by ANIS HAZIM / pic by HUSSEIN SHAHARUDDIN

THE Cabinet has agreed to a proposal by the Ministry of Environment and Water (KASA) to develop a Voluntary Carbon Markets (VCM) as a reference for international carbon credit transactions.

KASA Minister Datuk Seri Tuan Ibrahim Tuan Man (picture) said the main purpose of VCM is to ensure that the country’s interest in climate change and greenhouse gas (GHG) emission reduction is compromised.

“Through VCM, state governments or private parties involved in carbon projects must report the related information to KASA,” Tuan Ibrahim said in a statement.

According to him, Malaysia has an obligation to ensure that there is no double-counting when implementing the corresponding adjustment with the amount of carbon credits sold in the international market and the achievement of Nationally Determined Contributions (NDC) ratified through the Paris Agreement under the United Nations Framework Convention on Climate Change.

“This is because carbon credits that have been sold in the international market cannot be used to calculate the national GHG emission reduction targets through NDC,” he added.

The Cabinet has also agreed to develop a Domestic Emissions Trading Scheme (DETS) to catalyse the carbon trading sector in Malaysia.

“DETS will be implemented jointly with the Ministry of Finance, Bursa Malaysia and other interested parties. DETS is part of the country’s carbon pricing policy and it is able to enhance the capacity and reputation of private companies including government-linked companies through governance, social and environmental approaches,” added Tuan Ibrahim.

He stated that carbon pricing such as DETS is expected to enhance the ability of industry players in producing products and services that are competitive at the international level.

“This is important in preparing industry players for the implementation of carbon control mechanisms through international trade such as the Carbon Border Adjustment Mechanism by the European Union in 2023,” he said.

The government planned to implement DETS in phases, while a single transaction platform will be developed.

“The state government authorities and the private sector can utilise DETS to conduct carbon credit transactions at the domestic level compared to the international market which has high transaction costs and more stringent technical requirements.

“The application of the VCM guidelines and the development of DETS is crucial not only to protect national interests, but also to serve as a catalyst for country’s socioeconomic growth in line with low carbon development aspirations and sustainable development agenda,” he stated.