Viet Nam Proposes Connecting the ASEAN Carbon Market

According to Dr. Tho, connecting the ASEAN carbon market is not simply about trading carbon credits between nations, but also about creating a common, unified carbon ecosystem. To achieve this, ASEAN must standardize criteria for inventory, measurement, emissions verification, sustainability reporting, and green classification. These standards should be widely applied across multiple sectors, including construction, smart cities, waste management, land use and forestry, transportation, energy, and digital technologies. Such unification would reduce inconsistencies and overlap in current regulations, creating a favorable environment for the development of the regional carbon market.

“With the increasing impact of climate change, the role of the carbon market will become more essential for ASEAN in the coming decades. Regional and sub-regional initiatives will not only facilitate carbon credit trading but also optimize energy efficiency, reduce greenhouse gas emissions, and support climate action at both national and regional levels. This will not only help ASEAN achieve its emissions reduction goals but also contribute to building a unified and robust carbon ecosystem,” emphasized Dr. Nguyen Dinh Tho.

Connecting the ASEAN Carbon Market - Three Key Contributions

Dr. Nguyen Dinh Tho highlighted three critical contributions of connecting the ASEAN carbon market. First, this integration will play a pivotal role in building smart and sustainable cities, where energy use, waste management, and natural resource governance are handled efficiently and responsibly.

The connection of the ASEAN carbon market will also drive the integration of other key infrastructure sectors, including transportation, energy, and digital systems across the ASEAN region. Conversely, enhanced infrastructure connectivity will further support the development and linkage of the ASEAN carbon market, helping to achieve emissions reduction commitments. Special attention must be given to aligning this carbon market with global trends and commitments, such as international agreements on reducing emissions in aviation and maritime sectors—two major emitters often overlooked in national and regional strategies. Efficient transport connectivity within ASEAN will be crucial in mitigating greenhouse gas (GHG) emissions.

Second, energy connectivity forms the backbone of ASEAN’s strategy to integrate renewable energy into the carbon market. Initiatives like the ASEAN Power Grid (APG) and the Trans-ASEAN Gas Pipeline (TAGP) are essential to strengthening energy networks and sharing renewable resources among member states. This connectivity will reduce the region's reliance on fossil fuels and lower overall carbon emissions. Furthermore, it will cut costs associated with the development and deployment of renewable energy projects, while also facilitating the monitoring, reporting, and verification (MRV) of GHG emissions.

Third, digital connectivity through platforms and technologies such as blockchain, artificial intelligence (AI), and the Internet of Things (IoT) is becoming indispensable for ensuring safe, accurate, and transparent carbon credit trading across ASEAN.

6 solutions from Viet Nam

To realize the proposed initiative, Dr. Nguyen Dinh Tho outlined six solutions for ASEAN to establish a well-integrated, transparent, and effective carbon market, thereby contributing to regional efforts in reducing greenhouse gas emissions and promoting sustainable development.

First, it is crucial to enhance market trust and liquidity. Trust and liquidity challenges are significant barriers to the ASEAN carbon market. Member countries should collaborate to develop unified standards and reliable assessment methods, creating a common quality control and certification system. This approach will ensure that traded carbon credits are legitimate and valuable, thus boosting investor confidence.

Second, developing offset agreements between voluntary and compliance carbon markets is essential. Such agreements will facilitate the trading of carbon credits across different markets, aiding in the reduction of regional greenhouse gas emissions. ASEAN governments should encourage and support the formation of these agreements to improve market compatibility.

Third, there is a need for clear regulations and defined roles for governments. ASEAN governments should make explicit commitments to support carbon markets, particularly regarding regulations on cross-border transactions and Article 6 of the Paris Agreement. This will foster a stable regulatory environment, mitigate risks, and ensure transparency in carbon transactions.

Fourth, connecting carbon markets with international investors is vital. Regional bodies and non-governmental organizations should engage in capacity-building programs and enhance stakeholder linkages. Additionally, representing ASEAN in global standard-setting bodies will ensure that international standards align with regional needs.

Fifth, reducing development and registration costs through digital innovations such as blockchain, artificial intelligence (AI), and the Internet of Things (IoT) is necessary. These technologies can streamline processes and lower costs, making carbon markets more accessible.

Lastly, international and regional organizations must commit to supporting ASEAN's carbon market development. Organizations like ICVCM and IETA should collaborate with regional NGOs to help ASEAN countries build high-quality carbon markets. Establishing financial mechanisms to support decarbonization initiatives in developing countries will also be crucial in enhancing the connectivity of the ASEAN carbon market.