Collaborating Carbon Neutrality Efforts in ASEAN and Japan: A Feasibility Analysis of an ASEAN-Japan Joint Carbon Market

This paper examines the potential of an ASEAN-Japan joint carbon market to enhance regional collaboration on decarbonization and technology transfer, contributing to the achievement of net-zero targets under the Paris Agreement and the pathways outlined in the IPCC 1.5°C Report. By fostering cross-border cooperation and integrating diverse carbon pricing mechanisms, such a market could create a more efficient and transparent regional framework for emissions reduction. However, despite its promise, several challenges remain. Institutional resistance, disparities in governance capacity among participating countries, differing economic priorities, and conflicting policy objectives present significant obstacles to the successful establishment and operation of a joint carbon market. This study explores both the potential benefits—such as cost-effective emissions reductions, technology diffusion, and enhanced market liquidity—and the key barriers to implementation. It further proposes a set of coordinated policy measures and institutional reforms aimed at overcoming these challenges and facilitating deep and sustained emissions reductions that go beyond current Nationally Determined Contributions (NDCs).