This article first appeared in The Edge Malaysia Weekly on November 18, 2024 - November 24, 2024

Part of Malaysia’s climate action plan is to introduce a Climate Change Act to enhance Malaysia’s climate change governance at the international and domestic levels. However, the consultation paper for the proposed climate change bill (Ruupin), issued on Oct 4, has been criticised for being too vague and technical by some quarters.

Furthermore, the draft bill lacks a focus on climate change adaptation and risk impact assessments to protect vulnerable communities, they say. A longer consultation process is needed to include these topics.

The public consultation period for Ruupin ends on Nov 18.

“[The draft bill] seems very detached from the grassroots, from the community and the rakyat. That’s why people don’t care about climate change. People see it as an urban problem, but it is not,” says Ahmad Afandi, a fellow in the Climate, Environment and Energy department at the Institute of Strategic and International Studies Malaysia.

Conducting risk impact assessments can help identify the adverse consequences energy transition projects have on vulnerable communities. By understanding the potential impacts, the bill can incorporate more human-centric considerations in its policies to help companies have a more equitable and socially responsible transition.

“The Act can be the legal instrument to enforce climate risk-based planning. For example, mandating climate risk assessments every year, like what the United Kingdom and Philippines are doing,” says Ahmad Afandi.

Similarly, Aroe Ajoeni, co-founder and communications director at Klima Action Malaysia (KAMY), says the draft bill fails to explicitly draw a link with Malaysia’s developing National Adaptation Plan (NAP). The NAP, currently under development, is crucial for building national resilience against climate change impacts.

“The whole tone of it is emphasising mitigation, from carbon mitigation, carbon markets and all of these economic mechanisms, but not much on the protection of people and safeguards in place,” says Aroe.

Adaptation is important to help communities and ecosystems cope with the impacts of climate change. The effects of climate change have impacted communities worldwide and potentially led to 14.5 million deaths and US$12.5 trillion (RM54.81 trillion) in economic losses, according to the World Economic Forum report, “Quantifying the Impact of Climate Change on Human Health”.

Additionally, the government’s decision to prioritise the carbon capture, utilisation and storage (CCUS) bill before finalising the Climate Change Act is raising concerns about the coherence of its climate policy.

The Climate Change Act is supposed to be the overarching legislation, but the accelerated timeline for the CCUS bill creates uncertainty about how these two pieces of legislation will interact.

On the other hand, to address the lack of standardisation in data collection, the minister of natural resources and environmental sustainability (NRES) has proposed the formation of a national integrated climate data repository (NICDR), which will increase reporting obligations for stakeholders from the private and public sectors.

According to the Ruupin consultation paper, the NICDR will modernise the way Malaysia stores, analyses, integrates, tracks, monitors, reports and presents climate actions and reporting. The Ruupin will outline clear deadlines and frequency for data submission to the NICDR.

A central data repository will integrate information from all sources, including but not limited to greenhouse gas emissions data, climate impact and vulnerability assessments, adaptation and mitigation projects data, and socioeconomic data relevant to climate change and its risks.

However, one point that Aroe is concerned about is how the data will be used. Ruupin recommends that legal protection and immunity be given to designated enforcement units handling compliance matters, particularly those related to data and information disclosure, carbon trading, and actions taken to implement the paper.

Additionally, there is a lack of clarity about how the data collection under the Climate Change Act would interact with the existing data collection under the National Sustainability Reporting Framework (NSRF), which addresses the use of the IFRS (International Financial Reporting Standards) Sustainability Disclosure Standards issued by the International Sustainability Standards Board (ISSB).

The NSRF, launched in September, mandates sustainability reporting according to the ISSB standards for Main Market and ACE Market public-listed companies and large non-listed companies.

Large non-listed companies with an annual revenue of RM2 billion and above will have to prepare sustainability reports for the first time from 2027 onwards. Public-listed companies, which are already required to prepare sustainability reports by Bursa Malaysia, will prepare ISSB-aligned reports from 2025 onwards.

The climate change bill should also be crafted to have a real impact on the ground and made accessible to the public. According to Ajoeni, civil society has called for a focus on procedural rights. That means providing people with mechanisms to complain whenever there are projects in their area that affect them.

“There have been many instances of communities — for example, the Orang Asli — complaining about energy transition projects like mega dams. We know energy transition projects like mega dams are part of our energy transition project to go greener and move away from fossil fuels. It is renewable energy, but then is it responsible?” asks Ajoeni.

The draft bill does not have redress and complaint mechanisms for people to complain against energy transition projects that are deemed good for the country. It poses a challenge for communities to take legal action against those projects and will have to get a public prosecutor before initiating any legal proceedings.

“So, that’s another [extra mile] for the people to take if they want to make a complaint. But for the government or anyone working under the Ruupin, they would have immunity,” says Ajoeni.

