The Federal government is committed to ensuring that the sale of carbon credits abroad will not hinder Malaysia’s achievement of its nationally determined contribution (NDC) targets, the Dewan Rakyat was informed today.
Natural Resources and Environmental Sustainability Minister Nik Nazmi Nik Ahmad emphasized that this measure aims to guarantee Malaysia’s goal of reducing carbon emissions intensity across the economy by 45 percent by 2030 is met.
“To encourage and support carbon generation initiatives from the forestry sector, the ministry has established the Malaysia Forest Fund (MFF) as the entity responsible for implementing efforts and innovative financial strategies for the forestry sector,” Nik Nazmi stated. He noted that carbon credits have already begun trading on platforms such as the Bursa Carbon Exchange (BCX) and the Kuamut Project in Sabah.
“We have appointed MFF as the implementing agency under the Forest Carbon Project Development Fund with RM5 million allocated for 2024 to support state government activities,” he added.
Nik Nazmi was responding to a query from Paya Besar MP Datuk Mohd Shahar Abdullah regarding federal-state coordination in generating carbon credits from Malaysian forests.
On May 20, the inaugural auction of Malaysian Renewable Energy Certificates (RECs) and carbon credits on the BCX provided opportunities for the corporate sector to showcase their climate actions. This auction allowed for efficient capital allocation to support forest conservation, restoration efforts, and low-carbon technologies.
Nik Nazmi highlighted that carbon credits and RECs have the potential to stimulate the development of low-carbon projects, supporting Malaysia’s goal of achieving a 45 percent reduction in emissions intensity by 2030, based on 2005 gross domestic product levels, as outlined in Malaysia’s NDCs.
In response to Shahar’s supplementary question about government efforts to strengthen the carbon market mechanism, especially in the forestry sector, Nik Nazmi revealed that discussions with the World Bank are ongoing to explore the feasibility of implementing a carbon tax in Malaysia.
“This is one of the factors that need to be considered in drafting the National Climate Change Bill. I believe that if such a framework is established, the carbon market price will be better than the current relatively low levels,” he concluded.
