Across ASEAN – a region rich in biodiversity, forests and renewable energy sources such as hydro, solar and geothermal, investments in all of which could generate a significant number of ITMOs – several member states have taken steps to implement both voluntary and compliance markets (see table 1). In March 2021, Indonesia launched a pilot voluntary ETS for the power sector and is planning to start a national compliance system by 2024. Vietnam passed a law in November 2020 to create a national compliance system by 1 January 2022. Legislation to establish a national ETS covering large emitting sectors is under consideration in the Philippines. Thailand is considering establishing a national ETS. These developments follow the establishment of compliance carbon markets elsewhere in the Asia and Pacific, including national ETSs in South Korea, Australia, New Zealand, and Kazakhstan. China launched its own national trading scheme covering more than 2200 coal and gas power plants in February 2021 following a 10-year trial period in seven local pilot carbon markets. In addition, subnational systems exist in Japan (Tokyo and Saitama).
As the most mature of the carbon markets in Asia, the Korea ETS (K-ETS) sets an example for future developments in ASEAN. Launched in 2013, K-ETS now covers 73.5% of domestic GHG emissions This system allows financial intermediaries to participate in the secondary market and trade emissions allowances and converted carbon offsets on the Korea Exchange (KRX)19. By switching from physical 'over-the-counter' markets to exchange trading, new market participants do not need to invest in establishing bilateral trading, credit and settlement relationships with incumbents but can instead trade through the exchange as a single point of entry, creating opportunities for a diverse group of market players ClimateSeed provides an example of how an integrated VCM may work. With access to proprietary data and a standardized methodology to monitor the effectiveness of nature-based projects, carbon offset ratings platform Sylvera is able to enhance and standardize the due diligence performed by players like ClimateSeed, allowing for a greater level of transparency and confidence for clients. Furthermore, by relying on its technology and efficiencies of scale, it can – reduce the cost of monitoring the projects on an ongoing basis.