Something to learn from is the Philippine Climate Change Act of 2009, which mandates local government adaptation plans with federal support and emphasises community participation in decision-making. This holistic approach is crucial for ensuring the effectiveness of climate action, she says.

There are also calls for better institutional arrangements such as establishing a climate change commission that is independent of NRES. The commission will monitor the progress, ensure compliance and enforce the Act’s provisions to strengthen accountability in climate governance.

The climate change commission can aid in further regulatory issues such as the standards of data and reporting mechanisms as well. The commission can consist of experts, civil societies and governmental bodies such as the Human Rights Commission of Malaysia.

“One of the hardest things is lobbying with the industries but they did seem enthusiastic and want to help,” says Ajoeni.

Another challenge is garnering inter-ministerial support. The Act will require funding and support from other ministries.

“How are they going to talk with other ministries about this? KAMY has had the experience of talking to the Ministry of Women, Family and Community Development (KPWKM) and NRES before this, and it’s like playing ping pong because all of them have different understandings of climate, let alone a Climate Change Act,” says Ajoeni.

KAMY is also advocating for the Ruupin to fulfil its United Nations Framework Convention on Climate Change (UNFCCC) obligation to elect a national gender and climate change focal point.

The National Gender and Climate Focal Point under the UNFCCC is a designated role within a country’s climate governance framework aimed at integrating gender considerations into climate policies and decision making.

“Discussions on women and climate on an international level is a huge topic right now. Everyone in Southeast Asia is there in COP negotiations talking about gender and climate but Malaysia is never there,” says Ajoeni.

She adds that it has been a bit challenging to raise awareness about the bill because the public also doesn’t understand why it is important to them. Issues like carbon markets can be very complex for the ordinary people to understand, and the impact it has on certain communities is oftentimes overlooked.

“Their land is not being taken away but taken over by carbon projects. There is no clear benefit sharing terms with the communities. I have seen this as well on the ground working with the Orang Asli communities,” says Ajoeni.

The Act should establish a permanent and independent platform for public engagement, similar to a climate change board or consultative panel that can advise the government.

Another suggestion by some civil society organisations is to start climate budget tagging. The United Nations Development Programme has presented a sustainable development goals budget-tagging methodology to measure and strengthen countries’ SDG financing diagnostics.

“I think in terms of climate finance, this will be a major thing because we need a lot of money to transition. Based on the National Energy Transition Roadmap, RM1.3 trillion is needed in the next decade for energy transition and Malaysia cannot do it alone,” says Ajoeni.

The call for a climate budget tag is to provide more transparency and accountability across all government ministries and initiatives and reporting of climate-related expenditures and financial allocations.

“In Southeast Asia, Malaysia is one of the countries that received the lowest climate finance on an international level. Indonesia and the Philippines — those two countries are clawing for international climate finance and they have the best negotiators working on this. But where is Malaysia in this?” says Ajoeni.

The bill does mention the creation of a national climate fund where the funding sources include government budget allocations, fees from carbon trading and project accreditation, consultancy services, international financing, and philanthropy.

“The carbon tax [can be part of the funding stream], that’s the positive thing. They specified it will be used for research and for low-carbon initiatives. It will support low-carbon transition [such as] training for SMEs if they want to go reporting or re-skilling workers who are vulnerable to transition,” says Ahmad Afandi.

Banks and private sectors are already moving fast in their climate financing strategies. “It’s great that they are moving fast but at the same time it’s really concerning because their target would be profits and if the government comes later in this, then the public participation aspect and the human rights aspect would be lacking,” says Ajoeni.

One of the big unanswered questions in the bill is the proposed establishment of a domestic emissions trading scheme (ETS). There must be clear and detailed guidelines on the impact of ETS for businesses and on how it relates to the carbon tax that the Malaysian government is planning to introduce in 2026 for certain sectors.

“The carbon tax is currently covering iron, steel and energy. So if the ETS is going to happen and it’s open for consultation, it should not be overlapping,” says Hiro Chai, founder and director of Mitsusho Sdn Bhd (Decarbonisation Clinic), which provides consulting services on carbon credit development and carbon offsetting for corporations.

The introduction of a domestic ETS will present opportunities for a diverse carbon trading market and complement the currently available voluntary carbon market.

“We call it [a hybrid carbon market]. With the compliance market, you can push some of the voluntary projects to come up. At the same time, voluntary carbon projects can also help reduce some of the carbon intensive sector to offset a portion of their compliance costs,” says Chai.

However, rationalising subsidies is crucial before an ETS can be implemented. This is because subsidies can counteract the effects of an ETS by supporting carbon-intensive activities.

“The establishment of a domestic ETS will also have to align with state carbon policy, especially in Sarawak and Sabah,” says Chai.

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