The Case for Stronger Climate Policies in Malaysia: Electricity, Transport, and the Need for a Carbon Tax

A recent report published by the Intergovernmental Panel on Climate Change (IPCC) reiterated the dangers of a 1.5˚C increase in the Earth’s average surface temperature over preindustrial times. Yet, even a global fulfilment of the nationally-determined emissions reductions pledges as per the Paris Accord would still likely see temperatures rise by between 2.6 and 3.2˚C, at best. The upshot of this is that what we are willing to do, for the time being, is still far from enough to limit the sort of dangerous warming that will almost certainly have drastically negative economic impacts on both our country and planet. We need to do more.

In the context of Malaysia, the electricity and transport sectors are routinely responsible for over half of national emissions annually, and offer opportunities for strong climate action moving forward. At the heart of any sustainable solution is an increased emphasis on renewable energy (RE). To date, Malaysia’s energy policies have largely failed to encourage a significant uptake of RE; despite billions of ringgit in expenditure shared across the government and the Rakyat, the share of RE in electricity generation stands at roughly 3%. Emissions from electricity generation increased by 465% between 1990 and 2011, owing largely to the nation’s growing reliance on coal.

Greening the electricity grid will have benefits that spill over to the transport sector over the coming decades, as vehicle fleets electrify. This is one avenue through which emissions can be cut in personal transport. At the same time, Malaysia must continue its focus on improving public transport networks, and encouraging their use, in densely-populated areas of the country, as these modes of transportation are considerably more environmentally-friendly than personal vehicles.

A regular feature of IPCC reports, including this latest one, is a call for carbon pricing. From an economic perspective, putting a price on carbon is a critical part of the ideal response to climate change, as it solves the issues of emissions as a ‘negative externality’, and the atmosphere as a ‘public good’. In addition to its effect of levelling the playing field between renewables and fossil fuels, a tax on carbon has the potential to spur emissions reductions, alleviate the burdens of Malaysia’s current budgetary crisis, improve the welfare of Malaysians, and fund other sustainable initiatives. It is a policy mechanism that the Pakatan Harapan government should give serious consideration to as it presses on with its sustainability agenda.

Media Statement – The Case for Stronger Climate Policies in Malaysia: Electricity, Transport, and the Need for a Carbon Tax