KUALA LUMPUR, May 7 — 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 said 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.

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.

“On the international stage, carbon emissions are no longer just a measure of pollution limited to the environmental agenda.

“They have become a critical economic and business variable, serving as a primary benchmark in determining trade competitiveness, investor confidence, and a country’s strategic position in the global value chain,” he said in a statement to Bernama today.

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 which fail to meet international carbon standards will face additional costs when entering major world markets. This directly affects the competitiveness of local industries and Malaysia’s standing in global trade,” he added.

In this regard, Arthur said 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.

“The DPKK is critical for attracting investment into the remaining 30 per cent of high-cost potential options, such as Carbon Capture, Utilisation, and Storage (CCUS) or Battery Energy Storage Systems (BESS),” said Arthur.

The policy will complement the national carbon tax, which is 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, who act as guardians of the nation’s ecosystems, while creating new green jobs such as carbon auditors and Monitoring, Reporting, and Verification (MRV) experts.

“Today, the carbon market is no longer just about climate change; it involves jobs, industrial competitiveness, national revenue, and foreign investment,” said Arthur.

With the enforcement of the National Climate Change Bill (RUUPIN) supporting the policy, he expressed confidence that Malaysia is well-positioned to lead the region.

“Malaysia possesses all the prerequisites to leverage the carbon market as a new driver of growth. With high-integrity policies and close cooperation between the government and the private sector, we have the potential to become a ‘price maker’ in Southeast Asia’s carbon economy,” he concluded. — Bernama