ASEAN’S Evolving Climate Governance Framework – fulcrum.sg

Report on ASEAN’s Climate Governance and Sustainable Development Goals (SDGs) Alignment

Introduction

As ASEAN member states intensify efforts to implement their Nationally Determined Contributions (NDCs) under the Paris Agreement, regional coordination has become increasingly critical. While climate and energy policies remain primarily national, ASEAN’s collective role in facilitating shared infrastructure, harmonised standards, and institutional frameworks is vital to accelerating the green transition. This aligns closely with several Sustainable Development Goals (SDGs), including SDG 7 (Affordable and Clean Energy), SDG 9 (Industry, Innovation and Infrastructure), SDG 13 (Climate Action), and SDG 17 (Partnerships for the Goals).

ASEAN requires approximately US$1.5 trillion in investment by 2030 to meet its energy transition goals, yet only US$45 billion was mobilised between 2021 and 2023, highlighting a significant financing gap. Strengthening regional mechanisms to attract green investment and align national decarbonisation pathways with ASEAN’s collective vision is imperative for achieving SDG 13 and SDG 8 (Decent Work and Economic Growth).

Progress in Climate and Energy Cooperation

• Adoption of the ASEAN Strategy for Carbon Neutrality in 2023, promoting integrated institutional approaches across sectors.
• Ongoing discussions on carbon markets and a regional sustainable finance taxonomy to enhance coordination.
• Gradual advancement towards collective renewable energy targets, driven by rising demand from energy-intensive industries and AI applications, supporting SDG 7.
• Renewed commitment to the ASEAN Power Grid (APG) and exploration of subsea cable projects to strengthen energy interconnectivity, contributing to SDG 9.
• Launch of a tripartite financing initiative involving the Asian Development Bank (ADB), World Bank, and ASEAN to mobilise large-scale financing for cross-border energy interconnections.

Assessment of ASEAN Countries’ Climate Commitments

Nationally Determined Contributions (NDCs) Overview

Most ASEAN countries, except Myanmar and the Philippines, have communicated economy-wide net zero targets. Cambodia and Singapore have submitted updated 2025 NDCs with quantifiable emissions reduction targets, reflecting progress towards SDG 13.

1. Cambodia’s 2025 NDC commits to a 16% unconditional emissions reduction compared to its 2035 BAU scenario.
2. Singapore targets a reduction of 45 to 50 MtCO₂e by 2035.
3. Only Cambodia, Indonesia, Singapore, and Thailand have submitted long-term low greenhouse gas emissions development strategies (LT-LEDS).

Emissions Reduction Targets

• Seven countries set targets as percentage reductions relative to BAU scenarios, consistent with international practices.
• Conditional targets are generally stronger than unconditional ones, indicating reliance on international support, especially for the Philippines.
• Wealthier ASEAN countries (Brunei, Singapore, Malaysia) set unconditional targets, reflecting domestic resource mobilisation.
• Progress includes expanded coverage of greenhouse gases and sectors, and addition of new sectoral targets.

Summary Table: Latest NDCs Submitted by ASEAN Countries

Note: Emissions are expressed in million tonnes of CO₂ equivalent (MtCO₂e).

Key Developments in ASEAN Climate Governance

ASEAN Strategy for Carbon Neutrality

Endorsed in August 2023, the ASEAN Strategy for Carbon Neutrality adopts a cross-sectoral approach integrating environmental and economic objectives, supporting SDG 8, SDG 9, and SDG 13. The strategy aims to:

1. Develop green industries to enhance ASEAN’s role in regional green value chains and boost exports.
2. Enhance interoperability for cross-border exchange of green electricity, products, and feedstocks.
3. Establish globally credible standards to attract international capital and deepen market liquidity.
4. Cultivate green talent and expertise to support the climate transition.

The establishment of the ASEAN Task Force for Carbon Neutrality ensures coordination across sectors and alignment with existing mechanisms, facilitating collaboration with dialogue and development partners.

ASEAN Taxonomy for Sustainable Finance

Launched in 2021 under ASEAN Finance Ministers and Central Bank Governors, the ASEAN Taxonomy defines and classifies sustainable projects to guide investments, supporting SDG 17 and SDG 13. It ensures interoperability with national taxonomies and international standards such as the EU Taxonomy.

National-Level Taxonomies in ASEAN

The ASEAN Taxonomy employs a multi-tiered traffic light system (“Green,” “Amber,” “Red”) to classify activities based on sustainability criteria. It uniquely includes transitional activities such as early coal retirement projects aligned with the International Energy Agency’s Net Zero Emissions Pathway, addressing region-specific challenges.

Challenges and Recommendations

Towards an ASEAN Regional Carbon Trading Mechanism

ASEAN is in early stages of developing a regional carbon market, aligning with SDG 13 and SDG 17. The ASEAN Alliance of Carbon Markets, formed in 2024, is drafting the ASEAN Common Carbon Framework (ACCF) with private sector and civil society participation.

• Singapore leads with Southeast Asia’s first carbon tax (2019) and voluntary carbon market platform Climate Impact X (CIX).
• Indonesia has introduced carbon pricing for coal power plants but faces implementation challenges.
• Malaysia and Thailand are advancing voluntary carbon market exchanges and certification systems.
• Interoperability of carbon markets is a strategic priority under the ASEAN Strategy for Carbon Neutrality.
• Operationalisation of Article 6 of the Paris Agreement provides a framework for bilateral and multilateral carbon trading.

