Kuala lumpur: Minister of Plantation and Commodities Datuk Seri Johari Abdul Ghani announced that the palm oil sector is well-positioned to engage in the carbon market, having integrated sustainability and circular-economy practices throughout its value chain. Although the sector lacks a standalone carbon credit system, measures have been implemented to account for emission reductions, including efforts to curb deforestation.

According to BERNAMA News Agency, Johari emphasized a no-deforestation policy within the palm oil sector as part of its sustainability commitment, recognizing its significance as a major economic contributor. The government aims to ensure fully sustainable palm oil exports. In addition to the palm oil industry, other sectors like manufacturing are encouraged to adopt solar energy to progress towards net-zero emissions by 2050.

The minister highlighted ongoing circular economy efforts within the palm oil sector, such as converting palm oil mill effluent into biogas and processing used cooking oil into feedstock for sustainable aviation fuel. Additionally, oil palm trunks from replanting programs are being used for furniture production, and empty fruit bunches are transformed into pellets for green energy. These initiatives are set to expand into downstream industries.

Johari also mentioned that the government has not finalized the implementation of a carbon tax, prioritizing the passage of Malaysia’s Climate Change Bill (RUUPIN) and conducting comprehensive engagements with industry stakeholders. The Ministry of Finance will collaborate with stakeholders to determine the appropriate approach, with the mechanism evolving based on market supply dynamics.

According to Johari, the RUUPIN, slated for its first reading in Parliament next year, will establish a legal framework for companies to record, reduce, and trade their carbon emissions.