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Unlocking Article 6 in ASEAN

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A Regional Overview of Carbon Market Developments in Southeast Asia

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Agenda

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Carbon Credits & Why Article 6 Matters

Definitions, the Paris Gap, and integrity pillars

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Article 6 Explained

Core framework, ITMOs, Corresponding Adjustments and key mechanisms

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Regional coordination and emerging frameworks

ASEAN-Level Developments

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Which countries are engaged and how

Southeast Asia Supply Landscape

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Singapore's Strategic Role

Demand anchor, bilateral network, and facilitator

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Key Takeaways

Setting up the panel discussion

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What Is a Carbon Credit and Why Does It Matter?

💡 The Basic Unit

• A carbon credit = 1 tonne of CO₂-equivalent reduced, avoided, or removed.
• Each credit is independently verified, registered with a unique serial number, and can only be claimed once.
• That uniqueness and the verification behind it is the foundation of market integrity.

🌍 The Paris Gap

• Current NDC commitments cover only ~30% of what science requires to limit warming to 1.5°C.
• Carbon markets allow emission reductions to happen where they are cheapest, channelling climate finance from high-cost buyer countries to lower-cost mitigation in the developing world.

📈 3 Markets, One Shared Goal

• Voluntary markets - companies buy credits to honour their own net-zero or CSR commitments. No law requires it.
• Article 6 - governments trade emission reductions across borders under the Paris Agreement. Strict accounting rules to prevent double counting, high integrity.
• Compliance markets regulated industries must buy credits to meet legal emission caps. The highest-obligation tier.

✅ The Integrity Pillars

• A credible carbon credit must be:
1. Additional (the reduction wouldn't have happened anyway),
2. Permanent (the carbon stays out),
3. Measurable (verified against approved methodologies), and
4. Non-double-counted (only one party claims it). These pillars determine credit quality and price.

CARBON CREDITS 101

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Article 6: The International Carbon Market Framework

The cornerstone of Article 6 is the “Corresponding Adjustment”, an accounting rule ensuring every tonne of emission reduction is counted only once, eliminating double claiming between seller and buyer countries.

Article 6.2 is currently the preferred route, given its ability to facilitate immediate bilateral trade and expedite execution.

ARTICLE 6 EXPLAINED

Article 6.2

Mechanism Type

Bilateral Cooperative Approaches

Credit Unit

ITMOs (Internationally�Transferred Mitigation Outcomes)

Governance

Country-to-country�agreements (Decentralised)

Key Adopters

Singapore (preferred),�Japan (JCM), Switzerland

✓ FASTEST route to execution

Article 6.4

Mechanism Type

UN Centralised Mechanism

Credit Unit

A6.4ERs

Governance

UN-supervised market�(Rules finalised COP29, Baku 2024)

Key Adopters

Several developing nations�prefer UN oversight

⏳ Still maturing

Article 6.8

Mechanism Type

Non-Market Approaches

Credit Unit

N/A (no trading)

Governance

Collaborative frameworks�between countries

Key Adopters

Focus: capacity building, technology transfer, finance flows

⚙ Co-oporation Framework

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Internationally Transferred Mitigation Outcomes (ITMOs) – Under Art.6.2

AFTER ARTICLE 6 TRADE

Host country transfers Article 6.2 units (ITMOs) to buyer country through a bilateral agreement.

Key Features of ITMOs

ITMOs are transacted government to government.

ITMOs’ transaction is under UNFCCC and Paris agreement.

ITMO is used for countries to achieve their NDC targets.

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• Article 6.2 facilitate cooperative approaches between two countries, allowing host countries to sell Internationally Transferred Mitigation Outcomes (ITMOs) and buyer countries to purchase them to meet their Nationally Determined Contributions (NDCs).
• ITMOs are a type of unit that, like carbon credits, represent a ton of GHG emission reduced or removed from the atmosphere, which must be verified by an external entity and be authorized for issuance by a national designated authority under Article 6.2.

