Financing bottleneck

While green investment in SEA-6 increased by 43 percent year-on-year, there remains an annual green finance gap exceeding $50 billion.

International capital inflows are growing, with foreign investment outside the APAC region into SEA-6 green projects tripling in 2024. However, domestic investment fell by 40 percent, signaling the need for more stable internal financing mechanisms.

Carbon market development is also gaining traction. Yet, unlocking its full potential requires stronger policy frameworks, demand generation, and robust infrastructure.

"Southeast Asia's carbon markets are gaining momentum, but we can do more to unlock their full climate and economic potential," said Anshari Rahman, director of policy and analytics at GenZero.

"To deliver lasting social and economic gains, supply must also meet international benchmarks like ICVCM and CORSIA — where global demand is headed."

The Integrity Council for the Voluntary Carbon Market, or ICVCM, is an independent governance body that establishes and maintains the highest standards of ethics, sustainability, and transparency for the global voluntary carbon market.

The Carbon Offsetting and Reduction Scheme for International Aviation, or CORSIA, is a global market-based solution that airlines can use as a major step to reach net zero emissions by 2050.

Additionally, AI is both a risk and a solution as for its high electricity demand and potential to transform the sector, experts said.

Data centers could add 2 percent to emissions by 2030, but with clean energy and smart AI, they can also help cut emissions. Sectors like agriculture and energy could see a 3 to 5 percent drop in emissions if countries like Vietnam invest in AI.

"With just five years to 2030, our window for action to avoid the worst effects of climate change is rapidly closing. We need to increase the momentum and focus on pragmatic solutions with near-term impact," said Franziska.

THE STRAITS TIMES, SINGAPORE/VIET NAM NEWS, VIETNAM