However, various journals note that there are numerous challenges and barriers to the future of carbon trading in ASEAN. Here are some of them:
- Lack of involvement and proper policies
One major obstacle to carbon trading in ASEAN countries is the insufficient engagement of political leaders and the absence of policy frameworks that support coordinated efforts. Successful carbon trading requires collaboration among nations to set common goals, define emission reduction targets, and establish regulations for carbon markets. However, differing political priorities, conflicting national interests, and limited regional collaboration can slow down the development of coordinated policies and hinder the effective implementation of carbon trading.
- Limited capacity and expertise
Many ASEAN countries may lack the necessary capacity and expertise to effectively implement and manage carbon trading mechanisms. Setting up and operating a carbon market requires technical knowledge in areas such as emissions accounting, monitoring, verification, and enforcement. Some nations may struggle to build institutional capacity, train personnel, and develop the expertise needed to efficiently manage carbon trading schemes. This capacity gap poses a challenge to successfully implementing carbon trading in the region.
- Insufficient financing
Developing a functional carbon trading mechanism requires significant financial resources. However, some ASEAN countries face difficulties in securing sufficient funding for establishing and operating carbon markets. Limited financial resources, competing investment priorities, and uncertainties around carbon market revenues make it challenging for nations to allocate funds to develop and sustain carbon trading mechanisms.
- Poor data quality and transparency
Accurate and reliable data on greenhouse gas emissions are crucial for the functioning of a carbon market. However, many ASEAN countries struggle with challenges in collecting and maintaining high-quality emissions data across different sectors. Inadequate monitoring systems, lack of standardized methodologies, and limited transparency in reporting undermine the integrity and effectiveness of carbon markets. Establishing a viable and trustworthy carbon trading system becomes challenging without robust data quality and transparency.
- Limited stakeholder participation
Effective carbon markets rely on active participation from diverse stakeholders, including governments, industries, financial institutions, and civil society. However, some ASEAN countries experience limited involvement from key stakeholders in the development and operation of carbon markets. Insufficient engagement and participation hinder the design, implementation, and functioning of a functional market, as collective efforts and support from all stakeholders are necessary.