Malaysia is targeting increased investment and economic growth in its carbon capture utilisation and storage (CCUS) sector after passing its CCUS Act.
The smooth passage came as no surprise given CCUS is one of the six energy transition levers in Malaysia’s National Energy Transition Roadmap.
However the bill was criticised by lawmakers and non-governmental organisations (NGOs) for being rushed, and failing to properly address carbon capture risks.
The enactment of the CCUS Act recognises that natural carbon absorption methods like planting and preserving trees are insufficient to meet Malaysia’s climate commitments, and CCUS is needed to cut carbon emissions.
The CCUS Act only applies to Peninsular Malaysia and the Federal Territory of Labuan and therefore excludes CCUS in the states of Sabah and Sarawak.
CCUS projects within the state of Sarawak, where renewable energy is flourishing, is governed by another piece of legislation: the Land (Carbon Storage) Rules 2022.
The new legislation seeks to reduce CO2 emissions, mitigate climate change effects, and promote the development of the CCUS industry as a new source of economic growth.
In addition to defining key terms such as “carbon capture,” “carbon dioxide stream,” “offshore storage,” and “onshore storage”, the CCUS Act also establishes that CCUS practices in Malaysia must align with global industry standards.
New CCUS agency
The CCUS Act also establishes the Malaysia CCUS Agency. Its functions include advising the government of Malaysia, overseeing CCUS activities, managing storage resources, administering the “Post-Closure Stewardship Fund”, and promoting CCUS policies and initiatives.
The Act mandates registration with the agency for the owning and operating of a carbon capture installation; for transportation of CO2 obtained through carbon capture,; and for the utilisation of CO2 obtained through carbon capture.
Additionally, the CCUS Act prohibits importing CO2 obtained through carbon capture outside Malaysia.
