Between North and South: How ASEAN Is Reshaping the Global Climate-Finance Landscape
Introduction – Between the North and the South
In the chessboard of climate finance, the Global North has long dictated the rules, while the Global South is quietly redefining the game.
Europe anchors its compliance regimes on CBAM and ETS; the United States leverages the IRA and voluntary markets to extend technological influence. Yet south of the equator, a quiet but profound institutional revolution is underway — the rise of the ASEAN-version PACM (Paris Agreement Crediting Mechanism).
For the North, climate governance is an exercise in carbon accounting.For the South, it is a redefinition of survival, sovereignty, and resource value. This “testing ground” is not merely about emission rights; it is about who can institutionalize the conversion of green power, compliance credits, and real-world assets (RWA) into a legally recognized economic system.
The key lies in three intersecting initiatives: ACCF × APG × CBP.
They are not slogans but a governance architecture taking shape before our eyes:
- ACCF (ASEAN Common Carbon Framework): a platform for sovereign credit mutual recognition;
- APG (ASEAN Power Grid): a cross-border renewable energy and mitigation network;
- CBP (Cross-Border Payment System): a regulated regional settlement infrastructure for climate-related transactions.
At their intersection emerges a structure spoken in the language of Article 6 of the Paris Agreement —
the architecture of a sustainable RWA economy.
This is not catch-up by the South; it is institutional innovation — a next-generation PACM being built from the developing world upward.
1. From Paris to Jakarta – The Origins and Global Framework of PACM
The Paris Agreement (2015) opened a new era for compliance carbon markets.
Article 6.2 allows countries to transfer mitigation outcomes (ITMOs); Article 6.4 establishes a multilateral supervised mechanism (A6.4ER); Article 6.8 enables non-market approaches (finance and technology co-operation).
Together they form the Paris Agreement Crediting Mechanism (PACM) under the UNFCCC.
The UN provides the legal grammar but not the operational infrastructure.
The World Bank Group (WBG) has since supplied the digital and financial skeleton:
- The Climate Warehouse Program tested registry interoperability across countries — Indonesia’s SRN-PPI, Singapore’s NCCS, and Thailand’s TGO Registry were among the pilots.
- The Climate Action Data Trust (CAD Trust), co-developed by the World Bank, IETA, and national governments, with Singapore as a data node, established a global ledger for sovereign carbon credits.
- The Partnership for Market Implementation (PMI) and Transformative Carbon Asset Facility (TCAF) provide capacity building and financing for Article 6 implementation in developing countries.
At CMA.6, the UNFCCC adopted the A6.4-STAN standards and API protocols, enabling national registries to interconnect with the central Article 6 registry (CARP).
Thus, UNFCCC supplies the grammar; the World Bank provides the infrastructure; ADB and UNESCAP bridge finance and digital systems.
Together they form the international scaffolding that supports ASEAN’s institutional experiment.
2. ASEAN’s Institutional Experiment – ACCF × APG × CBP
From Trade Bloc to Climate Governance Community
Originally a political and economic alliance, ASEAN has evolved into a regional climate governance platform.
Since the release of the ASEAN State of Climate Change Report (2021), the region has systematically institutionalized its climate agenda.
In 2022, the ASEAN Centre for Energy (ACE) advanced the ASEAN Power Grid (APG) to link renewable energy systems across borders.
In 2023, the ASEAN Taxonomy Board (ATB) issued the ASEAN Taxonomy for Sustainable Finance Version 2, defining a common green finance standard.
At COP29 (2024), Thailand, Malaysia, Indonesia, and Singapore signed the ASEAN Carbon Co-operation Memorandum of Consensus, formally launching the ASEAN Common Carbon Framework (ACCF).
In parallel, central banks — MAS (Singapore), BOT (Thailand), BI (Indonesia), and BSP (Philippines) — jointly initiated the Cross-Border Payment (CBP) pilot for CBDC-based carbon and green-power settlement.
By 2025, these streams converged at the ASEAN–Indo-Pacific Forum (AIPF) under the theme “Regional Cross-Border Sustainable Development through ACCF, APG and CBP.”
This marked the region’s first fully integrated energy–carbon–finance framework.
