Carbon Pricing in Southeast Asia 2026: What It Means for Business

Which Southeast Asian countries have a carbon price?

Singapore, Indonesia, Vietnam and Thailand have a carbon price in some form, and Malaysia has announced one. The mechanisms differ: Singapore uses a tax, Indonesia and Vietnam use intensity-based trading systems, and Thailand has built a carbon price into its fuel excise.

For the global picture, see where carbon is taxed. For how taxes and ETSs work, see carbon pricing and its role in reducing CO2e.

Southeast Asia carbon pricing at a glance

Sources are given in each country section below. Rules are moving fast in all five markets, so check the official source before making decisions.

Singapore: how does the carbon tax work?

Singapore taxes the direct (Scope 1) emissions of large facilities. The rate is S$45 per tonne of CO2e in 2026 and 2027, with plans to reach S$50–80 by 2030.

• Who pays: facilities with direct emissions of at least 25,000 tCO2e a year. Facilities emitting 2,000–25,000 tCO2e must report but don't pay (NEA).
• Coverage: about 50 facilities in manufacturing, power, waste and water, covering about 80% of Singapore's emissions (NCCS).
• Carbon credits: since 1 January 2024, taxable facilities can use eligible international carbon credits to offset up to 5% of taxable emissions.
• Rate history: S$5 per tonne from 2019 to 2023, S$25 in 2024–2025, S$45 from 2026.

Our Singapore climate regulations guide covers disclosure rules alongside the tax.

Indonesia: is there a carbon tax?

Indonesia has legislated a carbon tax but not yet applied it. What runs today is an intensity-based ETS for the power sector.

• Carbon tax: the Tax Regulation Harmonisation Law (Law 7/2021) created a carbon tax. It was due in 2022 but has been postponed.
• Power-sector ETS: this started in 2023 for coal plants on the state grid. Phase 2 from 2025 added captive coal plants and gas-fired plants (ICAP, Indonesia ETS).
• Carbon exchange: IDXCarbon launched in September 2023, supervised by the Financial Services Authority (OJK).
• New framework: Presidential Regulation 110/2025, issued in October 2025, replaced the 2021 carbon pricing regulation. It sets up domestic trading, a carbon levy as a future compliance backstop and results-based payments.
• Next: in July 2026 the government said it aimed to finalise energy-sector carbon trading rules within one to two months.

Vietnam: how does the pilot ETS work?

Vietnam launched a pilot ETS in August 2025 covering thermal power, steel and cement. Allowances are free during the pilot, and auctions are planned from 2029.

• Legal basis: the Law on Environmental Protection (in force January 2022), Decree 06/2022, and Decree 119/2025, which set the pilot rules from 1 August 2025 (ICAP).
• Coverage: around 150 facilities in thermal power, steel and cement. More sectors are expected between 2027 and 2030.
• Allocation: intensity-based and free during the pilot. Decision 263/QĐ-TTg (February 2026) set total allowances of 243.1 MtCO2e for 2025 and 268.4 MtCO2e for 2026.
• Offsets: covered facilities can use eligible offsets for part of their obligation. Reports cite up to 30%.
• Trading: the domestic trading platform is expected to be running by the end of 2026, according to ICAP.

Thailand: is there a carbon tax?

Yes, in a limited form. Thailand has built a carbon price of THB200 per tonne of CO2e into its existing fuel excise, without raising pump prices. An ETS is planned under a new climate law.

• Fuel carbon price: the Cabinet approved the Ministerial Regulation on 21 January 2025. The carbon element sits inside current excise rates, so consumers see no price change (EY tax alert, February 2025).
• Climate Change Act: the Cabinet approved the draft on 2 December 2025. Enactment is expected around the third quarter of 2027.
• ETS: the draft Act provides for an ETS, expected to start around 2029.

Malaysia: when will the carbon tax start?

Malaysia has announced a carbon tax but not yet set a start date or rate. It will start with the iron, steel and energy sectors and be phased in.

• Announcement: Budget 2026, tabled on 10 October 2025, said a carbon tax would be introduced in stages, starting with iron, steel and energy.
• Status: in June 2026 the Deputy Finance Minister told Parliament the national carbon tax policy was in its final phase and the rate would rise gradually (The Star, 24 June 2026). It depends on a Climate Change Bill.
• Voluntary market: Bursa Malaysia runs a voluntary carbon exchange, Bursa Carbon Exchange.

