In brief
Malaysia is slated to have a comprehensive framework to regulate, implement and enforce actions/initiatives that is aimed to lead towards a low-carbon economy. The Ministry of Natural Resources and Environmental Sustainability (NRES) is leading the initiative for the proposed enactment of the Climate Change Act by issuing a consultation paper to obtain comments and feedback.
The introduction of a Climate Change Act is the result of Malaysia’s determination to honour its commitment under the Paris Agreement and also to reduce greenhouse gas emissions in Malaysia.
In more detail
There is currently no specific legislation addressing climate change in Malaysia. The NRES has been mandated to lead in the promulgation of a legislation that is intended to address all issues related to climate change and to enhance Malaysia’s climate change governance at both international and domestic levels.
As part of the process of developing and drafting the Climate Change Bill, NRES is seeking comments and feedback from the public to ensure that the legislation holistically addresses the relevant issues and would be proportionate to the result and outcome.
The full version of the Consultation Paper can be viewed here.
Salient proposed provisions
We have summarised below the provisions under the proposed Climate Change Bill.
- Greenhouse Gas Emissions (GHG) Target
There will be national targets for GHG emissions reductions.
- Establishment of a New Regulatory Entity
A Regulatory Entity will be established to administer, implement and enforce the requirements under the legislation.
- National Integrated Climate Data Repository (NICDR)
The NICDR shall serve as an integrated platform for monitoring, storing, analyzing climate actions and data.
- The Regulation of Carbon Trading Mechanism
There will be mechanisms to enable carbon trading and in tandem, regulate the matters related to Internationally Transferred Mitigation Outcomes (ITMOs). This will also lead to the establishment of a domestic emissions trading scheme (ETS).
- Financial provisions
A National Climate Fund will be established to support national climate change initiatives and operations of the Regulatory Entity. The Fund will, at the outset, be funded through national budget allocation, administration and registration fees imposed to participate in carbon trading platforms, accreditation fees for carbon project related service providers, consultancy/advisory/training fees, international financing, philanthropy.
- Reporting
There is intended to be mandated reporting of GHG emissions and other data for purposes of Malaysia’s international reporting obligation at the national, sub-national or state and facility level.
- Compliance and Enforcement
The proposed Climate Change Bill aims to include essential compliance mechanisms to ensure effective implementation. The Regulatory Entity would have the authority to enforce penalties, including fines and imprisonment.
Implications
While we do not expect the Climate Change Act to apply to the majority of the industries and business communities in Malaysia, it is expected to have huge impact on the major industries that emit greenhouse gases such as the electricity, oil and gas and manufacturing industries. Companies who are subjected to the Climate Change Act should take this opportunity to review the Climate Change Bill to get a head start in implementing policies to reduce their own greenhouse gas emissions. Interested parties are also encouraged to provide their views and comments on the draft Climate Change Bill for NRES’ consideration so that the Climate Change Act is robust enough to ensure the objectives of the Government are achieved while at the same time ensuring no material long term adverse impact on the economy.
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