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KUALA LUMPUR: Malaysia has the opportunity to shape the regional carbon economy with the ability to grow, be inclusive and be result-based.
Plantation and Commodities Minister Datuk Seri Johari Abdul Ghani said regionally, there is plenty of potential for the carbon market.
He said from 2025 to 2050, Asean’s carbon market could generate US$946bil to US$3 trillion in cumulative value, while by 2030, mitigation potential is estimated at 220 million tonnes of carbon equivalent.
With that, he said regional cooperation must now move from principle to practicality.
“Today, a memorandum of collaboration (MoC) has been formalised between the Malaysia Forest Fund (MFF) and Bursa Malaysia Bhd to advance carbon market development and foster synergies,” he said during the 3rd Malaysia Carbon Market Forum here yesterday.
The MFF has two key instruments – the Forest Conservation Certificate (FCC), which channels finance into forest protection, and the Forest Carbon Offset (FCO), Malaysia’s national crediting system for avoided, reduced, and removed emissions.
The two-year collaboration between MFF and Bursa Malaysia will cover areas like the potential inclusion of FCC support into environmental, social and governance (ESG)-themed indices to promote forest conservation efforts by listed entities as well as promote the national carbon crediting programme once it is completed among others.
MFF senior director of corporate development and strategy, Suhaini Haron said the introduction of the FCO next year is a significant stepping stone signalling the beginning of Malaysia’s vision to become a low-carbon nation.
“Having FCO traded on Bursa Carbon Exchange (BCX) would highlight Malaysia’s leadership in developing credible, transparent, and nationally accepted carbon instruments.
“This action will create room for additional private sector initiatives to support global action on climate, while keeping the value of our natural forests intact for future generations,” Suhaini said.
Johari said, in parallel to that, Bursa Malaysia and MFF are accessing the FCO’s potential for building on Bursa Malaysia’s current estimates, making the nation’s domestic carbon economy a global market.
“When I talk about the removal of carbon through the process, this is where MFF will give Bursa Malaysia the contributions they want to make.
“In the past, companies wanted to go into ESG practices, but when they do exercises or spend money, it is not in accordance with world standards,’ he explained.
He added it was important that companies under Bursa Malaysia receive this guidance and play a role so Malaysia can be competitive.
Also at the event, a second MoC was signed, this time between Sarawak Energy Bhd and Bursa Malaysia’s wholly-owned subsidiary BCX.
This is the second collaboration between both parties, the first being signed at COP28 in Dubai in 2023.
The two-year MoC will see BCX working in tandem with Sarawak Energy to develop action plans while leveraging on BCX’s service to promote and market Renewable Energy Certificates (REC) generated from Sarawak Energy’s hydroelectric plants.
Sarawak Energy senior vice-president of corporate services, Hajah Siti Aisah Adenan said Sarawak continues to advance hydropower development in line with the principles of the health systems strengthening, and through continuous efforts towards certification of all its hydropower assets.
“This commitment was exemplified through the first MoC with Bursa Malaysia, which marked the acceptance of hydropower as a sustainable energy source. We are expanding the value of hydropower beyond electricity generation by creating verified renewable energy instruments that support corporate sustainability goals,” she said.
She added that the introduction of hydropower RECs provides greater transparency and accessibility for corporates seeking credible renewable energy sources.
Meanwhile, Bursa Malaysia’s chief executive officer, Datuk Fad’l Mohamed said the global voluntary carbon market has faced significant headwinds in the last few years.
He made note of the total trading value that declined from a peak of US$2bil in 2021 to US$1.4bil in 2024.
According to him, the voluntary market is a small fraction of the overall carbon one, which is being driven primarily by compliance mechanisms and other national schemes.
“Compounding this issue of size is the limited demand for voluntary carbon credits and the scarcity of carbon projects within our region, including Malaysia.
“Given these circumstances, the challenges of the voluntary carbon market are felt across many jurisdictions, but studies indicate that the largest future demand for carbon credits will likely come from Article 6.2 of the Paris Agreement, followed by domestic carbon pricing instruments,” he said.
Following that, Fad’l said three catalytic enablers have been identified.
Firstly, the support for domestic carbon credit utilisation which should be considered for offsetting compliance emissions.
“The forward-looking provisions in the Climate Change Bill of Malaysia and the National Carbon Market Policy, which are currently being developed, are to be applauded, we stand ready to contribute in our role,” he said.
The Climate Change Bill is being finalised and will be tabled at Parliament soon.
Thirdly, he acknowledged the Asean Common Carbon Framework’s aspiration to link Asean’s carbon markets, both voluntary and compliance to each other.
Fad’l said a successful Asean carbon market will depend on a robust supply of high-quality credits and interoperability.
“Within this context, we encourage governments and authorities at sub-national levels to leverage on existing carbon market infrastructure to facilitate these linkages,” he noted.
Article By LYDIA NATHAN
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