ITMO operates on bilateral agreements, giving countries flexibility to set their own rules and safeguards, as long as they follow Article 6.2 guidelines, such as verification and reporting.

Source: The Nature Conservancy, 2023

ARTICLE 6 EXPLAINED

ARTICLE 6.2 TRADE & Corresponding Adjustment (CA)

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Accounting Integrity: A Corresponding Adjustment (CA) ensures only one party claims the emissions reduction. The host country deducts the transferred ITMO from its own NDC accounting, preventing double counting.

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Transaction Flow of Internationally Transferred Mitigation Outcomes (ITMOs)

Critical Integrity: The CA ensures only ONE party claims the reduction. When the host country authorizes an ITMO for use abroad, it applies a CA — deducting the credit from its own NDC accounting to prevent double counting. CA is the cornerstone of Article 6.2 integrity.

01. Implement

Host Country project (e.g. Wind, Mangroves) generates emission reductions.

02. Verify

Independent Validation & Verification Body (VVB) verifies the reductions against approved standards.

03. Authorize

Corresponding Adjustment (CA) is applied to prevent double counting.

04. Transfer

ITMO is transferred to Buyer Country to count against its NDC target.

🏗️

🔍

📋

🔄

ARTICLE 6 EXPLAINED

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Bangkok E-Bus Program: World’s First Operationalized Bilateral ITMO Transfer Framework (Art. 6.2)

ARTICLE 6 EXPLAINED

Managed by the KliK Foundation (Swiss compliance buyer) and Energy Absolute (Thailand host), this program translates transit modernization into high-quality ITMOs. This Article 6 monetization enabled the channeling of Swiss carbon finance directly to bridge the steep Total Cost of Ownership (TCO) gap between conventional diesel fleets and premium e-buses.

Abbreviations: VCM: Voluntary Carbon Markets; OMGE: Overall Mitigation in Global Emissions

Source: Pure Planet Projects Analysis

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WHAT’S NEXT?

Article 6.2 Pipeline: ACEN–SLTEC Transition Credits

Transition Credits are a novel financial tool designed to incentivize the early retirement of coal-fired power plants by bridging the financial gap between costly coal decommissioning & the deployment of clean energy alternatives. ACEN’s transition credits project in the Philippines utilizes the world's first market-based Energy Transition Mechanism (ETM) to accelerate the early retirement of the 246 MW SLTEC coal plant by a decade, while replacing it with clean energy.

As per IEA guidelines, early retirement must balance power system reliability with emission reductions. Transition credits are issued for the demonstrated acceleration of retirement, i.e., the delta between the planned lifespan and the funded exit of fossil fuels.

Source: Pure Planet Projects Analysis

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ASEAN-Level Developments: Building the Architecture

REGIONAL COORDINATION

2021

ASEAN Taxonomy for Sustainable Finance (v1)

Foundation for green/transition classification

2022

ASEAN Carbon Markets Taskforce

Member states begin harmonisation discussions

2023

ASEAN Carbon Markets Working Group established

Regular dialogue on Article 6 readiness

2024

COP29 Article 6.4 Rules Finalised

Global rulebook settled (Baku, Nov 2024) — ASEAN must now implement

2025

Bilateral IAs accelerating

SG-TH, SG-VN active; more countries in pipeline

⚠ Outstanding Regional Challenges

→ Heterogeneous ETS designs — no common ASEAN standard yet

→ MRV capacity gaps across least-developed members

→ Article 6 domestic legislation pending in most countries

→ Corresponding Adjustment accounting not uniformly operationalised

→ Tension between supply ambition and host-country NDC integrity

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Article 6 Activity Across Southeast Asia

COUNTRY OVERVIEW

• Policy Architecture: Restructured national carbon framework under Presidential Regulation No. 110 of 2025.
• Forestry Mandate: Enacted new regulation establishing explicit Ministry approval tracks and a strict 6-month validity window for international forestry asset transfers.
• Infrastructure: IDXCarbon platform fully operational, integrating mutual recognition with international standards (Verra, Gold Standard).

