ADB’s Support for Turkmenistan’s Green Transition

Asian Development Bank explores carbon market potential in Turkmenistan

The Asian Development Bank is assessing whether Turkmenistan can establish a voluntary carbon market as part of its broader economic transition away from fossil fuel dependence. This evaluation forms a central component of the bank’s new country partnership strategy for Turkmenistan, launched in 2025, which prioritises climate resilience and sustainable development alongside economic diversification.

Voluntary carbon markets allow companies and organisations to purchase carbon credits representing verified reductions or removals of greenhouse gas emissions. Unlike mandatory compliance markets created by regulation, these markets operate on a voluntary basis. Participants buy credits to offset their own emissions, effectively paying for carbon reduction activities undertaken elsewhere.

For Turkmenistan, this represents a significant strategic shift. The country has historically relied on fossil fuel exports as a primary revenue source. Developing a functioning carbon market could create new income streams whilst demonstrating alignment with international climate commitments under the Paris Agreement.

The Asian Development Bank has worked with Turkmenistan since the country joined as a member in 2000. Over this period, the bank has committed approximately $635 million to infrastructure improvements focused primarily on energy and transport systems. This latest assessment builds on more than two decades of engagement with the Central Asian nation.

Major infrastructure investments provide foundation for transition

In 2018, the Asian Development Bank initiated a substantial $500 million project to strengthen Turkmenistan’s national power grid. This programme supported construction of 1,400 kilometres of transmission lines and 11 substations across the country. Consequently, the infrastructure improvements have enhanced grid reliability and created capacity for integrating renewable energy sources.

The bank is currently evaluating Turkmenistan’s solar energy potential across various economic sectors. This assessment examines how solar generation could support industrial operations, agricultural activities, and urban development. Furthermore, it aligns with national programmes aimed at reducing carbon intensity whilst maintaining economic output.

Turkmenistan’s total greenhouse gas emissions currently stand at 118 megatonnes of carbon dioxide equivalents, according to the latest available data. This represents approximately 0.21 percent of global emissions. However, the country’s emissions intensity relative to its population and economic output remains high compared to regional peers.

The Asian Development Bank’s new partnership strategy emphasises building on these infrastructure foundations. By establishing market mechanisms for carbon trading, Turkmenistan could monetise future emissions reductions whilst attracting international climate finance. Nevertheless, success depends on creating credible monitoring and verification systems that meet international standards.

Evolving quality standards reshape voluntary carbon markets

The Integrity Council for the Voluntary Carbon Market has recently tightened standards for carbon credits seeking its Core Carbon Principles label. Notably, the council now disallows carbon credits from renewable energy projects under current methodologies from receiving this certification. This change reflects growing scrutiny of what constitutes genuine, additional emissions reductions in voluntary markets.

These stricter requirements aim to address persistent concerns about carbon credit quality. Many renewable energy projects would have proceeded regardless of carbon finance, raising questions about whether resulting credits represent truly additional climate benefits. As a result, the council’s updated standards prioritise projects demonstrating clear additionality and permanent emissions reductions.

The Asian Development Bank is hosting workshops to help developing member countries design national policy frameworks for high-integrity carbon markets. These sessions cover regulatory architecture, monitoring systems, and alignment with Paris Agreement requirements. Specifically, they address how countries can structure markets to attract credible investment whilst avoiding greenwashing risks.

Voluntary carbon markets currently lack standardised metrics and transparent reporting mechanisms. This inconsistency makes it difficult for buyers to assess the quality and genuine climate impact of their investments. Therefore, establishing clear standards becomes essential for market credibility and long-term viability.

For Turkmenistan, these evolving standards present both opportunities and constraints. On one hand, adhering to high-integrity frameworks could position the country as a credible source of quality carbon credits. On the other hand, stricter requirements may limit the types of projects eligible for certification, particularly in the renewable energy sector where Turkmenistan has significant untapped potential.

Commercial implications for UK businesses operating internationally

UK companies with operations or supply chains extending into Central Asia should monitor these developments closely. Voluntary carbon markets increasingly influence procurement decisions, particularly where public sector contracts require suppliers to demonstrate carbon reduction commitments. Consequently, understanding how these markets function in different jurisdictions becomes commercially relevant.

Many UK manufacturers and service providers use carbon offsetting to meet corporate sustainability targets or tender requirements. The quality of carbon credits purchased directly affects whether these offsets deliver genuine climate benefits or simply provide superficial compliance. Therefore, changes in market standards and the emergence of new carbon sources merit attention from procurement teams.

