To bring further value to smallholders in oil palm plantations, Malaysia must now unlock a new dimension of opportunity – carbon credit generation from oil palm cultivation.
According to Federal Land Development Authority (Felda) chairman Datuk Seri Ahmad Shabery Cheek, the agency envisions a system similar to a Malaysia Emission Reduction Unit (Meru), designed specifically for nature-based carbon credits from sustainable oil palm practices.
He also proposed the establishment of a national task force at the governmental level – led by the Ministry of Natural Resources, Environment and Sustainability (NRES) – to look into this.
“Across the region, we are seeing strong signals of market readiness. Regional governments have begun formalising their carbon market frameworks and registries. Asean initiatives are exploring carbon credit recognition from sustainable oil palm plantations, while international partners have expressed growing interest in purchasing Asean-based carbon credits, showing that sustainable palm oil can indeed become a legitimate source of emission reduction value,” said Ahmad Shabery.
“These developments illustrate that the time is right for Malaysia to formalise its own oil palm-based carbon credit framework.”
Speaking at the 2nd Unlocking Revenue and Sustainability: Exploring Carbon Credit Opportunities in the Palm Oil Industry 2025 in Genting Highlands, Pahang this morning, Ahmad Shabery added that building upon the foundation of the Malaysia Sustainable Palm Oil (MSPO) certification scheme, Malaysia can introduce a Carbon Enhancement Protocol, transforming it into MSPO 3.0 – a version that integrates carbon accounting and crediting mechanisms into the certification process.
“It has been reported that oil palm plantations can absorb between 36 to 40 tonnes of CO₂ equivalent per hectare per year through photosynthesis and biomass growth. Imagine what 5.67 million hectares of oil palm plantation can sequestrate. Likewise, a national fertiliser policy that promotes efficient nutrient management and low-emission fertilisers can complement these efforts – reducing emissions, increasing yields, and enhancing profitability for smallholders.
“Malaysia is also moving forward with its carbon market system, targeting high-emission sectors such as electricity, iron and steel. In this context, the proposed Meru can serve as a bridge – enabling these heavy emitters to offset their emissions by purchasing certified carbon credits from oil palm plantations.
“This would create a win-win scenario. Large industries can meet their compliance or voluntary offset needs. Smallholders receive financial incentives for sustainable practices, and Malaysia can advance its national decarbonisation goals while uplifting rural communities.”
He said that once a local system is recognised and traded, the credits will embody both pillars of Malaysia’s Asean vision – sustainability and inclusivity. Malaysia promoted the theme ‘Inclusivity and Sustainability’ as chair of Asean this year.
“Therefore, I would like to propose the establishment of a national task force at the governmental level – led by the Ministry of Natural Resources, Environment and Sustainability, with MGTC (Malaysian Green Technology and Climate Change Corporation) or Bursa Malaysia serving as the operator of the national carbon registry; the Malaysian Palm Oil Board acting as the technical authority and methodology developer for oil palm-based carbon standards; and Sirim, through Sirim QAS International, functioning as the accredited certification and verification body,” he said.
Twentytwo13, on Dec 1, highlighted that Malaysia is a global titan in palm oil production but remains a rule-taker rather than a rule-maker in the burgeoning carbon credit market.
This was the talking point among local players on the sidelines of the International Palm Oil Congress and Exhibition held at the Kuala Lumpur Convention Centre last month.
For domestic players, the frustration is palpable. They champion the industry but when it comes to monetising the carbon stored in the nation’s oil palms, they are forced to look West for approval. Europe has been critical of palm oil producers in this region, citing environmental concerns.
