KUALA LUMPUR: The National Carbon Market Policy is underway and expected to be finalised by next year, the Dewan Rakyat was told.
Natural Resources and Environmental Sustainability Minister Nik Nazmi Nik Ahmad said the policy will complement the development of the National Climate Change Act which will act as the main instrument for ensuring the effective operation of the national carbon market.
"The government believes that the revenue from carbon credit transactions can generate additional income and attract both domestic and international investments.
"Without the revenue from selling these carbon credits, projects that have the potential to significantly reduce greenhouse gas (GHG) emissions or carbon projects using the latest technology will not be feasible.
"Hence, the carbon market mechanism can be seen as an additional financial instrument that can fund carbon projects in the country," he said in a parliamentary written reply.
Nik Nazmi said this in response to Mordi Bimol (PH-Mas Gading) who enquired about the government's stance and developments to make carbon trading a national policy.
At the same time, he added that the policy will explore offset methods as a reduction option for GHG emissions in hard-to-abate sectors, such as the iron and steel industries.
"The development of the policy is also crucial to address the urgent needs of industry players and state governments that wish to participate in carbon markets both domestically and internationally.
"It will also facilitate the implementation process of carbon projects by foreign investors through collaboration with Malaysia," he said.
Apart from the investment aspect, Nik Nazmi added that the policy is also designed to ensure that international carbon trading can be conducted in line with the guidelines set by the United Nations Framework Convention on Climate Change (UNFCC) and the ministry without compromising Malaysia's nationally determined contribution.
"The National Climate Change Action Council Meeting held in October last year has also agreed that the ministry at the time will serve as the national authority responsible for developing the national arrangement for the implementation of the carbon market mechanism in Malaysia.
"Following this, the Cabinet meeting in February this year agreed with the council's decision."