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Malaysian government announces carbon credit incentive ahead of inaugural carbon auction

The Malaysian government has announced a RM10 million (US$2.21 million) seed funding incentive to assure the demand for Malaysia-generated carbon credits traded on Bursa Malaysia’s new Bursa Carbon Exchange (BCX).

The BCX, which is the world’s first Shariah compliant carbon exchange, was launched in December last year and is set to hold its inaugural auction next week on the 16th March.

“To support the national journey to achieve net zero [by] as early as 2050, I am pleased to announce that the government is committing to a seed fund amounting to RM10 million to act as an assured demand for Malaysia-generated carbon credits to kick-start the market,” Anwar Ibrahim, the prime minister and finance minister of Malaysia, announced at the Invest Malaysia event.

The prime minister further noted that Islamic finance is a natural fit to drive sustainable development.

“We are working closely with both the government and the corporate sector to execute the national sustainability agenda, and we are pleased to be part of Bursa Malaysia’s sustainable supply chain initiative to support our companies in their decarbonization journey,” Khairussalah Ramli, the group president and CEO of Maybank, commented.

The upcoming inaugural auction is primarily envisioned as a carbon pricing exercise. ISFI previously reported that as at the 20th February 2023, the stock exchange received applications from 23 participants for the inaugural auction, including both buyers and suppliers of carbon credits.

The stock exchange, at the time, commented that it was still in the process of approving and finalizing the participants, most of whom are local entities, for the inaugural auction.

Notably, as at the 10th March, the BCX has listed two foreign projects whose underlying Verra Verified Carbon Units will be traded during the upcoming auction.

The approved projects include the ‘Southern Cardamom REDD+ Project’ based in Koh Kong, Cambodia with 100,000 contracts priced at RM68 (US$15.03) each and the Shandong, China-based ‘Linshu Biogas Recovery and Power Generation Project’ with 50,000 contracts priced at RM18.5 (US$4.1) each.

Also announced at Invest Malaysia was Bursa Malaysia’s ‘Centralised Sustainability Reporting Platform’ in collaboration with the London Stock Exchange Group to be launched next month.

The platform will allow listed and unlisted companies to calculate their carbon emission impact and disclose common ESG datasets in a standardized manner, conforming to the Task Force on Climate-Related Financial Disclosures standards.

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