Kota Kinabalu: Malaysia is moving to position carbon markets at the centre of its economic strategy as global trade increasingly penalises high emissions, Natural Resources and Environmental Sustainability Minister Dato’ Sri Arthur Joseph Kurup said.
He said climate change and carbon management are no longer purely environmental concerns but key determinants of economic competitiveness.
“Carbon emissions are no longer just a measure of pollution…They have become a critical economic and business variable,” Arthur said, adding that they now influence trade competitiveness, investor confidence and a country’s strategic position in the global value chain.
He noted that Malaysia faces growing pressure from international policies such as the European Union’s Carbon Border Adjustment Mechanism (CBAM), which imposes costs on carbon-intensive imports.
This, he said, could affect key Malaysian exports including iron, steel, aluminium and cement.
“For Malaysia, the carbon market is no longer an option, but a pressing strategic necessity,” Arthur said in a statement, recently.
To address this, he said the government has introduced the National Carbon Market Policy, or DPKK, that was approved by the Cabinet on Apr 1 this year, aimed at preparing industries for a low-carbon global economy while supporting access to sustainable financing.
“The policy is designed to help Malaysia meet its climate commitments under the Paris Agreement, including cutting greenhouse gas emissions by up to 30 million tonnes by 2035,” he added.
Arthur said the framework would also support investment in higher-cost technologies such as carbon capture and energy storage, which are critical for deeper emissions reductions.
“Through the international market mechanisms under the DPKK, these high-cost but high-potential technologies can be widely adopted by industry players,” he said.
He said Malaysia plans to introduce a carbon tax starting in 2026, initially targeting the iron, steel and energy sectors, while the carbon market will provide incentives through the trading of carbon credits.
Following this, Arthur said the initiative would generate broader economic benefits beyond emissions reduction, including job creation and new opportunities for local communities.
“Today, the carbon market is no longer just about climate change; it involves jobs, industrial competitiveness, national revenue and foreign investment,” he said.
He added that Malaysia has the foundations to become a regional leader in the sector.
“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 said.