The Three-Layer Architecture – Energy, Carbon, and Finance
The three initiatives function as a single architecture:
ACCF (ASEAN Common Carbon Framework) — led by Thailand’s Bangchak Corporation and its Carbon Markets Club (CMC), with Malaysia’s MCMA, Indonesia’s IDCTA, and Singapore’s SSFA as partners — creates mutual recognition of sovereign credits under Article 6.
APG (ASEAN Power Grid) — driven by ACE — quantifies cross-border renewable power flows and converts verified reductions into Article 6.4 Emission Reductions (A6.4ERs).
CBP (Cross-Border Payment System) — built by ASEAN central banks through Project Nexus and Project Dunbar — enables multi-currency and CBDC settlement for carbon and energy transactions.
Together they synchronize physical energy flows, carbon accounting, and financial clearing — transforming Article 6 from an agreement into an operating mechanism.
Seven Countries, One Regional Framework
The ASEAN sustainable RWA architecture now spans seven active participants.
Singapore serves as the legal and financial hub through its Carbon Pricing Act (2022) and MAS digital finance programs.
Thailand acts as policy and market integrator, anchored by Bangchak’s CMC and the TGO’s Premium T-VER scheme. Indonesia is the sovereign carbon source, governing its SRN-PPI registry through Presidential Regulation 98/2021 and Ministerial Decree 21/2022. Malaysia plays the policy co-ordination role via the NRECC and Bursa Carbon Exchange. Vietnam emerges as the renewable and compliance market frontier under Decree 06/2022 and Circular 01/2024, and signed an Article 6.2 bilateral agreement with Singapore in 2025. The Philippines serves as a financial node, with its central bank testing a Peso CBDC prototype and drafting a national carbon credit framework. Laos provides clean power exports via the Laos–Thailand–Malaysia Power Integration Project (LTM-PIP), linking into APG.
Cambodia has also signed an Article 6.2 bilateral agreement with Singapore, while Brunei and Myanmar maintain observer status in the ACCF process.
Collectively, these seven nations form a multi-layered governance matrix that ties sovereignty, energy, and finance into a coherent regional system.
3. Future Goals and Outcomes – From Next-Generation PACM to a Common Language for the World
The ASEAN version of PACM is no longer merely a carbon accounting scheme; it is evolving into a sustainable RWA economic network.
Its logic is layered and precise:
APG represents the physical reduction layer; ACCF embodies the trust and legal layer; CBP anchors the financial settlement layer.
Each megawatt-hour of cross-border renewable electricity generates traceable emission data, verified under ACCF rules, and converted into sovereign-authorized credits.
These credits are then settled through CBP in local currencies or CBDCs.
For the first time, environmental, institutional, and financial integrity operate in the same system.
PACM here becomes three-dimensional — not merely an accounting tool but an engine of regional integration.
More importantly, it is rewriting the language of global governance.
Where the EU’s CBAM imposes a one-way carbon logic, ASEAN’s ACCF builds mutual recognition and trust. This signals a new form of multilateralism: consensus instead of imposition, interoperability instead of dependency.
For the first time, the Global South is authoring its own institutional grammar.
PACM is no longer just a treaty mechanism — it is becoming a common language for the world.
It is an economic and sovereign syntax that can be read by the UN, the World Bank, and the regional states alike — a language of interoperable trust.
While the North debates credibility, the South is building a new architecture of recognition.
4. Conclusion – The Awakening of Institutions and a New Era Begins
ASEAN demonstrates that institutional innovation need not originate in the North.
As Singapore legislates, Thailand champions regional frameworks, and Indonesia anchors sovereign registries — with Malaysia, Vietnam, the Philippines, and Laos adding supporting pillars — the “South-born PACM” is already operational.
ACCF provides its legal syntax, APG its energy structure, and CBP its financial circulation.
Together they turn ASEAN into the institutional laboratory of the Global South.
We once believed PACM was still new.
In truth, its next generation has already begun in ASEAN.
It is no longer a policy proposal nor a market aspiration, but a living system — a framework that institutionalizes the integration of green power, compliance credits, and real-world assets.
The future is promising.
As national laws mature, digital standards align, and sovereign adjustments harmonize, this architecture will redefine the North-South balance of climate finance and allow the voice of global governance to speak with a Southern accent.
