Malaysia is set to introduce its first-ever carbon tax in 2025, marking a major milestone in the country’s climate policy. The move is projected to generate close to RM1 billion annually for government coffers, while nudging heavy industries towards greener practices.
Following Singapore’s lead — which pioneered Southeast Asia’s first carbon tax in 2019 — Malaysia’s plan will initially target high-emission sectors such as iron, steel, and energy. These industries are among the largest contributors to the nation’s carbon footprint, with the energy sector alone responsible for over 80% of national emissions.
The framework is expected to begin modestly, with rates comparable to Singapore’s initial levy of S$5 per tonne of carbon dioxide-equivalent. This measured start gives industries space to adapt while ensuring Malaysia steadily progresses towards its 2030 carbon intensity reduction targets and 2050 net-zero ambitions.
The timing is crucial. The European Union’s Carbon Border Adjustment Mechanism (CBAM) has just come into effect, applying carbon tariffs on imported goods. For Malaysia, this means local industries will need to align with stricter international standards or risk losing competitiveness in export markets.
While Malaysia contributes less than 1% of global emissions, its per capita footprint of nine tonnes is relatively high, underscoring the urgency of transitioning away from fossil fuel dependence. A carbon tax is therefore more than just revenue generation — it is a signal of Malaysia’s intent to build a resilient, low-carbon economy.
Our Role in the Transition
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Malaysia’s carbon tax is a step forward and at Regen, we are ready to support this transition by enabling cleaner processes, greener operations and a stronger circular economy.
Let’s transform waste into opportunity, together.
Source: The Edge Malaysia
Image Credit: Reuters