Malaysia Carbon Market Readiness

Malaysia introduced Bursa Carbon Exchange (BCX), a voluntary carbon market (VCM), in 2022 and held the first auction of carbon credits from the Verra registry earlier this year. It is understood that carbon credits verified by Gold Standard will be available on the BCX next year.

Meanwhile, the government is offering tax incentives to support Malaysian project developers in getting their carbon credits verified and sold via the VCM. “Developers are looking at the potential of Malaysia’s VCM in nature-based solutions, especially in forests and mangroves,” says Hiro Chai, founder and director of Mitsusho Sdn Bhd.

There has also been interest in blue carbon credits, says Chai, which focuses more on sequestering carbon in the ocean and coastal ecosystems such as mangroves, seagrass and salt marshes.

An example of how blue carbon credits are highly valued can be observed in the Delta Blue Carbon project in Pakistan, which was traded on the Singapore-based carbon exchange Climate Impact X for S$26 to S$30 per tonne, says Chai.

Local banks are already gearing up to help companies buy, sell and trade carbon credits. CIMB Bank Bhd, for instance, foresees a collaboration with BCX to form an integral part of its sustainable financing ecosystem, says Luanne Sieh, group chief sustainability officer of CIMB Group.

Additional regulatory and legislative clarity, either on tax, emissions trading schemes or a combination of both, will spur the growth in demand for domestic carbon credits, she says. The passage of the Environment (Reduction of Greenhouse Gases Emission) Bill 2023 in Sarawak last month is an example.

“The bill requires registered businesses in Sarawak, which are covered under the scheduled economic sectors, to submit annual carbon emission reports and set carbon emission thresholds.

It is also understood that registered business entities unable or unwilling to bring their carbon emissions down to the emission threshold levels will have a carbon levy imposed on them at a rate to be determined by the state cabinet,” says Sieh. “Given this future demand, we are getting ready to work closely with our clients and provide them with innovative carbon solutions.”

The carbon market developments reflect Malaysia's proactive approach in aligning with global sustainability goals, fostering a green economy, and integrating carbon markets into its national strategy.

 (Source :ttheedgemalaysia.com)