Having issued the first Nationally Determined Contribution (NDC) in 2016, the Indonesian government is now formulating its second NDC following the enhanced NDC submission in 2022. As per the Paris Agreement, Indonesia is required to submit the second NDC by 2025, emphasizing on the technological innovation such as Carbon, Capture, Utilization and Storage (CCUS) to reduce emissions, combat climate change, achieve the net zero emissions (NZE) and safeguarding the energy security through the use of cleaner fossil fuel. Implementing an effective carbon pricing mechanism is essential to support the feasible and scalable deployment of CCUS. While Indonesia aims to enhance its climate action, this research proposes a regulatory road map inspired by the European Union (EU)’s energy landscape transformation. The EU’s achievements in energy market liberalization, renewable energy adoption, carbon pricing and enhanced energy security serve as benchmarks for developing a sustainable and integrated energy system. In contrast, most ASEAN member states, including Indonesia, are at varying stages of assessing, developing or implementing carbon pricing instruments. Despite the presence of a robust regulatory framework, Indonesia’s carbon market development face significant challenges such as: (1) highly regulated energy market and price; (2) electricity and fossil fuel subsidies burden; (3) unrecorded CO₂ emissions due to informal economy activity; (4) lack expertise in technology relevant to low carbon industry; (5) regulatory overlaps, sectoral silos and limitations in cross sector trading; and (6) high emissions free allowance. Learning from the EU’s successful experience, ASEAN can transition from voluntary to mandatory carbon markets by establishing robust compliance mechanisms such as carbon taxes and Emissions Trading Systems (ETS), complemented by voluntary carbon credit markets. This research is the first to examine ASEAN’s progress and challenges in carbon pricing implementation, leveraging insights from the EU to propose a regulatory road map tailored to Indonesia. This research aims to guide the policy makers in designing effective carbon pricing instruments and establishing a competitive carbon market to boost Indonesia’s economic competitiveness within ASEAN.