by Daniela Chiriac with insights from:
- Carrie Heng, Associate Director, Investments – New Forests Asia
- Regan Pairojmahakij, Climate Change Programme Lead – RECOFTC
- Adibtya Asyhari, NBS Associate, Hydrology and Peatlands – Ecosecurities
Southeast Asia presents unique opportunities for nature-based carbon markets. With deforestation rates among the highest in the world, the region has the potential to reverse this trend, becoming a major carbon sink and generating a strong pipeline of carbon projects. At the same time, regional demand for carbon credits is growing. Voluntary corporate demand—combined with the emergence of compliance markets across a growing number of Southeast Asian countries[1] and increasing demand for Internationally Transferred Mitigation Outcomes (ITMOs) under Article 6 of the Paris Agreement (particularly from Japan, South Korea, and Singapore)[2]—is fueling a dynamic ecosystem of investors and project developers in the region.
In turn, carbon markets can deliver significant benefits, from financial gains to improved biodiversity, ecosystem services, and enhanced livelihoods for local communities. For regional project developers and investors, this represents a business opportunity with both financial and climate-related, socio-economic returns. Southeast Asia is rapidly emerging as an international hub for nature-based carbon markets.
The key question now is: how can we accelerate project development to close the financing gap for natural climate solutions—without compromising on quality, integrity, and participatory design and implementation?
At the Asia Climate Summit (8–10 July in Bangkok), our partner New Forests and the Restoration Seed Capital Facility (RSCF) team co-hosted a panel discussion on the barriers limiting the development of nature-based carbon projects in Southeast Asia. This exchange highlighted five strategies and tools that practitioners are using to overcome these roadblocks.
Strategy 1: Manage risks by advancing on multiple fronts simultaneously
Ecosecurities’ guiding principle is that a successful carbon project depends on five essential elements progressing in parallel. Each also represents a potential risk area for investors. To manage this complexity, it is crucial to build multidisciplinary teams or partner with specialized experts.
- Technical: Robust carbon accounting requires deep knowledge of country-specific methodologies and often necessitates reconstructing historical data for baseline assessments.
- Regulatory: Early engagement with regulators helps navigate complex, multi-layered frameworks and align with international standards. Involving regulators early—even before project scoping—is critical for building trust and avoiding approval delays.
- Operational: Feasibility studies are vital for designing realistic, context-specific projects and managing implementation risks.
- Financial: Access to capital at the earliest stages is key. New Forests emphasizes the importance of “doing proper homework” during the development of the project design document, acknowledging the significant resources this requires. Seed funding—such as that provided by the Restoration Seed Capital Facility (RSCF)—has helped close this early financing gap.
- Community Engagement: Building trust with Indigenous Peoples and Local Communities (IPLCs) is essential. A rushed approach can increase risks; instead, a thorough free, prior, and informed consent (FPIC) process and long-term benefit-sharing arrangements should be prioritized.
Challenges this strategy addresses:
- Limited availability and accuracy of public data for GHG quantification
- Unclear carbon policies, particularly around land tenure, ownership, and approval timelines
- Regulatory uncertainty, leading to delays in decision-making and lengthy approval timelines.
- High risk of early-stage projects deterring investors
- Limited early-stage capital
- Low community awareness and trust regarding technical and development processes
Strategy 2: Take a phased, iterative approach to reduce risks, get investors on board, and continuously improve project design and implementation.
When it’s not feasible to advance all five elements at once, New Forests adopts a phased implementation approach. Early investment in pre-feasibility studies helps assess project viability and reduce downstream risks. As Carrie Heng of New Forests advises: “Don’t save on the homework that needs to be done before more resources are invested in developing the project.” Thorough groundwork helps move projects from concept to investable assets.
For community engagement, starting with a proof of concept helps build trust. Early consent from one community can inspire others to participate, enabling organic expansion of project areas. This approach also facilitates learning and iteration across phases and helps manage regulatory uncertainty, as developers can adapt to evolving frameworks step by step.
Challenges this strategy addresses:
- High early-stage project risk and investor reluctance to invest
- Low community trust and awareness
- Uncertain and evolving regulatory frameworks
Strategy 3: Improve internal processes to better navigate regulatory complexity
In the quest for higher integrity in carbon markets, standards are moving towards increased sophistication. Ecosecurities has streamlined internal systems and processes to efficiently manage multiple projects under different standards. Technical innovations—including centralized geospatial data platforms, modular baseline modeling tools, and digitized MRV systems—enable knowledge-sharing and reduce duplication of effort.
Challenges this strategy addresses:
- Regulatory uncertainty and evolving standards
- Fragmentation across multiple methodologies and frameworks
Strategy 4: Provide resources and a marketplace to enable IPLCs to initiate and lead projects
Well-informed IPLCs benefit all stakeholders by reducing delays and investor risk. RECOFTC is finalizing a toolkit to support IP and LCs’ fair engagement with carbon markets: from high-integrity consultations, FPIC, stakeholder engagement, benefit-sharing, gender considerations, and tenure issues.
There is growing interest among IPLCs to initiate their own projects on traditional territories. RECOFTC sees value in developing information hubs or marketplaces to help communities find suitable partners. Addressing information asymmetries will not only accelerate market growth but also enhance buy-in, reduce risk, and improve long-term sustainability.
Challenges this strategy addresses:
- Delays in FPIC processes and mistrust due to misinformation
- Difficulty securing community buy-in
Strategy 5: Take the time to ensure high-integrity FPIC processes that are meaningful, encompassing active and intentional co-design and co-implementation with IPLCs.
Robust FPIC processes are critical. These must be participatory, transparent, and designed with IPLCs as co-creators of the project. Equally important is the careful design of benefit-sharing agreements, governance structures, and disbursement mechanisms.
RECOFTC has found that trust is built on accurate, unbiased information delivered in accessible language and formats. Investing in neutral information dissemination can transform relationships and outcomes.
Challenges this strategy addresses:
- FPIC delays and community mistrust
- Difficulty achieving authentic community engagement and consent
Conclusion
There is no question: accelerating finance for nature-based carbon solutions is urgent if we are to meet the goals of the Paris Agreement and the Kunming-Montreal Global Biodiversity Framework. But speeding up individual project timelines is often neither feasible nor advisable, as it may compromise integrity.
Instead, the system as a whole must become more capable of developing a larger number of high-quality projects simultaneously. This is precisely the impact thesis of the Restoration Seed Capital Facility: to provide early-stage seed funding, enabling fund managers to pursue multiple projects in parallel while maintaining strong environmental and social safeguards.
Copy edited with support from ChatGPT by OpenAI.
[1] Seven ETS under development or under consideration and 14 already in force in the region. ICAP (2025). Emissions Trading Worldwide: Status Report 2025. Berlin: International Carbon Action Partnership. Available at: https://icapcarbonaction.com/en/publications/emissions-trading-worldwide-icap-status-report-2025
[2] The Nature Conservancy (2025). Article 6 Explainer. Available at: https://www.nature.org/content/dam/tnc/nature/en/documents/c/m/CM-TNC-Article-6-Explainer.pdf
