Sarawak to introduce carbon levy for oil and gas, energy sectors

THE Sarawak government will introduce a carbon levy framework for the oil and gas and energy sectors, with revenue channelled into the Sarawak Climate Change Fund to finance climate projects.

Premier Datuk Patinggi Tan Sri Abang Johari Tun Openg said the framework would ensure emitters bore their fair share of responsibility in line with global standards.

“This is not punitive. It is pragmatic. It is consistent with Malaysia’s broader trajectory, as the federal government prepares to introduce a national carbon tax mechanism,” he said when tabling the Supply (2027) Bill, 2026 on Monday (Oct 12).

To support its implementation, Abang Johari said RM10 million would be allocated next year for Phase 2 of the Greenhouse Gas Management System (GHGMS), out of RM20 million provided under the 13th Malaysia Plan (13MP).

He said the system would ensure every tonne of carbon emitted in Sarawak was accounted for, monitored and managed.

“This system will be the digital engine of our climate governance. It will strengthen Measurement, Reporting and Verification (MRV), and it will operationalise the carbon levy, carbon credit management, and carbon registry,” he said.

Abang Johari said the Environment (Reduction of Greenhouse Gases Emission) Ordinance, 2023, which came into force on March 1, 2024, provided the legal foundation for Sarawak’s carbon markets and climate governance.

At the same time, he said another RM600,000 would be allocated next year to strengthen institutional capacity and operational readiness, as part of a RM2 million allocation under 13MP.

“A law is only as strong as its enforcement,” he said, stressing the need to ensure Sarawak’s institutions could deliver on its net-zero commitment.

Abang Johari said Sarawak’s transition towards a low-carbon economy supported the national net-zero emissions target by 2050 and its commitments under the Post COVID-19 Development Strategy 2030.

“This is not merely an environmental aspiration. It is a strategy for growth, for prosperity, and for resilience.

“It is an opportunity to attract new industries, secure fresh investments, and safeguard the integrity of our land, our rivers, and our seas for generations to come,” he added.