Carbon pricing instruments (CPIs) are crucial in the climate policy framework as they provide a solution to the energy–climate nexus and address climate change while ensuring energy security. Well-designed CPIs guide countries towards decarbonisation, acting as a defence against negative events like the economic impacts of the European Union’s Carbon Border Adjustment Mechanism (CBAM). Despite their importance, however, CPIs face challenges such as political feasibility and public misunderstanding. A deeper understanding is therefore required to encourage adoption, facilitate more ambitious Nationally Determined Contribution (NDC) targets and motivate progressive actions for urgent decarbonisation. This chapter aims to present fundamental insights into CPIs. We conduct a comparative analysis between carbon taxes and cap-and-trade (CAT) programmes, using Brunei Darussalam as a case study. Subsequently, we provide a comprehensive review of the current carbon pricing status in ASEAN countries, analysing CPI implementation readiness based on monitoring, reporting and verification (MRV) infrastructure and the related legal framework. We introduce the EU’s CBAM and analyse CBAM-regulated goods from ASEAN countries exported to the EU, thereby indicating the importance of addressing CBAM. Our review found that while Singapore and Indonesia adopted a carbon tax and CAT programme, respectively, Vietnam is the most prepared for CPI implementation among the other eight ASEAN countries. Singapore is the most resilient to the impacts of the CBAM, and Malaysia, a significant exporter to the EU, is relatively more vulnerable, lacking robust CPI infrastructure and legal framework. We recommend that the ASEAN countries consider CPIs to incentivise decarbonisation, mitigate CBAM’s economic impacts and address carbon leakage. However, for a just transition, carbon pricing must be coupled with a robust revenue recycling strategy.