Malaysia has released its updated national climate change policy, which sets out a new framework for the country's transition toward a low-carbon economy.
Malaysia on 30 September launched its National Climate Change Policy 2.0, an update to its first national climate change policy that was implemented in 2009. It serves as an "umbrella policy" that ties together the country's various climate initiatives. It sets out a strategic framework to provide an overarching guide on achieving goals, including targets in its nationally determined contribution (NDC) to the Paris agreement — climate plans. The updated policy made no mention of 2035 goals, although countries, including Malaysia, are due to submit their NDCs for that period in November-February to the to the UN Framework Convention on Climate Change (UNFCCC).
The country's NDC targets remain unchanged, with the country aiming to reduce emissions by 45pc by 2030 compared with 2005 levels, and achieve net zero by 2050. Its greenhouse gas emissions in 2019 totalled 330.4mn t of CO2 equivalent (CO2e), states the policy document, up from 250mn t of CO2e in 2005. The energy sector accounts for more than 79pc of the country's emissions.
The policy acknowledges that as a trading nation and oil producing country, the shifts required for the energy transition pose risks to Malaysia. Policy changes such as carbon pricing may result in overall costs of doing business, and such changes need to be just to ensure there are no negative societal impacts, and no stranded assets. The policy, regulatory, technological and market shifts "are likely to significantly impact Malaysia's economy," states the policy document.
Currently, 20-30pc of Malaysia's economy is reliant on sectors that face the aforementioned risks, such as the oil and gas, power generation, metals and mining sectors. Bank Negara Malaysia, the central bank, estimates that the country stands to lose $65.3bn/yr in export revenue "if it fails to comply to these transition risks."
The updated policy attempts to address these risks and sets out five strategic thrusts that constitute its new climate change framework. One of these is to strengthen climate governance and institutional capacity. The initiatives under this include creating a comprehensive legal framework to regulate climate action and establishing an effective governance structure to manage climate action.
Malaysia, much like many other developing economies, faces challenges in receiving adequate financing for its energy transition. It is estimated that the country needs 350bn ringgit ($84bn) in investments to achieve its net zero goals, according to the policy document.
To address this, another key strategy in the policy is to scale up blended financing and stimulate a green economy by increasing the involvement of private sector. In line with this, Malaysia aims to explore the feasibility of carbon pricing instruments and to develop a national policy for the carbon market, to give guidance on carbon trading, including on international compliance and voluntary markets.
Other strategies under the policy include supporting carbon capture, utilisation and storage development, as well as enhancing international collaboration on low carbon technology and innovations, although specifics on these initiatives were not provided.
