Preheat Oven: Preheat your oven to 350°F (175°C). Line a 12-count muffin pan with cupcake liners and set aside.
Mix Dry Ingredients: In a medium bowl, whisk together 1 ½ cups flour, 1 tsp baking powder, ¼ tsp baking soda, and ¼ tsp salt. Set aside.
Cream Butter and Sugar: In a large bowl, using a hand mixer or stand mixer with a paddle attachment, beat ½ cup softened butter and 3/4 cup granulated sugar on medium-high speed until light and fluffy, about 2-3 minutes. Scrape down the sides of the bowl as needed.
Add Eggs and Flavorings: Beat in 2 eggs one at a time, mixing well after each. Add 2 Tbsp lime juice, 4 tsp lime zest, and 1 coconut emulsion. The mixture may look curdled—this is normal.
Combine Wet and Dry Ingredients: With the mixer on low, alternate adding the dry ingredients and ½ cup coconut milk to the butter mixture, starting and ending with dry ingredients: ½ dry → coconut milk → ½ dry. Mix until just combined.
Fold in Coconut: Gently fold in ½ cup unsweetened shredded coconut with a spatula.
Fill and Bake: Divide the batter evenly among the 12 cupcake liners, filling each about ⅔ full. Bake for 18-20 minutes, or until a toothpick inserted in the center comes out clean.
Cool Cupcakes: Let cupcakes cool in the pan for 5 minutes, then transfer to a wire rack to cool completely.
Make Frosting: In a large bowl, beat ¾ cup softened butter until creamy, about 1 minute. Add 3 cups confectioners’ sugar, 2 Tbsp lime juice, 1 tsp lime zest, 1 tsp coconut emulsion, and an ⅛ tsp salt. Beat on low until combined, then on medium-high for 2 minutes until fluffy. Add 2-3 Tbsp coconut milk, 1 Tbsp at a time, until pipeable.
Frost and Decorate: Pipe or spread frosting onto cooled cupcakes. Sprinkle with ¼ cup unsweetened shredded coconut (toasted, if desired) and garnish with lime slices, if using.
Coconut Milk: Use full-fat canned coconut milk, shaken well. Substitute with canned coconut cream for richer cupcakes and creamier frosting; thin frosting with 1-2 Tbsp regular milk if too thick.
Toasting Coconut: For optional toasted coconut garnish, heat 1/4 cup unsweetened shredded coconut in a dry skillet over medium heat, stirring constantly for 2-4 minutes until golden. Transfer to a plate to cool immediately to prevent burning.
Lime Zest: Zest limes before juicing. Use about 2 medium limes for the recipe.
Measuring Flour: Spoon flour into the measuring cup and level off to avoid dense cupcakes.
Make Ahead: Bake cupcakes a day ahead and store unfrosted at room temperature. Frost on serving day.
Storage: Room temperature: Store frosted cupcakes in an airtight container for up to 1 day.
Refrigerator: Refrigerate for up to 4 days; bring to room temperature before serving.
Freezer: Freeze unfrosted cupcakes for up to 2 months; thaw at room temperature, then frost.