A new association has been formed to accelerate carbon market development in Malaysia with nine founding members – all private companies across various economic sectors, including those with interests in oil and gas.
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Among those at the forefront of the fledgling Malaysian Carbon Market Association (MCMA) are national oil company Petronas and energy services provider Yinson, which primarily operates floating production, storage and offloading (FPSO) units for use in the offshore oil and gas industry.
Yinson’s group head of corporate sustainability, Dr Renard Siew, will lead MCMA as its president, while Petronas head of strategy, policy and regulation for corporate sustainability Wan Sayuti Wan Hussin is vice president.
Other founding members include private Sabah-based timber outfit Bornion Timber, stock exchange operator Bursa Malaysia, renewables company Cenergi SEA, Johor-based investment holding firm Iskandar Investment, state utilities firm Sarawak Energy, palm oil producer SD Guthrie and environmental, health and safety consultancy EeHSSE. There are currently no representatives from the public sector, academia or non-governmental organisations in the group.
“We felt that within the Malaysian market, the voices of the private sector, those who are really interested in getting their footing in the carbon market, are quite fragmented,” said Siew, speaking at the Malaysia Carbon Markets Forum, organised by Bursa Carbon Exchange, on Thursday.
“(The founding members of the MCMA) thought there was a need to galvanise the support of the private sector and have a platform for organisations which are interested in spurring the growth of the carbon market.”
Siew went on to explain that the association had four objectives, with the first being to advocate for a voluntary carbon market in Malaysia in which the private sector participated “not as a form of charity, but as part of a strategic, net-zero transition journey.”
MCMA’s launch comes on the heels of the Malaysian government’s push for a new regional carbon standard to accelerate the market for credible carbon credits.
MCMA said it aims to be the “unified voice” on carbon markets-related policy. This is especially as Malaysia studies various carbon pricing instruments and prepares to table its climate change bill in 2025.
The government is currently in the process of revising its Nationally Determined Contributions (NDCs) by 2025, and these targets will have to take into account the latest climate change-related policies, said Dr Ching Thoo, secretary general of Malaysia’s natural resources and environmental sustainability ministry at the same event.
Malaysia’s current NDC sees it committing to reduce greenhouse gas emissions intensity to 45 per cent by 2030 compared to 2005 levels.
Carbon tax for hard-to-abate sectors?
Ching hinted at the likely introduction of a carbon tax for hard-to-abate sectors by next year. Malaysia’s finance ministry is exploring the feasibility of a compliance carbon market in the form of a carbon tax or emissions trading system in partnership with the World Bank.
“We were informed that in the coming (federal) budget, there will be an announcement on the carbon tax,” said Ching. “We would like to see a carbon tax imposed on hard-to-abate industries, for a start,” he said, though no details were given on which industries might be targeted.
In the meantime, the carbon association would prioritise capacity building and talent development for the local carbon market – its third objective, said Siew. The association’s members have jointly contributed RM190,000 (US$42,300) as seed funding for the association to develop training programmes that would grow a “pool of talent” within the carbon market ecosystem in Malaysia, Siew shared, adding that the organisation is keen to grow its membership.
New kids on the block
On the proposed Asean standard for carbon, or the Asean Common Carbon Framework, Ching shared that his ministry will be presenting the concept to a wider audience later this year, and intend to organise a forum discussing the framework at the COP29 climate summit in Baku, Azerbaijan.
Siew added that under this framework, Malaysia hope to get Asean countries to mutually recognise each other’s methodologies. It also wants to develop a regional pool of potential carbon credit validators and verifiers.
Thailand and Indonesia have set up their own carbon market associations. MCMA is now in talks with Thailand Carbon Markets Club, established in 2021, as well as Indonesia Carbon Trade Assocation, formed in 2022. In each country, members of the carbon association began with a few private sector companies and project proponents, but have increasingly attracted participants from across the carbon credit value chain.
Singapore also recently lanched its own carbon market alliance, although its current priority is to increase the supply of carbon credits from countries with which it has agreements on Article 6 of the Paris Agreement. Details of the article, which lays out rules for how countries can meet national climate targets through trading carbon credits, are expected to be a key point of discussion at COP29.
Siew told Eco-Business that MCMA has already reached out to the Singaporean alliance to discuss opportunities for collaboration.
“We simply have no time to waste, especially when we are talking about the climate crisis. It’s urgent that we speed up our process [of getting carbon credits to market],” said Siew.
