Focus on developing domestic carbon market, not rush into contracts with foreign entities
22 Dec 2021
By Wartawan Nabalu News
KOTA KINABALU: Kota Kinabalu MP Chan Foong Hin has urged Sabah Deputy Minister Datuk Dr Jeffrey Kitingan to first get the house rules clean by getting the Sabah government involved in the development of the single domestic platform market instead of blindly bulldozing the Nature Conservation Agreement (NCA).
The agreement was signed on Oct 30 silently, in a rush and without due consultation, he said.
“To put it simply, the domestic carbon market is basically a market where Malaysian companies producing excessive carbon (like those in the energy sector i.e. Petronas, etc) pay state governments (or owners of the forests), or whoever maintains their forest that takes in carbon dioxide, thus offsetting the carbon produced by these companies.
“With all these latest developments, what’s the role of state government, especially Sabah and Sarawak in deciding the policy framework for carbon trading?
“Under the Ninth Schedule of the Malaysian Constitution, Forests is under the State List. This means States have the exclusive rights to deal with their forests and derive revenue from them, including granting logging concessions. The question is then can the federal government create laws to dictate and regulate forest derived carbon trading?” he said in a statement today.
Chan also questioned whether the Sabah and Sarawak governments will just blindly take in whatever the rules formulated, decided and imposed by the federal government.
“That cannot be the way. For example, it would make no financial sense for a state government to confine within the domestic market when it can sell its carbon credit to other foreign companies at a higher price than that offered by domestic companies.
“As such, I wish to call upon the Sabah (and also Sarawak) Government to stop being passive but to take an active part in the ongoing development of this “single platform for domestic carbon trading” as announced by the federal government in parliament as the majority of these Class 1 forest involved in this carbon trading are in fact located in Sabah & Sarawak.
“Without these Class 1 forests in Sabah & Sarawak, there would in fact be near to no market for carbon offset trading with anyone in the first place, and as such the Sabah & Sarawak government as guardians of the forests ought to be more involved in the development of this platform and be a part of it (join the board of directors, etc) so that they can ensure the price tag of the carbon offset would be indeed the global market price and not dictated by the federal government.”
Chan said this to refer to the answer given by the Deputy Minister of Energy and Natural Resources (KeTSA) Datuk Ali Biju recently on Dec 15 in parliament’s special chambers where he stated that there is already in place the National Guidance on Forest Carbon Market issued by the ministry which outlines the requirement for all state governments to report on forest carbon market activities by the state government.
“The Deputy Minister further stated that the Sabah Government had failed to comply with the said guideline when the ministry was not notified of the signing of the ‘Nature Conservation Agreement’ with Singaporean company Hoch Standard Pte Ltd.
“The requirement for notification is to ensure no double counting takes place when accounting for the forest sector’s emission reductions, which will be reported in the Biennial Update Report (BUR) and/or the Biennial Transparency Report (BTR) to the United Nations Framework Convention on Climate Change (UNFCCC).
“The reporting is also to ensure Malaysia achieve the commitments made at the United Nations (UN) Climate Change Conference 2021 (COP26) concluded in Glasgow regarding rules governing international carbon markets, transparency of emissions reporting, common timeframe for the Nationally Determined Contributions (NDC) and climate finance.
“Next is the announcement by federal Environment and Water (KASA) Minister Datuk Seri Tuan Ibrahim Tuan Man stating that a single platform for domestic carbon trading is being developed through cooperation among KASA, the federal Ministry of Finance and Bursa Malaysia Berhad. The Minister further added that this domestic carbon market platform is developed in phases firstly through a voluntary carbon market, and then moving on to a Domestic Emissions Trading Scheme.
“Datuk Seri Zaini Ujang, secretary-general of KASA, stated that in COP26, participants (including Malaysia) agreed to no double-counting of carbon offsets. Furthermore, under the Domestic Emissions Trading Scheme and voluntary carbon market, the federal government will only allow 1% (of carbon offsets generated) to be sold abroad and the rest is for local (companies).”