Indonesia

• Proven Execution: Maintains the region's most mature, digitally integrated Article 6.2 architecture under the Thailand Greenhouse Gas Management Organization (TGO).
• Continuous Issuance: Successfully executed multi-vintage, authorized ITMO transfers to Swiss and European compliance registries, verifying registry cross-connections.

Thailand

• ETS Roadmap: Progressing through its pilot domestic ETS phase toward a full compliance cap-and-trade market deadline by 2028.
• Bilateral Alignment: Accelerating industrial emissions monitoring and data collection infrastructure to operationalize its signed Implementation Agreement with Singapore.

Vietnam

• Policy Launch: Officially published the inaugural National Carbon Market Policy (NCMP) in early 2026, aligned with its updated NDC 3.0 targets.
• Legal Framework: Backed by an upcoming National Climate Change Bill to formalize a National Carbon Registry and MRV protocols for Article 6.2 and 6.4 tracks.
• Strategic Allocation: Low-cost mitigation measures are reserved for domestic targets; high-cost, tech-based solutions are designated for Article 6 monetization.

Malaysia

• Bilateral Milestone: Formalized its historic first Article 6.2 Implementation Agreement with Singapore in May 2026.
• Energy Sector Framework: Enacted a foundational Department of Energy (DOE) circular establishing domestic Carbon Credit Certificates (CCCs).
• Governance Transition: Established a unified, National Carbon Market Framework overseen by the Climate Change Commission (CCC).

Philippines

• Asset Pivot: Transitioning large-scale forestry and run-of-river hydro projects away from legacy voluntary credits into compliance credit pipelines.
• Capacity Building: Utilizing MDB technical readiness funding to build foundational legal frameworks and basic MRV capabilities.

Lao PDR / Cambodia

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Article 6 Market Demand: The Integrity Premium

MARKET STRUCTURE

Sovereign carbon credit demand is driven by strict regulatory standards and the need for absolute policy alignment and high integrity supplies. Sovereign buyers are willing to pay a premium for compliance safety.

Singapore acts as a regional Article 6 anchor sovereign buyer on the back of limited structural land to scale and structure Article 6 supply.

*Historical Average Pricings

Sources: S&P Global (Feb 2025); Fastmarkets (Mar 2025); NCCS/MTI Singapore; KliK Foundation (Jun 2025); EEX/Homaio (Apr 2026); Japan METI GX-ETS proposals (2025).

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Article 6 Buyers: Who Drives Demand?

MARKET STRUCTURE

Disclaimer: This map is provided "as is", without warranty of any kind, either express or implied, including but not limited to warranties of spatial or temporal accuracy.

Source: Pure Planet Projects analysis

🇸🇬 Singapore

Carbon Tax: S$25→S$45/t (2026)→S$80/t (2030)

Structurally a net buyer. Up to 5% of taxable emissions offset via Article 6 credits.

🇯🇵 Japan (JCM)

Joint Crediting Mechanism — ~S$30-50/t effective

Largest bilateral buyer in Asia; JCM architecture closely mirrors Article 6.2.

✈️ CORSIA (Aviation)

Global aviation sector mechanism

ICAO mandates eligible offsets for international flights above 2019 levels.

🇪🇺 EU, Switzerland &

New Zealand

ETS carbon price ~€55-70/t

Some EU member offsets + New Zealand and Switzerland maintain bilateral Article 6 links.

🌐 Article 6.4 Buyers

Emerging demand via UN mechanism

Private sector & governments using the UN-supervised track for fungible credits.

Key Sovereign Demand Drivers

Compliance Verification: Sovereign authorization guarantees alignment with host NDCs.

Zero Double-Counting Risk: Adjustments prevent double claiming by the project sponsor.

Pricing predictability: Government-backed demand establishes highly resilient carbon project revenue.

