Putting a Price on Carbon in ASEAN and East Asia: Are Consumers Willing to Pay?

Date:
4 June 2025Category:
Energy, Environment and Climate ChangeType:
Discussion PapersTags:
carbon pricing, carbon price, net zero economy, ASEAN and East AsiaPrint Article:
Carbon pricing is a policy tool designed to account for the external costs of carbon emissions, such as damage to crops, healthcare costs, and property loss due to climate change. It attaches a price to these costs and allocates responsibility to the sources of emissions. This approach helps incentivise the reduction of carbon emissions and encourages the adoption of technologies aimed at achieving a net zero economy. Revenue generated from carbon pricing can be reinvested by companies to support sustainable practices, including employee benefits and health insurance. While a few countries in the Association of Southeast Asian Nations (ASEAN) and East Asia have implemented carbon pricing mechanisms, there is limited understanding of individual preferences regarding these mechanisms at the national and regional levels. The Carbon Border Adjustment Mechanism of the European Union aims to standardise carbon prices for internationally traded products. However, there is a lack of knowledge about preferences for such policy instruments across key stakeholders and countries.
A survey has been conducted to elicit stakeholders’ preferences and willingness to pay (WTP) for a carbon price in ASEAN and East Asia. The overall proportion of ‘yes’ answers to the WTP question was around 70%. Mean WTP corresponds to an additional price of US$10–US$15. The analysis of more than 500 consumer responses revealed that several modifiers impact the choice of higher and lower WTP additional costs for climate actions. Amongst the consumer groups, academia and household residents are more concerned about climate change and its harmful consequences but have less knowledge and lower appreciation of external pressures such as the European Union’s Carbon Border Adjustment Mechanism. This, coupled with the already high electricity price, could have resulted in the lower WTP by the private sector respondents. Three null hypotheses on the effects of WTP on carbon emission reductions, revenue recycling, and regional cooperation are tested. The low WTP underscores the urgency of measures to overcome market size and technical and financing constraints, and to address regulatory hurdles that raise transaction costs, to achieve industrial competitiveness