Asia has become the world’s carbon credit powerhouse, producing more than half of global offsets. By 2030, the region is expected to generate nearly US$10 billion annually from carbon credits.
What are carbon credits?
Carbon credits are certificates that represent one tonne of CO₂ avoided or removed. The first credits in Asia were issued under Kyoto’s Clean Development Mechanism (CDM) in the 2000s. By 2024, Asia had issued 2.978 billion tonnes of carbon credits, 56.2% of the global total.
See also: Advantages and disadvantages of carbon credits | Experts’ Opinions
China alone accounted for nearly half of Asia’s supply (48.15%), while India contributed more than 23%. Divided per regions, East Asia produced 51% of credits, South Asia 31%, and Southeast Asia 12%.
Whereas CDM dominated a decade ago, now, Verra, VCS, and Gold Standard projects now lead the issuing of carbon credits, accounting for 54.6% and 33% of Asia’s 2024 total, respectively.
Historical carbon credit issuance (Asia in dark blue vs global total in light blue). Asia’s share climbed over time, peaking during the CDM boom around 2012, and remains above half of global issuance today.
Why can Asia issue so many carbon credits?
Asia’s dominance in the carbon credit market is rooted in its mix of natural abundance and economic opportunities. The region, particularly Southeast Asia, is home to vast ecosystems. Countries such as Indonesia and Vietnam, with large rainforests and peatlands, rank among the world’s top sources of avoided deforestation (REDD+) credits. Protecting and restoring these ecosystems through reforestation, avoided deforestation, and peatland restoration allows enormous volumes of credits to be generated.
Modern agricultural practices also play an important role. Innovations in rice farming to cut methane emissions and biochar production from organic waste are introducing new approaches to carbon sequestration.
Emerging trading hubs
Despite its vast supply, Asia’s trading market is still maturing. Singapore is positioning itself as a regional carbon trading hub. Exchanges such as the Air Carbon Exchange (ACX) and Climate Impact X (CIX) are working to standardize contracts and boost liquidity.
Meanwhile, ASEAN countries are collaborating to harmonise the rules. The new ASEAN Carbon Market Common Framework, an initiative backed by Singapore, Indonesia, Thailand, and Malaysia, aims to link regional carbon markets.
Top key players and regional trends
Several Asian countries are leading the way in developing their own carbon markets, with a mix of national emissions trading systems (ETS) and voluntary markets.
🔹 China runs the world’s largest ETS that was launched in 2021, and covers 60% of its CO₂ emissions. Prices have risen to about US$13 per tonne. In 2024, China relaunched its offset program, CCER, and had issued 10 MtCO₂ credits by April 2025, with expansions to new sectors expected through to 2027.
🔹 India launched the Carbon Credit Trading Scheme (CCTS) in 2024, which is an intensity-based ETS for 13 heavy industries, including steel and cement. Facilities that surpass efficiency targets earn tradable carbon credit certificates which are overseen by a new Carbon Market Authority.
🔹 Japan launched its GX-ETS in 2023, initially as a voluntary market, but this is expected to become mandatory in 2026. Japan focuses on domestic offsets (J-Credits and JCM credits), but remains active in bilateral Article 6 deals, financing emission reductions abroad.
🔹Singapore had a high carbon tax (25 Singapore dollars per ton (US$18-19) in 2024, which is expected to rise to 50–80 Singapore dollars by 2030. Since January 2024, companies have been able to offset up to 5% of their carbon tax bill using eligible international credits. The country has no national credit standard and instead relies on platforms such as AirCarbon Exchange (ACX) and Climate Impact X (CIX). At the same time, it is actively entering international partnerships and bilateral agreements to channel climate finance.
🔹 Indonesia launched the IDX Carbon Exchange in 2023. By early 2025, it had traded 1.55 million tonnes with total transactions amounting to US$4.66 million. Its ETS aims to cover over 80% of national emissions. Carbon credits issued before October 2021 remain valid but must be recorded in the National Registry System (SRN-PPI) as new trading rules came into effect since then. The country’s own certification scheme (SPEI) was launched in 2023. Credits can be traded domestically and can be rolled over for two years. Cross-border trading is allowed but tightly controlled and requires approval from the Ministry of Environment and Forestry.
🔹 Malaysia operates a voluntary market through the Bursa Carbon Exchange (BCX). Currently limited to Verra VCS credits since 2016, BCX plans to add Gold Standard credits. Foreign participants can trade freely, although no unified carbon credit law exists.
However, Asia’s dominance has attracted criticism. Some analysts point out that many historic credits from Asia were of questionable quality (e.g., overstated forest carbon or old coal-to-gas projects), with only about 14% of Asian credits carrying “high-quality” labels (such as Sustainable Development Goals tags) in 2024.
Challenges ahead
Quality control: Legacy credits appear to be viewed as low-grade, prompting calls for stricter verification. Double-counting and data inconsistency across registries are of concern. To address this, market groups are pushing for high-integrity standards (e.g., Singapore’s SCMA is working with registries to adopt best practices).
Liquidity: While issuance is huge, actual trading volumes remain modest apart from China’s ETS. For example, Indonesia’s exchange trades under 2 million tons per year, and Singapore’s traded volumes are small relative to global markets. Efforts to cross-list credits and attract corporate buyers are ongoing.
Policy fragmentation: Different countries use different standards, baselines, and market regulations, which makes regional trading complicated. Heavy reliance on voluntary credits also makes Asia vulnerable to international policy changes. Some governments are now moving to formalize the market (e.g., India’s CCTS, China’s CCER), which may reduce arbitrariness but could also limit eligible projects.
Future Prospects
Higher Quality Focus: There is a growing demand for high-quality credits with verifiable co-benefits. In response, Asia is developing new standards (e.g., SCMA, ACCF) and using technology like blockchain to ensure integrity and prevent double-counting.
Article 6 and International Trading: The Paris Agreement’s Article 6 is expected to facilitate more international trading, with countries such as Japan and Singapore leading new partnerships. This will help Asian projects to find new international buyers as global commitments and carbon border taxes increase.
Carbon Dioxide Removal (CDR): CDR credits, such as those from direct air capture or afforestation, are selling at a high premium. Asia’s natural resources and technical potential may turn this into a major growth sector for high-value credits.
Market Integration: Regional cooperation is improving through initiatives such as the ASEAN Carbon Market Common Framework. The goal is to harmonise credit verification and market regulations to enable easier cross-border trading and eventually pave the way for linked ETS or multinational carbon funds.
At a glance
Asia’s carbon credit market looks set to remain central to global climate finance. With governments, businesses, and platforms across the region working to improve transparency and integrity, the region is poised to capture a significant share of the global market growth, which is expected to expand more than tenfold by 2030.
See also: Carbon credits in Africa – exploitation or benefits?
