KUCHING: Sarawak will introduce a carbon levy on the oil and gas (O&G) as well as energy sectors starting 2026 as a new revenue source.
Announcing this when tabling the Sarawak 2026 State Budget in the state assembly yesterday, Sarawak Premier and Finance Minister Tan Sri Abang Johari Tun Openg said the levy would apply to emissions generated within Sarawak by regulated facilities in the O&G and energy sectors.
“Revenue collected from this levy will be channelled to a dedicated climate change fund, renewable energy (RE) development, energy-efficiency initiatives, grid modernisation, forest conservation and climate resilience projects that will benefit communities across Sarawak.
“Sarawak stands ready to work closely with the federal government to ensure Malaysia’s future national carbon tax and carbon-pricing architecture are harmonised.
“The environmental (reduction of greenhouse gases emissions) ordinance 2023 is already in force with established measurement, reporting and vertification systems, advanced modelling, and detailed policy design underway.
“Sarawak is well-positioned to support and lead Malaysia’s overall decarbonisation efforts, nationally determined contribution achievement, and the development of a strong domestic carbon market,” he said.
He pointed out that the carbon levy is poised to become a future revenue source for Sarawak.
According to Abang Johari, the Sarawak Climate Change Roadmap sets the direction of the state’s transition to a low-carbon and climate-resilient economy.
The roadmap builds on the environmental (reduction of greenhouse gases emissions) ordinance 2023 which gives Sarawak the legal authority to regulate and reduce greenhouse gas emission.
“The roadmap also supports the implementation of the Sarawak greenhouse gas management system, a digital platform that will track emissions across sectors and help industries comply with emission requirements.
“Through these initiatives, Sarawak aims to achieve better coordination in climate policy implementation, stronger capacity to manage carbon emissions, and wider adoption of sustainable practices across industries.”
The Premier said to support Sarawak’s net-zero carbon emissions strategy and carbon plan, the flaring and venting rules 2025 was enacted to regulate greenhouse gas emissions from the O&G sector, reinforcing the state’s commitment to zero routine flaring by 2030.
In 2026, the Sarawak government will set aside RM7mil to fund its net-zero strategy and carbon plan, study on carbon levy and carbon pricing, energy transition policy implementation programme and quantifying forest carbon stock in the state.
