Carbon Credits

The Bursa Carbon Exchange (BCX) is Malaysia's voluntary carbon market exchange, launched by Bursa Malaysia in December 2022. It is marketed as the world's first shariah-compliant carbon exchange, which means its structure and contracts are designed to meet Islamic capital market principles.

On BCX, the unit of trade is a standardised carbon credit contract. One contract represents one tonne of carbon dioxide equivalent (1 tCO2e) that a project has either avoided emitting or removed from the atmosphere. Buyers use these credits to offset emissions they cannot yet cut directly, then retire the credits to make an offsetting claim.

BCX supports three modes of trading:

The exchange lists both internationally sourced credits and Malaysian-origin credits. Internationally sourced products include the Global Technology-Based Carbon Contract (GTC) and the Global Nature-Based Plus Carbon Contract (GNC+), which bundle verified credits so corporate buyers do not have to hand-pick individual projects.

BCX has run several auctions since launch, and the outcomes give the clearest picture of what Malaysian carbon credits actually cost.

The Kuamut project covers 83,381 hectares in Sabah with an estimated annual emission reduction of around 800,000 tonnes of carbon dioxide equivalent, and holds Gold Level for Climate under the Climate, Community and Biodiversity (CCB) Standards. The June 2025 Monsoon auction was the first sale of Malaysian technology-based credits, and clearing above reserve signalled corporate appetite for locally generated units.

Auction prices in the RM40 to RM50 range sit below premium international removal credits and reflect early-stage, thin market conditions. Prices move with project type, vintage, and verification standard, and a handful of auction results is a limited basis for judging where prices settle over time.

Access to BCX is limited. Buyers and sellers must be incorporated entities, whether local or foreign. That includes commodity traders and brokers, financial institutions, project developers, and corporates. Individuals and retail investors cannot open a BCX trading account in their own name.

BCX has classes of market participants:

Onboarding involves registering through the BCX microsite and meeting eligibility criteria under the BCX Rules. There is a standard onboarding fee of around RM6,000, which BCX has waived during promotional periods to encourage registration.

For an ordinary Malaysian, direct participation is effectively closed. The realistic ways an individual touches this market are indirect: buying a small voluntary offset through a consumer app or airline programme, holding shares or funds exposed to companies with carbon strategies, or supporting the market through employer purchases. There is no BCX equivalent of a retail brokerage account, and no listed retail carbon credit product on the local exchange.

Malaysia's carbon market sits inside a broader climate policy stack.

The headline target is net-zero greenhouse gas emissions by 2050. Under its updated (second) Nationally Determined Contribution (NDC), submitted in July 2021, Malaysia committed to cutting economy-wide carbon intensity against GDP by 45% by 2030 compared with 2005 levels, with the full 45% unconditional. This raised ambition from the original 2015 submission, which had split the same 45% into 35 percentage points unconditional and 10 percentage points conditional on climate finance, technology transfer, and capacity-building from developed countries.

In October 2025 Malaysia submitted its third NDC, which moves toward an economy-wide absolute emissions target covering all seven greenhouse gases. It aims to peak emissions by 2030 and reduce 15 to 30 MtCO2eq by 2035 from peak levels (roughly 20 MtCO2eq unconditional and 10 MtCO2eq conditional on international support). This is a shift away from an intensity-only measure toward an absolute cap.

Supporting frameworks include the National Carbon Market Policy (Dasar Pasaran Karbon Kebangsaan, or DPKK) and the forthcoming Climate Change Bill (RUUPIN), which is intended to give the carbon tax and market mechanisms a legal foundation. These pieces are still being finalised as of 2026.

The most significant near-term change is the carbon tax. Announced by Prime Minister and Finance Minister Anwar Ibrahim in the Budget 2025 speech in October 2024, it is planned to take effect in 2026 and to apply first to the iron, steel, and energy sectors.

The rate has not been formally confirmed. A widely cited proposed figure is RM15 per tonne of carbon dioxide equivalent, while some earlier estimates ranged from RM35 to RM45. Kenanga Research analysis suggested that at a RM15 rate, most companies in affected sectors could see profitability decline by at least 5%, with the impact rising sharply for emissions-intensive firms at higher carbon prices. Revenue is intended to fund green research and low-carbon technology programmes.

The timing connects to trade. The EU Carbon Border Adjustment Mechanism (CBAM) will charge importers for the embedded carbon in goods such as iron and steel. A domestic Malaysian carbon price lets exporters pay at home rather than surrender the value to the EU, which is part of the rationale for starting with those sectors. The tax may later extend to other CBAM-exposed sectors such as cement, aluminium, fertiliser, and hydrogen.

As of mid-2026, final details including the exact rate, sector coverage, and compliance thresholds had not been formally gazetted, and businesses were advised to treat published rate figures as indicative.

For companies, the practical path is: measure emissions, cut what can be cut, then use credits for the residual. Engaging with BCX means registering as an incorporated participant, onboarding under the BCX Rules, and buying either international standardised contracts (GTC, GNC+) or Malaysian project credits through auction, continuous trading, or off-market deals. Companies in iron, steel, and energy should also model the carbon tax into their cost base ahead of 2026.

For individuals, honest options are narrow:

Credit quality is the central risk in voluntary offsets. Not every credit represents a permanent, additional, independently verified reduction, and offset claims have drawn scrutiny globally. Treat consumer offsets as a supplement to actually reducing your own emissions, and check the underlying standard and verifier before paying. This guide is general information and does not recommend any purchase; consider licensed advice before acting.