How does carbon pricing affect businesses in Southeast Asia?

Carbon pricing raises costs directly for large emitters and indirectly for everyone else, through electricity and materials. Exporters face a second layer of cost from the EU's CBAM.

• Direct cost (Scope 1): covered facilities pay on their own emissions. In Singapore, a facility emitting 100,000 tCO2e a year pays S$4.5 million at S$45 per tonne, before any credits or allowances.
• Electricity (Scope 2): power generators covered by the tax or ETS pass part of the cost on in tariffs. This reaches companies that aren't covered themselves.
• Supply chain (Scope 3): steel, cement and other materials made in priced markets will carry more of their carbon cost over time.
• Exports to the EU: CBAM financial obligations started on 1 January 2026 for imports of iron and steel, aluminium, cement, fertilisers, hydrogen and electricity. EU buyers will ask for verified embedded emissions (European Commission).

How should businesses prepare?

Start with a full emissions baseline, then find your exposure in each country and the reduction levers that cut it most.

1. Measure Scope 1, 2 and 3. Build an inventory across all sites. For value chain emissions, see methods of calculating Scope 3.
2. Map exposure by country. List sites near the thresholds (25,000 tCO2e in Singapore) or in covered sectors (power, steel, cement), plus exports to the EU.
3. Find the hotspots. A few activities usually drive most emissions. Focus data collection and reduction there first.
4. Model costs against future prices. Test reduction projects against the planned price path, for example Singapore's S$50–80 by 2030, not just today's rate.
5. Get data audit-ready. Taxes, ETSs and CBAM all depend on verified, facility-level data.

Terrascope customer example: scaling data across a group

Carbon pricing and disclosure in several countries means far more data. Sime used Terrascope to go from about 3,000 to about 50,000 data points with the same team.

How Terrascope helps

Terrascope gives companies operating across Southeast Asia one system for the facility-level emissions data that carbon taxes, ETSs and CBAM need.

• Facility-level footprint: the Terrascope carbon footprint platform measures Scope 1, 2 and 3 by site and country, so you can see which facilities cross each threshold.
• Reporting and CBAM: Terrascope climate reporting prepares data for disclosure rules and CBAM declarations for EU customers.
• Reduction planning: Decarbonise with AI models "what-if" reductions against targets and carbon costs.
• Business case: estimate the return on better carbon data with the carbon management ROI calculator.

For disclosure rules across markets, see the sustainability reporting alphabet soup. Operating in Singapore, Indonesia, Vietnam, Thailand or Malaysia? Talk to our team about your carbon cost exposure.

FAQs

What is Singapore's carbon tax rate in 2026?

Singapore's carbon tax is S$45 per tonne of CO2e in 2026 and 2027, up from S$25 in 2024–2025. The government aims for S$50–80 per tonne by 2030. It applies to facilities emitting at least 25,000 tCO2e a year.

Does Indonesia have a carbon tax?

Not in practice yet. Indonesia legislated a carbon tax in 2021 but has postponed it. It runs an intensity-based emissions trading system for power plants, and trades carbon units on IDXCarbon. Presidential Regulation 110/2025 adds a carbon levy as a future backstop.

Does Vietnam have an emissions trading system?

Yes. Vietnam launched a pilot ETS in August 2025 for about 150 facilities in thermal power, steel and cement. Allowances are free during the pilot. Auctions are planned from 2029, and more sectors are expected to join from 2027.

When will Malaysia introduce a carbon tax?

Malaysia announced in Budget 2026 that it would introduce a carbon tax in stages, starting with iron, steel and energy. As of June 2026, the policy was in its final phase, with no rate or start date yet published.

Does Thailand have a carbon tax?

Thailand has a carbon price of THB200 per tonne of CO2e built into its existing fuel excise, approved in January 2025, so pump prices don't change. A Climate Change Act with an ETS is still being drafted.

Do carbon taxes in Southeast Asia apply to Scope 3?

Not directly. They are charged on direct emissions from covered facilities. But costs pass through electricity tariffs and material prices. Exporters to the EU must also report embedded emissions under CBAM, which often relies on supplier data.