Risks and Considerations:

• Over-reliance on voluntary, non-binding carbon offset mechanisms may disincentivise direct emissions reductions.
• Lack of transparency and pricing signals could undermine market integrity and lead to greenwashing.
• Consensus-based ASEAN governance may slow development of legally binding carbon market rules.
• Establishing robust Monitoring, Reporting, and Verification (MRV) infrastructure is critical for environmental integrity and investor confidence.

Conclusion

ASEAN’s climate governance architecture is rapidly evolving to align with global climate goals and the Sustainable Development Goals, particularly SDG 7, SDG 9, SDG 13, and SDG 17. Initiatives such as the ASEAN Strategy for Carbon Neutrality, ASEAN Taxonomy for Sustainable Finance, and the ASEAN Common Carbon Framework demonstrate a commitment to coordinated, cross-sectoral climate action.

High-level coordination, exemplified by the Ministerial Interface Meeting on the ASEAN Power Grid Financing Facility, underscores the importance of integrated efforts. Continued progress will depend on enhancing ambition, harmonising standards, fostering green industry development, and establishing credible carbon market mechanisms. These efforts position ASEAN to strengthen its role in global climate governance while advancing sustainable economic resilience.

1. Sustainable Development Goals (SDGs) Addressed or Connected

1. SDG 7: Affordable and Clean Energy
   • Article discusses ASEAN’s renewable energy targets, energy transition goals, and the ASEAN Power Grid initiative.
2. SDG 9: Industry, Innovation and Infrastructure
   • Focus on regional infrastructure connectivity, green industries, and development of sustainable finance taxonomies.
3. SDG 13: Climate Action
   • Central theme of the article is ASEAN’s climate governance, NDCs, carbon neutrality strategy, carbon markets, and emissions reduction targets.
4. SDG 17: Partnerships for the Goals
   • Emphasis on regional coordination, international climate finance, cooperation among ASEAN countries, and partnerships with development banks.

2. Specific Targets Under Identified SDGs

1. SDG 7: Affordable and Clean Energy
   • Target 7.2: Increase substantially the share of renewable energy in the global energy mix (ASEAN renewable energy targets and ASEAN Power Grid).
   • Target 7.a: Enhance international cooperation to facilitate access to clean energy research and technology (regional and international financing initiatives).
2. SDG 9: Industry, Innovation and Infrastructure
   • Target 9.1: Develop quality, reliable, sustainable and resilient infrastructure (ASEAN Power Grid, subsea cable projects).
   • Target 9.4: Upgrade infrastructure and retrofit industries to make them sustainable (green industries development under ASEAN Strategy for Carbon Neutrality).
3. SDG 13: Climate Action
   • Target 13.2: Integrate climate change measures into national policies, strategies and planning (NDCs, ASEAN Strategy for Carbon Neutrality, carbon market frameworks).
   • Target 13.a: Implement the commitment undertaken by developed-country parties to the UNFCCC to mobilize climate finance (mobilizing US$1.5 trillion investment and addressing financing gap).
4. SDG 17: Partnerships for the Goals
   • Target 17.3: Mobilize additional financial resources for developing countries from multiple sources (ADB, World Bank, ASEAN financing initiatives).
   • Target 17.16: Enhance the global partnership for sustainable development (ASEAN regional cooperation, international taxonomies alignment).

3. Indicators Mentioned or Implied to Measure Progress

1. Emission Reduction Metrics
   • Quantitative economy-wide emissions reduction targets expressed as percentages relative to Business-As-Usual (BAU) scenarios (e.g., Cambodia’s 55% reduction from 2030 BAU).
   • Absolute emissions reductions in million tonnes of CO₂ equivalent (MtCO₂e) (e.g., Singapore’s target to reduce emissions to 45-50 MtCO₂e by 2035).
2. Investment and Financing Indicators
   • Amount of investment mobilized for energy transition (US$45 billion mobilized vs. US$1.5 trillion required by 2030).
   • Number and scale of financing initiatives (e.g., tripartite financing initiative for ASEAN Power Grid).
3. Governance and Policy Implementation Indicators
   • Submission and updating of Nationally Determined Contributions (NDCs) and Long-Term Low Emission Development Strategies (LT-LEDS).
   • Establishment and operationalization of regional frameworks such as ASEAN Strategy for Carbon Neutrality and ASEAN Taxonomy for Sustainable Finance.
   • Development and adoption of carbon pricing mechanisms and carbon markets (e.g., carbon tax rates, ETS coverage).
4. Taxonomy and Standards Indicators
   • Adoption and updates of ASEAN Taxonomy versions and national taxonomies.
   • Classification of projects under “Green”, “Amber”, and “Red” categories based on screening criteria.
5. Carbon Market Integrity Indicators
   • Monitoring, Reporting, and Verification (MRV) systems for carbon trading.
   • Volume and quality of carbon credits traded in voluntary and compliance markets.

4. Table: SDGs, Targets and Indicators

Source: fulcrum.sg