Kuala Lumpur: The carbon capture, utilisation and storage (CCUS) sector could bring about opportunities in new areas of growth for Malaysia, especially with the passing of the Carbon Capture, Utilisation and Storage (CCUS) Bill 2025 in the Dewan Rakyat.
Kenanga Investment Bank Bhd (Kenanga IB) noted that the CCUS hubs planned in Terengganu and Pahang are expected to help spur the growth of heavy industries such as iron, steel and cement which need carbon mitigation measures.
This would attract investment interest from countries such as Japan and South Korea, which need to meet their emission reduction targets, it added.
“Globally, carbon capture storage (CCS) costs vary widely, ranging from US$15 to US$120 per tonne. There is no clarity yet on CCS cost in Malaysia.
“Pending details of the carbon tax rate, some Malaysian companies are implementing internal carbon pricing for an estimate on their carbon cost such as Petronas at US$50 per tonne, CIMB (RM70 per tonne), Sunway (RM15 per tonne) up until 2024,” Kenanga IB said in a research note on Friday.
The CCUS Bill 2025 seeks to regulate and promote CCUS technologies, which are part of Malaysia’s multipronged strategy to address climate change and drive economic growth in new areas, in line with 2023’s National Energy Transition Roadmap (NETR).
Targeted to be enforced by March 31, 2025, the Bill applies to Peninsular Malaysia and Labuan only, excluding Sarawak and Sabah.
Kenanga IB viewed that the exclusion of both Borneo states from the Bill is likely due to Sarawak’s established regulatory framework in carbon-related activities such as storage and trading, hence, avoiding overlapping or conflict which could delay and dampen Malaysia’s CCUS development and opportunities.
“It is clear that Sarawak is way ahead in terms of carbon-ready legislation, a strong indication of its commitment to a low-carbon economy.
“With Kasawari scheduled to begin operations by end-2025, the state government is ready for the first CO2 injection by 2026, paving the way for the state to become a regional hub,” it added.
Kenanga IB said the National Climate Change Bill is a much-awaited next step, with many hoping to obtain clarity on a carbon policy that spells out, among others, carbon tax, cross-border carbon trading, and carbon project development regulations.
“Without an effective carbon tax mechanism, there is little incentive to drive mitigation projects such as CCUS,” it added.
Malaysia’s parliament on Thursday passed legislation intended to help the country become a “global leader” in carbon capture, utilisation and storage—a technology touted as reducing planet-warming emissions.
The bill provides a legal framework for the so-called CCUS, which the Southeast Asian nation says could be a key economic driver, worth up to $250 billion and the source of hundreds of thousands of jobs by 2050.
CCUS seeks to eliminate emissions created by burning fossil fuels for energy and from industrial processes.
The carbon is captured at source and stored permanently in various underground environments.
It has been promoted by emitting sectors including heavy industry and the oil and gas sector, and has backing from the United Nation’s key scientific panel on climate change as a solution for difficult to decarbonise industries.
However, some scientists and environmentalists view it as a licence to continue burning fossil fuels and cite doubts over its effectiveness, given its cost and complexity.
Malaysia’s Economy Minister Rafizi Ramli said the bill would help the country address climate change, while strengthening its position as a “regional frontrunner in low-carbon technologies.”
CCUS offers a “new source of economic growth,” he added.
“This will enable Malaysia to become a global leader in CCUS because, at present, only Norway has successfully implemented it effectively.”
Malaysia argues it is particularly well-placed for CCUS, in part because of an abundance of depleted oil reservoirs to store captured carbon dioxide.
The bill’s regulations on the import and permanent storage of carbon dioxide in offshore areas come into force from March 31.
However, it will only apply to Peninsular Malaysia and the Federal Territory of Labuan—off the coast of the Malaysian portion of Borneo Island.
The eastern states of Sabah and Sarawak requested to be excluded as part of a broader push for greater economic autonomy.
