Asian economies are accelerating the development of carbon pricing systems as a central tool to drive decarbonisation. With the region responsible for around half of global emissions, these frameworks will be decisive for global climate action. However, carbon pricing is advancing unevenly across the region. Japan and South Korea already operate large-scale systems covering 60% and 79% of national emissions, respectively, while Vietnam, Indonesia, and the Philippines are still in the early stages of designing and piloting carbon pricing instruments.

This new report examines potential CBAM costs for Japan, South Korea, Vietnam, Indonesia, and the Philippines, based on their trade exposure, production outlooks, and progress toward implementing a domestic carbon price signal.

For Asian economies to fully benefit from strong trade relations, strengthen their climate policies, promote clean production processes, and ultimately achieve decarbonisation, they should prioritise:

• Setting a clear, declining cap on emissions in line with national climate goals to ensure a predictable climate outcome and provide long-term visibility for public and private stakeholders
• Phasing out offsetting mechanisms and focusing instead on direct emissions reductions
• Shifting from free allocation to auctioning to create a meaningful price signal and generate revenue for reinvestment in climate action and support for affected communities
• Targeting support toward top-performing producers and investments in low-carbon technologies