This article first appeared in Forum, The Edge Malaysia Weekly on December 16, 2024 - December 22, 2024

As Malaysia continues to grow, the country faces the dual challenge of advancing economic development while addressing the urgent need to mitigate climate change. To navigate this complexity, the National Energy Transition Roadmap (NETR) and the New Industrial Master Plan (NIMP 2030) have laid the foundation for a low-carbon future. Among the key strategies highlighted in these plans is the deployment of carbon capture, utilisation and storage (CCUS) technology, which plays a crucial role in reducing greenhouse gas (GHG) emissions, particularly in hard to abate sectors such as heavy industry, manufacturing and petrochemicals.

While renewable energy and energy efficiency are integral to reducing carbon emissions in the power sector, CCUS is essential to help decarbonise industries that have little to no alternatives. By capturing CO2 emissions at source and either utilising or permanently storing them, CCUS offers a viable solution to curb emissions from processes such as cement production, steel manufacturing and chemical refining — industries that are key to the country’s economic growth but pose significant challenges for decarbonisation. Through its focus on CCUS, Malaysia can maintain industrial competitiveness while transitioning to a more sustainable, low-carbon economy.

The NETR complements these efforts by outlining a strategic framework that integrates CCUS into the broader decarbonisation strategy, ensuring alignment with national climate goals. Additionally, the importance of CCUS is also highlighted in NIMP 2030, which identifies it as one of the four new growth areas. Under Mission 3-Push for Net Zero, Malaysia plans to develop CCUS as a new sector, and it has also been recognised as a promising breakthrough solution for carbon management, especially in sectors that are challenging to decarbonise. Together, the NIMP 2030 and NETR position CCUS as a pivotal element in driving sustainable economic growth while effectively addressing climate change.

These energy and hard to abate sectors contribute significantly — accounting for 70% of the country’s total GHG emissions. However, they also contribute 28% to gross domestic product (GDP) and employ 25% of the nation’s workforce. These figures underscore the necessity for the country to navigate a path that balances reducing emissions with sustaining economic growth, striving to achieve both goals without one undermining the other. Decarbonising these sectors is essential, not only for protecting the environment but also for ensuring sustained prosperity.

Successfully implementing the strategies outlined in the NETR has the potential to transform the economy, increasing GDP from RM25 billion in 2023 to an astounding RM220 billion by 2050, while creating approximately 310,000 new jobs. Likewise, the NIMP 2030 aspires to drive economic growth forward, boosting GDP by 6.5% by 2030, contributing significantly to economic growth and job creation. Undoubtedly, the prime beneficiary to the successful implementation of CCUS in Malaysia will be the nation and its people.

The adoption of CCUS has been met with hesitation and unease from civil society organisations and non-governmental organisations, with certain groups expressing concerns about recognising CCUS solely as a decarbonisation lever. However, it is important to emphasise that CCUS is just one of the six key levers identified in the development of the NETR. While addressing climate change, as proposed by environmentalists, often focuses on natural and policy-driven solutions, a technological approach is crucial for achieving faster results, especially in sectors where emissions are hardest to mitigate. CCUS serves as one of the six energy transition levers to fully decarbonise the economy, particularly needed for the hard to abate sectors, while also enabling new sources of growth.

According to Petroliam Nasional Bhd, it is estimated that CCUS alone could collectively increase the country’s gross value added by US$200 billion to US$250 billion, cumulative up to 2050, and create up to 200,000 direct and indirect jobs at its peak. Alongside economic growth via CO2 utilisation, by using CO2 to produce cured concrete and e-fuels, CCUS could take the driver’s seat in steering the growth of new industries like blue hydrogen and blue ammonia.

Ultimately, this demonstrates that CCUS is a technology that not only fuels synergy between existing and emerging industries, but could also become a powerful engine for new growth in Malaysia’s low-carbon economy.

As global demand for sustainable practices increases, CCUS projects are becoming important links to the new circular economy. Currently, CO2 is used in various industries to produce carbonated drinks, fire extinguishers and dry ice. However, new and innovative uses for CO2 are emerging, as can be seen in the production of synthetic fuels, cosmetics, carbon fibre and concrete curing. These technologies are still in the research phase, but they have the potential to be commercially viable within the next decade.

In early 2023, the global market indicated that approximately 27 million tonnes per annum of CO2 capture capacity, driven by CCUS projects, is targeting CO2 utilisation as a key end use in commercial CCUS. This reflects a 37% growth in new CCUS project announcements. For additional clarity, these figures do not include the use of CO2 in enhanced hydrocarbon recovery. Approximately 40% of the total were key projects in the fuel production sector, followed by building material projects, including concrete production, at 22%. Other sectors include the food and beverage industry (14%), chemical production (10%), various products (8%) and other industrial products (6%).

Therefore, it is anticipated that the utilisation of CO2 will gain momentum, driven by the accelerating push for decarbonisation and sustainable business practices. Malaysia must be ready to lay the groundwork and build the infrastructure needed to unlock CO2 as a new catalyst for growth.

Malaysian government initiatives set the foundation for CCUS projects to thrive, aligned with internationally recognised standards.

In response to the global climate crisis, Malaysia is also charting a bold course towards a more resilient and sustainable future. The government is taking a comprehensive, whole-of-government approach to the development and deployment of CCUS initiative. This initiative involves coordinated efforts across multiple ministries, each playing a distinct role in ensuring the success of the CCUS initiative.

On Aug 30, 2023, the cabinet recognised CCUS as a new source of economic growth. The initiative to facilitate the development of CCUS will be spearheaded by the Ministry of Economy.

In the most recent development, on May 21, 2024, one of the cabinet’s decisions is the development of the CCUS Bill which aims to facilitate the adoption of CCUS technology in Malaysia. But how does this bill navigate the tightrope between achieving ambitious climate goals and spurring economic growth? The answer is in its thoughtful design, aimed at harmonising the country’s climate objectives with the need to promote economic advancement.

Simultaneously, the Ministry of Natural Resources and Environmental Sustainability (NRES) is currently developing the National Climate Change Act (RUUPIN), which aims to regulate and reduce GHG emissions, including CO2. Alongside this, NRES is also working on a national carbon market policy which includes compliance and voluntary mechanisms to support emissions reduction efforts.

In the recent Budget 2025 announcement, the prime minister outlined plans to implement a carbon tax targeting key sectors such as iron, steel and energy by 2026. This initiative is designed to encourage the adoption of low-carbon technologies and aligns with the broader commitment to achieving net zero emissions by 2050.

The CCUS Bill can be seen as a crucial component of the strategy, supporting RUUPIN in the pursuit of net zero GHG emissions by 2050, as well as meeting Malaysia’s Nationally Determined Contribution target of a 45% reduction in carbon intensity by 2030. Furthermore, the formulation of the CCUS Bill will help attract international investments and ensure that Malaysia’s industries remain competitive in a sustainable and low-carbon economy.

By aligning with internationally recognised standards, Malaysia can ensure the safety and viability of all CCUS projects while managing risks and liabilities effectively. This approach will help build a more resilient and sustainable future for the country.

As the country navigates the challenges of climate change, CCUS will play a critical role in achieving its environmental and economic goals. The urgency of addressing global warming and climate change requires collective action and shared responsibility, not just within the country, but across the region and the world. Having been blessed with significant geological storage potential, Malaysia is well-positioned to contribute to the regional climate solutions by physically removing large volumes of GHG especially from the hard to abate sectors. By embracing CCUS, Malaysia can ensure that its economic growth is sustainable, providing a better future for all its citizens.

Datuk Nor Azmie Diron is the secretary-general of the Ministry of Economy

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