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Southeast Asia: A High-Potential Supply Region

SOUTHEAST ASIA

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Mitigation Potential

Vast RE, NBS & industrial decarbonisation pipeline

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Abatement Cost

Lower domestic costs — credits are competitively priced

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Development Co-benefits

Climate finance aligns with Sustainable Development Goal (SDG) priorities

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Policy Momentum

Multiple countries advancing ETS, carbon pricing, MRV

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Notable Trends Shaping the Article 6 Landscape

REGIONAL TRENDS

🔗 Bilateralism Dominates

Countries are bypassing the slower UN 6.4 track. Bilateral IAs under 6.2 are proliferating, thereby enabling quicker operationalisation and customisation.

🌲 NBS Under Scrutiny

Nature-Based Solutions (forests, mangroves, peatlands) face tighter scrutiny post-Verra controversies. Buyers demand co-benefits and robust baselines.

⚡ RE Projects Rising

Renewable energy (solar, wind, geothermal) increasingly favoured for cleaner additionality claims and stronger price outlook under Article 6.

🏛️ Institutional Capacity Gap

Most SEA countries lack the dedicated agencies, MRV systems, and legal frameworks to efficiently host and authorise ITMOs at scale.

💎 Integrity Premium Emerging

High-integrity credits (strong additionality, no double counting, co-benefits) are commanding a price premium in early Article 6 transactions.

🏦 MDB Catalytic Role

Asian Development Bank (ADB) and Green Climate Fund (GCF) are stepping in to de-risk early-stage transactions, provide concessional finance, and build host-country readiness.

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Singapore's Strategic Role in the Regional Ecosystem

SINGAPORE’S POSITIONING

🛒

Demand Anchor

• Limited domestic abatement → structural net buyer

• Carbon tax (S$25/t in 2024; S$45/t in 2026; rising to S$50-80 by 2030)

• Up to 5% of taxable emissions offset via eligible credits

• Predictable, policy-driven demand signal

🔗

Bilateral Facilitator

• 11 Implementation Agreements signed globally

• ASEAN partners: Thailand, Vietnam, Philippines + more in the pipeline

• IAs operationalise 6.2 — not just intent, but execution

• Preferred pathway: 6.2 bilateral, not 6.4 UN centralized

🏗️

System Architect

• Policy & Strategy:

• National Climate Change Secretariat (NCCS): Bilateral Authorizations
• Ministry of Trade & Industry (MTI): Economic/Trade Strategy

• Diplomacy & Regulations:

• Ministry of Sustainability & Environment (MSE): Government-to-government treaties
• NEA: Registry & Carbon Tax Implementation

• Finance & Market Ecosystem: Monetary Authority of Singapore (MAS), Economic Development Board (EDB), EnterpriseSG

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Singapore's Article 6 Bilateral Network

SINGAPORE'S POSITIONING

🌐 Singapore has signed 11 Implementation Agreements — one of the most extensive bilateral Article 6 networks globally

Image Source: Pure Planet Projects

The Philippines

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Article 6 in Southeast Asia: The Big Picture

KEY TAKEAWAYS

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Article 6 is moving into execution mode

After years of negotiation, the rulebook is largely settled — the race is now to operationalise bilateral agreements and generate real transactions.

→ ACTION

Mobilise project developers and strengthen Article 6 authorisation frameworks without delay.

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ASEAN is the world's most important supply frontier

High mitigation potential, lower abatement costs, and growing policy readiness make SEA the key source region for the next generation of Article 6 credits.

→ ACTION

Build domestic MRV systems, carbon registries, and legal frameworks to attract and authorise ITMOs.

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🤝

Bilateralism (6.2) is the dominant pathway

Countries with ambition such as Singapore are building direct relationships, not waiting for the UN 6.4 mechanism to mature.

→ ACTION

Engage Singapore's bilateral IA frameworks; do not wait for the UN 6.4 track.

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🇸🇬

Singapore is buyer + facilitator + architect

Beyond compliance demand, Singapore is actively structuring regional frameworks — a critical enabler of the emerging ASEAN carbon market.

→ ACTION

Leverage Singapore's hub status for carbon deal structuring, green finance, and project development.

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CONTACT

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Kanchuya Sukdheva

Managing Partner

Pure Planet Projects

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kanchuya@pureplanetprojects.com