Carbon pricing potential in East and South Asia: Synthesis and case studies for Indonesia, Vietnam, and Pakistan

More and more countries are already implementing or considering the introduction of carbon pricing as a key instrument in order to reduce greenhouse gases. In recent years, market-based instruments in the form of emissions trading systems or CO2 taxes have been established or are currently in the process of implementation in various regions of the world. However, the application potentials for carbon pricing vary considerably due to different political, legal, economic, technical and multilateral circumstances. The studies developed in this research project analyse the framework conditions for the introduction of carbon pricing in selected jurisdictions in Asia. The findings of the research project highlight the importance of the framework conditions that need to be in place for carbon pricing to be feasible and effective in delivering emissions reductions. Based on the findings, three countries (Indonesia, Pakistan and Vietnam) were selected for in-depth analyses (case studies). In addition to the current status of preparations for the introduction of carbon pricing, the main challenges as well as concrete recommendations for a successful implementation were laid out. Special attention was paid to the interaction of the electricity/energy markets with a market-based instrument of CO2 pricing in the respective context of the country case studies.