Carbon pricing, trading, and taxation are crucial aspects of the decarbonisation agenda, says Malaysia’s Ministry of Investment, Trade and Industry (MITI).

Deputy minister Liew Ching Tong said during the launching ceremony of the Malaysian Iron and Steel Industry Federation (MISIF) report on the status and outlook of the national iron and steel industry, attended by Kallanish, that Malaysia will have to start pricing carbon to facilitate carbon trading, and at some point look at carbon taxes.

"These collections should then be channelled into green investment, including the investment into green steel," he noted.

The EU will commence the imposition of a carbon border adjustment mechanism (CBAM) in 2026. Under CBAM, the export of steel and another five listed items from Malaysia will be taxed by the EU, unless Malaysia collects carbon taxes, he noted.

Until 2014, Malaysia produced steel entirely through electric arc furnaces, which emit less carbon. But in 2022, 72% of steel was produced through converters fed by blast furnaces, he added.

"If Malaysia aspires to push for net zero, we need a holistic and thorough mitigation and transition plan for the steel industry," he opined.

During the speech, MISIF president Lim Hong Thye highlighted that the journey towards decarbonisation in Malaysia is long, arduous, and fraught with challenges.

"Due to their experimental nature, none of the strategies is fully matured with proven and commercially viable technology, posing significant risks for industry players to adopt without clear benefits," he commented.

However, he added it is imperative for the industry to proactively engage and leverage all available support to enhance green initiatives and align with the government’s aspirations.