This paper analyzes the benefits and losses associated with cooperation among ASEAN members in
mitigating their CO2 emission, particularly by implementing a uniform carbon tax across ASEAN.
To achieve this goal, this paper uses a multi-country CGE model for ASEAN, known as the InterRegional
System of Analysis for ASEAN (IRSA-ASEAN) model. This study finds that the
implementation of a carbon tax scenario is an effective means of reducing carbon emissions in the
region. However, this environmental gain could come at a cost in terms of GDP contraction and
reduction in social welfare, i.e. household income. Nevertheless, Indonesia and Malaysia can
potentially gain from the implementation of a carbon tax as it counteracts price distortions due to
the existence of heavy energy subsidies in these two countries.