Bursa, Malaysia Forest Fund team up to promote nature-based carbon credits
- The Edge Malaysia
- 1 day ago
- 4 min read
KUALA LUMPUR (Oct 15): Bursa Malaysia and the Malaysia Forest Fund (MFF) have launched a new collaboration to promote the adoption of Forest Conservation Certificates (FCCs) and Forest Carbon Offsets (FCOs) among corporations.
The FCC is a non-market financial instrument designed to finance conservation and sustainable forest initiatives by channelling collected voluntary funds from the private sector into local forest conservation projects.
Meanwhile, the FCO functions as a carbon credit that can be used by corporations to offset their emissions.
This collaboration was announced by the Minister of Plantation and Commodities and Acting Minister of Natural Resources and Environmental Sustainability Datuk Johari Abdul Ghani, at the Malaysia Carbon Market Forum (MCMF) 2025, held on Wednesday at the W Hotel Kuala Lumpur.
Following the announcement, Johari oversaw the exchange of the memorandum of collaboration between Bursa and MFF.
Bursa and MFF are also assessing the potential for FCOs to be traded on the Bursa Carbon Exchange, linking Malaysia’s domestic carbon market with the broader global markets.
“Through these initiatives, Malaysia is positioning itself to ensure that carbon markets drive real climate action, attract capital and support inclusive growth both at home and across the region,” said Johari.
“With the right frameworks and a shared commitment, Asean has the potential to become a global leader in climate-aligned development and Malaysia is ready to do its part.”
Johari added that the National Climate Change Bill (RUUPIN) is nearing completion, with the bill expected to be tabled in Parliament soon, although he did not share a timeline. In parallel, the National Carbon Market Policy (DPKK) is also in the process of being finalised.
“[RUUPIN] will serve as the legal backbone of Malaysia’s climate governance, defining institutional roles, reporting duties and compliance mechanisms,” said Johari.
Johari highlighted the DPKK’s role in providing an overarching framework that will set Malaysia’s direction on carbon trading.
“DPKK outlines how we will utilise carbon pricing to support investment, innovation and low-carbon development. Together, RUUPIN and DPKK strengthen Malaysia’s readiness for credible, well-governed carbon markets, while positioning us to integrate meaningfully with regional frameworks.”
Adjusting and adapting ETS plans to meet changing carbon markets
As the MCMF covered topics affecting the carbon markets in the region, countries around Malaysia are taking steps to ensure businesses are further incentivised to reduce their carbon emissions.
James Coombes, manager of the international climate division at the New Zealand Ministry for the Environment, highlighted the current status of New Zealand’s Emissions Trading Scheme (ETS), which has been running since 2008 and has played a huge role in driving down the country’s carbon emissions. Today, New Zealand’s ETS encompasses all sectors, except agriculture.
This was discussed during the MCMF plenary session titled “Emissions Trading Scheme (ETS), lessons learned from Asia Pacific members,” where experts across the region shared their insights and the challenges they face today.
An ETS works through a central authority, selling a limited number of permits that allow companies to discharge a specific amount of a pollutant over a set time period. These companies need to hold permits in an amount equal to their emissions, and if they want to increase their emissions, they must buy more permits from others willing to sell.
New Zealand’s ETS works by requiring businesses to measure and report their GHG emissions, after which they must surrender one emissions unit (NZU) to the government for each tonne of emissions they plan to emit during their operations.
These NZUs are provided through government auctions, and ETS participants can buy and sell NZUs from other businesses, making the price dependent on supply and demand. This allows businesses to make economically efficient choices when it comes to reducing emissions.
The country is looking into how it can regulate the secondary market for NZU, and amend its regulations to enhance NZU trade reporting and set new market conduct standards.
“One key change we made recently was to ensure that the underlying allocated baselines were updated to ensure that they best reflected the actual emissions of our industrial allocation recipients,” added Coombes.
“It had actually been around 10 years since they had been updated, so we knew that there was an oversupply of units for those industries.”
Australia has a different approach in encouraging large carbon emitters to reduce their emissions. Peter Wood, director of the Safeguard Mechanism at the Australian Department of Climate Change, Energy, the Environment and Water (DCCEEW), highlighted the structure of the Safeguard Mechanism as Australia’s form of ETS.
“Safeguard Mechanism ensures Australia's largest carbon emitters have proportional contributions to Australia’s carbon emission targets. It does this by requiring large facilities to keep emissions below limits known as baselines,” explained Wood.
“It applies to facilities of scope one emissions of more than 100,000 tonnes, and it covers around 21% of Australia's initiatives.”
The Safeguard Mechanism is a system in Australia’s ETS that places emission baseline limits on industrial facilities that emit more than 100,000 tonnes of Scope 1 carbon dioxide (CO2) per year.
This mechanism was put in place back in 2016 and by 2023, covered 31% of Australia’s emissions. In 2023, the Australian government reformed the mechanism so that facility emission baselines will decline by 4.9% each year until 2030.
Wood highlighted that companies that manage to keep their emissions below the declining baseline will be given Safeguard Mechanism Credits, which works just like carbon credits.
Edwin Hartanto, head of carbon trading development and new initiatives at the Indonesia Stock Exchange, highlighted how these adjustments are required not just to address changing market standards, but also to accommodate unique sector needs.
Hartanto noted that in Indonesia, different sectors are covered by different ministries. “The grand design is under the Ministry of Environment for the national net-zero target. From there, the Ministry of Environment sets its target for each sector,” said Hartanto.
“For example, the power sectors will be handled by the Ministry of Energy, and the industrial sector will be handled by the Ministry of Industry.”
Read the full article at The Edge
