Kuala lumpur: Malaysia is positioning the carbon market as a critical economic driver to bolster industrial competitiveness and meet its ambitious climate targets under the newly approved National Carbon Market Policy (DPKK). Minister of Natural Resources and Environmental Sustainability Datuk Seri Arthur Joseph Kurup stated that the country's new policy is a strategic necessity to navigate a changing global economic landscape where carbon emissions have become a primary benchmark for trade and investor confidence.

According to BERNAMA News Agency, the DPKK, approved by the Cabinet on April 1 this year, aims to facilitate the nation's goal of reducing greenhouse gas (GHG) emissions by 15 to 30 million metric tonnes of carbon dioxide equivalent (MTCO2e) by 2035. Arthur highlighted in a statement that carbon emissions have transcended environmental agendas and are now critical economic and business variables that determine trade competitiveness, investor confidence, and a country's strategic position in the global value chain.

Arthur pointed out that the urgency is intensified by international trade instruments, such as the European Union's Carbon Border Adjustment Mechanism (CBAM), which imposes costs on high-emission imports like iron, steel, aluminium, and cement. Products failing to meet international carbon standards will face additional costs when entering major world markets, directly affecting the competitiveness of local industries and Malaysia's standing in global trade.

In this regard, Arthur noted that the DPKK is founded on four strategic pillars: establishing a market with high integrity, developing supportive infrastructure such as a national carbon registry, acting as a catalyst for trade through international cooperation, and promoting decarbonisation in various sectors. He explained that while 70 per cent of Malaysia's GHG reduction potential can be achieved through low-cost energy efficiency, the DPKK is vital for the remaining 30 per cent of high-cost technologies.

Arthur stated that the policy is critical for attracting investment into high-cost potential options like Carbon Capture, Utilisation, and Storage (CCUS) or Battery Energy Storage Systems (BESS). The policy will complement the national carbon tax, scheduled for implementation this year, starting with the iron, steel, and energy sectors. While the tax serves as a penalty for emissions, the carbon market allows for the trading of credits to incentivise low-carbon transitions.

The minister emphasised that the benefits of the carbon market would extend to local communities and the Orang Asli, acting as guardians of the nation's ecosystems while creating new green jobs such as carbon auditors and Monitoring, Reporting, and Verification (MRV) experts. Arthur concluded that with the enforcement of the National Climate Change Bill (RUUPIN) supporting the policy, Malaysia possesses all the prerequisites to leverage the carbon market as a new driver of growth, with the potential to become a 'price maker' in Southeast Asia's carbon economy.