The fall of the forest-based carbon offset: A cautionary tale for Malaysia

Carbon offsets can provide certain advantages, but one key issue is the difficulty in reliably verifying the environmental benefits that carbon offsets tangibly deliver.

IN THE past few years, activity on forest-based carbon offsets in Malaysia has exploded. In early 2023, Bursa launched the Bursa Carbon Exchange to facilitate the trade of voluntary carbon offsets. In early 2024, Sabah launched its first forest-based carbon offset project, the Kuamut Rainforest Conservation Project. Sarawak passed an Environmental Bill which provided a legal framework for the trade of offsets from Sarawak-based offsets, followed by a proposal by controversial logging company Samling to establish another project in Marudi.

Petronas and the Malaysia Forest Fund have reportedly partnered to explore forest carbon sites, and companies including Shell, Grab and Malaysia Airlines have made carbon-neutral claims based on carbon offsets. Most recently, AirAsia has announced that they will implement a ‘sustainability fee’ for carbon offset projects. Further, the government has announced that they are developing a National Carbon Policy to “provide more clarity on carbon trading at the state level”.