The National Climate Change Bill will establish a monitoring, reporting and verification system as the foundation for carbon pricing and Malaysia’s low-carbon transition.
KUALA LUMPUR: The National Climate Change Bill (RUU PIN) will establish a monitoring, reporting and verification (MRV) system as the core foundation for implementing carbon pricing.
This system will provide a uniform methodology for calculating greenhouse gas emissions across all economic sectors.
The Ministry of Natural Resources and Environmental Sustainability (NRES) stated the MRV framework ensures data transparency and validity. It will also support the formation of a national carbon registry with integrity.
“MRV is an important foundation for the implementation of carbon pricing instruments as it ensures that pricing is based on actual emissions data,” the ministry said in a parliamentary reply.
The response was to a question from Senator Tan Sri Low Kian Chuan regarding the bill’s role in enabling carbon pricing and a broader economic transition.
Based on the MRV system, the government will implement a carbon tax starting in 2026. The initial focus will be on the energy, and iron and steel sectors.
This tax will be aligned with the National Carbon Market Policy and provisions under the RUU PIN. The ministry said this alignment ensures policy uniformity and implementation efficiency.
“The introduction of a carbon tax at this stage will provide a clear signal to high-carbon-intensive sectors to improve efficiency and shift to low-carbon technologies,” it added.
The bill also provides the legal basis for a future Emissions Trading Scheme (ETS). This will be introduced in a later phase once the MRV system and domestic carbon market ecosystem have matured.
The ETS will enable emission limits to be set for specific sectors. It will also provide compliance flexibility through cost-effective emission allowance trading.
Furthermore, the RUU PIN will regulate the compliance carbon market, including the use of carbon credits. This provides options for sectors that find direct emission reductions difficult.
NRES said this approach ensures the country’s overall greenhouse gas reduction targets are not compromised.
The ministry stated the bill’s drafting allows for carbon pricing to be implemented in a phased manner. It starts with developing the MRV system before introducing instruments like carbon taxes and market mechanisms.
Regarding the bill’s progress, NRES said it is undergoing a final legal review by the Attorney General’s Chambers. This ensures it aligns with Cabinet policy decisions agreed upon earlier.
“The ministry intends to table the RUU PIN and the RUU Iklim in the Second Sitting of the Fifth Term of the 15th Parliament,” it said.
