PETALING JAYA: The government's plan to impose a carbon tax on industries will be put on hold due to the Middle East geopolitical situation, so as not to burden the rakyat further, Natural Resources and Environmental Sustainability Minister Datuk Seri Arthur Joseph Kurup said.
He said that although the plan was to impose the carbon tax on polluters as penalties this year, the government would first work on setting up the framework to gather carbon credits.
Kurup was speaking at a media conference after launching the National Carbon Market Policy (DPKK) during the opening ceremony of the two-day Climate Change and Sustainability Conference 2026, which began on Monday (Apr 21) in Petaling Jaya.
"The government wants to implement a carbon tax but we have to take into account the timing.
"The announcement on carbon tax in Budget 2026 was made prior to the Middle East conflict. We as the government have to stay in touch with reality and, taking into account the geopolitical situation, we do not want to put any extra burden on industries and the rakyat.
"We may review the carbon tax but that is under the purview of the Finance Ministry although NRES sets up the framework," said Kurup.
Last year, during the Budget 2026 announcement, Prime Minister Datuk Seri Anwar Ibrahim stated that Malaysia would introduce a carbon tax, starting with the iron, steel and energy sectors - marking a major step towards a low-carbon economy.
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Kurup said the government would now focus on verifying carbon credits.
"First, we must ensure the carbon credits are verifiable. Only then will we introduce Acts to force compliance by industries and establish a Carbon Registry to gather data so that we can measure, price and trade the carbon internationally," he said.
Carbon trading is a market-based system designed to reduce greenhouse gas emissions by putting a price on carbon. It allows countries and companies to buy and sell credits or permits that represent the right to emit a specific amount of carbon dioxide (CO2) or other greenhouse gases.
Kurup also cautioned industries not to let the postponement of the tax slow down Malaysia's green agenda.
"In any event, we still have to move towards a green economy and renewable energy as ultimately fossil fuels are a finite resource. Whether there is an energy crisis or not, let's not slack off and be too dependent on fossil fuels," he said.
Earlier, in his speech at the opening of the conference, Kurup said the DPKK would provide the framework to position Malaysia as a credible participant in international carbon trading.
The DPKK, approved by the Cabinet on Apr 1, is part of the National Climate Change Policy (DPIN) 2.0 strategy, which was launched in 2024.
He added that all these policies should be in place before Malaysia's greenhouse gas emissions peak between 2029 and 2034.
"DPKK approved by the Cabinet on Apr 1, 2026, will provide the framework for both voluntary and compliance carbon markets, positioning Malaysia as a credible participant in international carbon trading.
"To underpin these systems, we are strengthening our carbon market framework and ecosystem, backed by data, to ensure that every tonne of carbon reduced or traded is backed by integrity and trust.
"One of DPIN 2.0's main strategic thrusts is the establishment of a regulatory instrument in the form of Malaysia's Climate Change Bill or Rang Undang-Undang Perubahan Iklim Negara (RUUPIN).
"This landmark legislation that we are now finalising will enshrine accountability, transparency and ambition into law, ensuring that our climate commitments under DPIN 2.0 and the DPKK are not only aspirational but enforceable," said Kurup.
He also said Malaysia commits to achieving an absolute emissions reduction of 15 to 30 million tonnes of carbon dioxide equivalent by 2035, relative to the peak level.
"This includes an unconditional reduction of up to 20 million tonnes, which we will deliver through our own national efforts; and a conditional reduction of an additional 10 million tonnes, which depends on international support from partners in the form of finance, technology transfer and capacity building," he said.
Malaysia has also committed to achieving net-zero greenhouse gas emissions by 2050.
"The introduction of the DPKK will also ensure that our efforts not only benefit Malaysia but are also linked to the global effort to address climate and environmental issues.
"From this moment onwards, let us act with urgency, with courage and with unity so that we may be remembered not as the generation that stood by, but as the architects of a resilient tomorrow," said Kurup.
