Kuala lumpur: The National Climate Change Bill (RUU PIN) will introduce a monitoring, reporting and verification (MRV) system as the main basis for the implementation of a carbon pricing mechanism and Malaysia's transition towards a low-carbon economy. The Ministry of Natural Resources and Environmental Sustainability (NRES) said the MRV system has a uniform methodology for calculating greenhouse gas (GHG) emissions across economic sectors to ensure transparency and validity of data as well as the formation of a national carbon registry with integrity.
According to BERNAMA News Agency, the MRV system is an important foundation for the implementation of carbon pricing instruments as it ensures that pricing is based on actual emissions data. This statement from the ministry was in response to a question from Senator Tan Sri Low Kian Chuan, who inquired about how the RUU PIN would enable carbon pricing and the transition to a low-carbon economy across other sectors of the economy.
NRES explained that with the MRV system as a basis, the government plans to implement a carbon tax starting in 2026, initially focusing on the energy, iron, and steel sectors. The carbon tax implementation will align with the National Carbon Market Policy and the provisions under the RUU PIN to guarantee policy uniformity and implementation efficiency. The introduction of this tax aims to prompt high-carbon-intensive sectors to enhance efficiency and shift towards low-carbon technologies.
The ministry further elaborated that the RUU PIN provides the legal groundwork for the future implementation of the Emissions Trading Scheme (ETS), once the MRV system and domestic carbon market ecosystem have sufficiently matured. The ETS will allow emission limits to be set for specific sectors and offer compliance flexibility through cost-effective emission allowance trading.
Additionally, the RUU PIN will regulate the carbon market for compliance, including the utilization of carbon credits to fulfill emission reduction obligations. This regulation offers additional options for sectors that struggle to directly reduce emissions, without impacting the country's GHG emission reduction targets.
NRES highlighted that the drafting of the RUU PIN facilitates a structured and phased implementation of carbon pricing, beginning with the development of an MRV system before introducing other instruments such as carbon taxes and carbon market mechanisms.
In response to Low's query regarding the latest developments and timeline for tabling the RUU PIN, the ministry stated that the Bill is currently in the final review process by the Attorney General's Chambers (AGC) to ensure legal compliance and alignment with policy decisions agreed upon by the Cabinet on June 11, 2025. The ministry plans to table the RUU PIN and the RUU Iklim in the Second Sitting of the Fifth Term of the 15th Parliament.