brief provides an overview of efforts to introduce carbon pricing in Indonesia, the Philippines, and Viet Nam, examining the status of carbon pricing policies, recent developments, and key implementation challenges. It also identifies opportunities for strengthening carbon markets and offers recommendations to support the development of effective carbon pricing systems in the region.
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