Malaysia updates climate policy to support NDC target, Climate Change Act by Q1 2025

Malaysia’s Ministry of National Resources and Environmental Sustainability (NRES) announced the updated National Climate Change Policy 2.0 on Sept. 30, reiterating its commitment to achieving its nationally determined contribution (NDC) while supporting the draft for Malaysia’s Climate Change Act, slated for early 2025.

The country aims for a 45% reduction in economy-wide carbon intensity against GDP by 2030 compared to 2005 levels, and it seeks to achieve net-zero greenhouse gas emissions by 2050.

The NCCP 2.0 serves as an umbrella policy, introducing a framework for Malaysia’s transition to a low-carbon economy. It encompasses all climate initiatives and provides guidelines for governance, low-carbon development, adaptation, climate financing and cross-border collaborations.

Additionally, Minister of NRES Nik Nazmi Nik Ahmad, said that Malaysia will prioritize the implementation of Article 6 of the Paris Agreement, among other global climate initiatives, at UNFCCC’s upcoming COP29 from Nov. 11-22.

Emissions reduction through carbon market mechanisms is gaining traction in the Association of Southeast Asian Nations (ASEAN). As Malaysia assumes the chairmanship in 2025, the Minister emphasized the importance of cross-border collaboration for further progress and development on this front.

Platts, part of S&P Global Commodity Insights, previously reported on Aug. 8 that Malaysia is likely to announce a carbon tax in emission-intensive sectors(opens in a new tab) in 2025 to push domestic decarbonization and address trade policies like the EU’s Carbon Border Adjustment Mechanism.

The amount of the tax, the liable sectors, as well as the exact timeline were not disclosed, but it is expected to create a financial incentive for local companies to cut their carbon emissions and adopt clean energy technologies, especially for emission-intensive and trade-exposed sectors ahead of EU’s CBAM.

CBAM will impose carbon taxes on commodities exported to the EU market, including cement, iron and steel, aluminum, fertilizers, electricity and hydrogen.