On September 10, 2025, the World Economic Forum (WEF), in collaboration with Bain & Company, published a report on the future of Asia’s carbon markets. It underscores the critical role of carbon pricing mechanisms in the region’s journey to net zero, urging corporations to strategically engage with these markets to reduce emissions and seize new business opportunities. The report also underscores the potential of Article 6 of the Paris Agreement in the region, both as a framework to enable international collaboration and position Asia as a major trading hub.
The Global Weight of Asia’s Carbon Markets
Asia’s carbon markets are pivotal to the world’s climate future. The region accounts for 76% of global coal generation capacity and 55% of global CO2 emissions, making its energy transition central to global net-zero scenarios. Yet, unlike the European Union’s unified Emissions Trading System (EU ETS), Asia remains highly fragmented. Currently, there are 17 national or sub-national carbon pricing instruments and four national ETSs (covering 28% of regional emissions), but each follows different rules, targets, and mechanisms
This fragmentation increases costs and limits Asia’s ability to fully mobilize climate finance. A more connected market would attract investment, strengthen supply chains, and accelerate low-carbon technology adoption across the region.
Current Landscape
China operates the world’s largest ETS, with 630 million tonnes traded in 2024, covering roughly 40-50% of national emissions. By 2030, the report projects that volumes could rise to 8-11 billion tonnes. South Korea, a pioneer since 2015, now covers about 80% of its emissions, while Japan is preparing its GX-ETS for 2026 after years of regional pilots. India, too, launched a compliance pilot in 2024.
Singapore is the main Asian representative of the carbon tax. The country’s mechanism, set in 2019, now covers about 80% of national emissions. Thailand and Malaysia plan to follow suit with new schemes starting in 2026.
The use of Voluntary Carbon Market (VCM) credits differs depending on the country. Singapore integrates Article 6 into its carbon tax, allowing firms to offset up to 5% of taxable emissions using eligible credits. China and Japan also run voluntary schemes (CCERs and J-Credits), though both remain domestic-only systems, operating separately from the broader global VCM.
These developments show progress, but also highlight Asia’s uneven approaches, with advanced markets in Northeast Asia, strong tax frameworks in Singapore, and emerging systems elsewhere.
Three Imperatives to Develop Carbon Markets in the Region
The report identifies three imperatives for corporations to take advantage of the opportunity that carbon markets represent:
- Imperative 1: Overcome net-zero challenges through engagement. Carbon markets are accelerators, not distractions, providing cost-effective ways to reduce emissions. By engaging actively, companies can optimize operations, extend decarbonization efforts across supply chains, and manage compliance costs through balanced credit portfolios.
- Imperative 2: Capture new business growth opportunities. Carbon markets create demand for low-carbon technologies, green services, digital solutions, and emerging innovations. All of these can represent significant growth opportunities for companies.
- Imperative 3: Companies should actively build new ecosystems. The report encourages companies to go beyond individual compliance to help to shape the carbon market ecosystem itself. This can be done by participating in standard-setting, investing in innovation, and scaling supply chains for low-carbon technologies.
The Central Role of Article 6
A central theme of the report is the pivotal role of Article 6 in shaping Asia’s carbon markets. The WEF argues that greater alignment between national systems is essential to ensure compatibility and cross-border trading. For example, integrating China’s CCER offset scheme with Article 6 could make credits internationally tradable, significantly enhancing both liquidity and market credibility.
Beyond alignment, Article 6 also represents a strategic opportunity for the region. Asia’s vast natural capital positions it to become a leading exporter of Article 6.2 and 6.4 credits, unlocking new revenue streams while supporting global decarbonization. Singapore already demonstrates this potential by embedding Article 6 credits into its carbon tax system.
Main Takeaways
The WEF-Bain report leaves several main takeaways. Asia’s carbon markets must expand quickly to meet net-zero goals, with greater interconnectivity between national systems instead of continued fragmentation. Companies should see those markets as opportunities rather than burdens: a way to cut costs, drive innovation, and capture growth. Article 6 also presents a major chance for Asia to become a global carbon trading hub, as some nations could profit from exporting high-quality credits, while others gain affordable reductions.