Turkmenistan’s potential entry into voluntary carbon markets could eventually provide UK businesses with additional offset options. However, credits from any new market would need to meet stringent verification standards to satisfy corporate sustainability policies and stakeholder expectations. UK companies should ensure their carbon procurement strategies specify quality criteria aligned with recognised international frameworks.

The tightening of standards by bodies like the Integrity Council for the Voluntary Carbon Market reflects broader market maturation. UK businesses relying on carbon offsets must adapt procurement approaches accordingly. Credits that met requirements two years ago may no longer satisfy current best practice or stakeholder scrutiny.

Supply chain implications also warrant consideration. UK companies sourcing goods from Central Asian suppliers may face increasing pressure to account for Scope 3 emissions embedded in their supply chains. If Turkmenistan develops robust carbon market infrastructure, this could facilitate supplier emissions reduction programmes that UK buyers might support or require.

Additionally, UK engineering and consultancy firms specialising in renewable energy, grid infrastructure, or carbon accounting may find opportunities supporting market development. International financial institutions like the Asian Development Bank often procure technical expertise from member countries when implementing major infrastructure or policy programmes.

Essential facts about Turkmenistan’s carbon market assessment

• The Asian Development Bank joined Turkmenistan as a member in 2000 and has since committed approximately $635 million to energy and transport infrastructure improvements.
• A major $500 million grid strengthening project initiated in 2018 delivered 1,400 kilometres of transmission lines and 11 substations across the country.
• Turkmenistan’s current greenhouse gas emissions total 118 megatonnes of carbon dioxide equivalents, representing about 0.21 percent of global emissions.
• The Integrity Council for the Voluntary Carbon Market has tightened standards, now excluding renewable energy projects from receiving its Core Carbon Principles certification under existing methodologies.
• The Asian Development Bank’s new 2025 partnership strategy for Turkmenistan emphasises climate resilience and sustainable development alongside economic competitiveness.
• Voluntary carbon markets currently lack standardised metrics and transparent reporting, creating challenges for buyers assessing credit quality and genuine climate impact.

What UK businesses should consider regarding carbon market developments

Companies using carbon offsets to meet sustainability commitments need clear procurement criteria that specify credit quality requirements. As international standards tighten, credits purchased without proper due diligence may fail to deliver claimed benefits or satisfy future stakeholder scrutiny. Therefore, businesses should review their carbon offsetting strategies against current best practice frameworks.

Organisations responding to public sector tenders increasingly encounter carbon reduction requirements, including PPN 06/21 compliance for central government contracts. Understanding how voluntary carbon markets function and what constitutes credible offsetting helps companies develop robust responses. Moreover, it enables more accurate carbon accounting across operations and supply chains.

UK businesses with international supply chains should engage suppliers on emissions reduction. As carbon markets develop in regions like Central Asia, opportunities may emerge for collaborative reduction programmes. However, these initiatives require careful structuring to ensure genuine emissions reductions rather than paper exercises that expose companies to reputational risks.

Professional advisers can help businesses navigate evolving carbon market landscapes. ESG compliance support assists companies in understanding regulatory requirements and voluntary frameworks. Similarly, structured carbon reporting programmes help organisations measure, manage, and credibly communicate emissions reduction efforts.

Training programmes can build internal capability for carbon management and procurement. Specialist training on emissions accounting helps teams understand Scope 1, 2, and 3 emissions, evaluate offset quality, and develop procurement strategies aligned with corporate sustainability objectives.

Businesses should also consider how carbon pricing mechanisms might affect their sectors in coming years. Whilst voluntary markets differ from compliance schemes, they increasingly influence commercial decision-making. Companies that develop carbon literacy now will be better positioned to respond as requirements evolve.

Where to find authoritative information on carbon markets

The Department for Energy Security and Net Zero provides UK policy information on carbon markets, emissions trading, and net zero strategy. Their guidance covers both domestic requirements and international climate finance.

The Integrity Council for the Voluntary Carbon Market publishes standards for high-integrity carbon credits through its Core Carbon Principles framework. Their documentation explains quality criteria and approved methodologies for carbon credit generation.

The Asian Development Bank publishes country partnership strategies, project documentation, and policy papers on climate finance and infrastructure development across its member countries. These resources provide context on development finance approaches to emissions reduction.

The United Nations Framework Convention on Climate Change maintains information on the Paris Agreement, including Article 6 provisions covering international carbon markets and cooperative approaches to emissions reduction.