This article first appeared in The Edge Malaysia Weekly on February 19, 2024 - February 25, 2024

Sarawak made history in November last year by passing the Environment (Reduction of Greenhouse Gases Emission) Bill, which made it the first state in the country to have a law targeting climate change.

But this was not the state’s first bold move. In 2022, the Sarawak government gazetted the Land Code (Carbon Storage) Rules, 2022, to regulate carbon storage, the first in the country. The Forests (Forest Carbon Activity) Rules, 2022, enables carbon trading activities from forest resources in the state.

Here are more details:

State Deputy Minister in the Premier’s Department (Law, MA63 and Federal-State Relations) Datuk Sharifah Hasidah Sayeed Aman Ghazali said during the State Assembly that the bill is meant to:

1. Implement strategies to reduce greenhouse gas emissions and achieve net zero emissions by 2050

2. Promote carbon capture and storage

3. Provide opportunities for Sarawakians to participate in these efforts and generate revenue from carbon credits

The state government will establish an advisory panel to manage carbon capture, utilisation and storage, climate change, carbon credits and carbon pricing issues. Additional measures in the bill:

1. Registered businesses in scheduled economic sectors must submit annual carbon emissions reports and set carbon emission thresholds

2. Business entities that fail to do so will be charged a carbon levy determined by the state

3. A robust system for verification and validation of carbon credit projects issued in Sarawak will be established

Sharifah added that the bill will pave the way for Sarawak to have its own complete regulatory framework on renewable energy.

Source: News reports

Allows onshore or offshore land in Sarawak to be used for the storage of scheduled gases, which include atmospheric carbon dioxide and any other greenhouse gases needed to mitigate climate change.

The storage sites could be in abandoned petroleum production sites, deep saline aquifers, coal seams and other areas that the state deems suitable and safe for use.

Any entity that wants to use these sites must apply for a licence from the state government. The storage operator must submit an annual report on the condition of the site, the estimated quantity and type of scheduled gases stored, any incidents that require corrective measures, and other details.

Source: Sarawak LawNet System

Provides a regulatory framework for forest carbon projects in Sarawak. Any entity that wants to carry out a carbon study — to measure the carbon stock baseline in an area — must apply for a carbon study permit from the state.

The carbon study must include the methodologies used, information on the proposed forest carbon activity, measures to include benefit sharing with native communities, if their rights may be affected and a description of the local stakeholder consultation to be undertaken, among other things.

If a carbon study permit is issued, it does not mean the entity will receive a carbon licence and it does not last for more than two years. Within three months of the study’s completion, the holder of the permit has to submit the Sarawak Project Design Document to the state.

The document must be in accordance with the validation requirements of the applicable Carbon Standard Rules and the plan described in the document must be designed to reduce emissions and deliver real, measurable and long-term benefits, among other things.

Consequently, the entity can apply for a carbon licence. The application must be accompanied by the Sarawak Project Design Document, audited financial statements and other documents.

The forest carbon activity must be validated against a carbon standard by a validation agent for the carbon licence to be issued.

Source: Sarawak LawNet System

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