World Bank Highlights Growing Role of Carbon Crediting in Mobilising Climate Finance across APAC

SINGAPORE, March 11, 2026 — Carbon crediting is emerging as a critical mechanism to unlock billions of dollars in climate finance for developing economies, particularly across Asia-Pacific, Southeast Asia and India, according to a new report by the World Bank.

The report, Carbon Crediting: A Results-based Approach to Mobilizing Additional Climate Financing, argues that well-designed carbon crediting systems can help bridge the persistent gap between climate ambition and available financing, particularly for countries with large mitigation potential but limited fiscal resources.

With many developing economies facing significant capital constraints for decarbonisation, the World Bank notes that carbon crediting can provide results-based payments for verified emission reductions, creating an additional revenue stream for climate mitigation projects and policies.

Asia-Pacific emerges as a major carbon crediting opportunity

Asia-Pacific is widely expected to become one of the most important regions for future carbon credit supply, given its combination of rapidly growing economies, high emissions reduction potential and extensive natural ecosystems.

Many countries in the region possess large opportunities in sectors such as:

forest conservation and restoration

renewable energy deployment

methane reduction

sustainable agriculture

industrial decarbonisation

The report emphasises that carbon crediting mechanisms can play a particularly important role in mobilising private investment into mitigation projects that might otherwise struggle to secure financing.

In Southeast Asia, where governments are seeking to balance economic growth with climate commitments, carbon markets are increasingly viewed as a tool to channel international capital into national decarbonisation efforts.

Countries such as Indonesia, Vietnam and Thailand are exploring carbon crediting frameworks that can complement domestic carbon pricing and climate policy initiatives.

Southeast Asia’s nature-based solutions drive carbon market potential

One of the most significant opportunities for carbon credit generation in Southeast Asia lies in nature-based solutions, particularly forest conservation and ecosystem restoration.

The region contains some of the world’s most important tropical forests, mangrove systems and peatlands, all of which represent substantial carbon storage potential.

Protecting and restoring these ecosystems could generate large volumes of high-integrity carbon credits while delivering additional benefits including biodiversity protection, climate resilience and sustainable livelihoods.

However, the World Bank report stresses that the success of these programmes will depend heavily on strong governance frameworks, transparent monitoring systems and equitable benefit-sharing mechanisms for local communities.

Ensuring the environmental integrity of carbon credits remains central to building trust in global carbon markets.

India positioned to scale policy-based carbon crediting

India is also expected to play an increasingly prominent role in the global carbon credit landscape.

The country is currently developing its own domestic carbon market framework, which aims to complement national climate policies and support the country’s long-term decarbonisation strategy.

The World Bank report highlights that large emerging economies like India can benefit from policy-based carbon crediting mechanisms, which reward governments for implementing sector-wide mitigation measures rather than focusing only on individual projects.

Such approaches can include:

power sector reforms

energy efficiency programmes

industrial emissions reductions

transport system transitions

Policy-based crediting can potentially deliver large-scale emissions reductions while lowering transaction costs compared with project-by-project carbon credit generation.

This model is increasingly being explored under international mechanisms linked to the Paris Agreement’s Article 6 framework, which allows countries to cooperate on cross-border carbon markets.

Carbon crediting linked to Article 6 international carbon markets

The report emphasises that the future of carbon crediting will be closely tied to the operationalisation of Article 6 of the Paris Agreement, which provides the foundation for international carbon market cooperation.

Under Article 6, countries can transfer verified emission reductions to help other countries meet their climate targets, potentially unlocking large flows of international climate finance.

For many developing economies in Asia, this could mean new revenue streams linked to national climate mitigation programmes, provided that robust accounting frameworks and environmental safeguards are in place.

The World Bank has been actively supporting countries in designing carbon crediting programmes aligned with Article 6 requirements.

These initiatives aim to ensure that emission reductions are real, measurable and additional, while avoiding double counting between national climate commitments and carbon credit transactions.

Moving beyond project-based crediting

A key message from the World Bank report is that the next generation of carbon crediting systems will likely move beyond traditional project-based models.

Instead, policymakers are increasingly exploring sectoral and policy-based crediting approaches that operate at larger scales.

Such mechanisms could support transformational policies across entire sectors such as:

electricity generation

transportation systems

industrial production

land-use management

These broader approaches are designed to capture emissions reductions that occur across entire economies rather than within individual projects.

For rapidly developing regions such as Asia-Pacific, this could significantly expand the volume of potential carbon credits while supporting national climate transitions.

Integrity and governance remain critical

Despite the growing potential of carbon markets, the World Bank warns that the credibility of carbon crediting systems will depend heavily on strong governance and transparency.

Concerns about credit quality, additionality and environmental integrity have increasingly come under scrutiny in voluntary carbon markets.

The report highlights the importance of robust monitoring, reporting and verification frameworks, as well as clear rules on accounting for emissions reductions within national climate commitments.

For countries in Asia-Pacific seeking to scale carbon crediting programmes, establishing strong institutional capacity will be essential to ensuring market confidence.

Unlocking climate finance for developing economies

Ultimately, the report frames carbon crediting as a financing tool rather than simply a climate accounting mechanism.

By linking verified emission reductions with international payments, carbon markets can mobilise private capital that might otherwise remain unavailable for climate mitigation projects.

For many emerging economies across Asia-Pacific, Southeast Asia and India, this could play a crucial role in closing the climate investment gap.

With the region facing rising energy demand, urbanisation and industrial expansion, access to new sources of climate finance will be critical to enabling a transition toward lower-carbon development pathways.

As global carbon markets evolve under the Paris Agreement framework, the World Bank suggests that Asia-Pacific could become one of the most dynamic regions for carbon credit generation and climate finance mobilisation in the years ahead.