@ green | March-April , 2022
Cartoon by Bjorn Bull Hansen , IEN Consultants
Carbon tax projections for Malaysia
GIV AGT ...
BY GREGERS REIMANN
Carbon taxation could be introduced without financially burdening the low-income segment of the population
THE Singapore government recently announced a 10-fold increase in the carbon tax over eight to 10 years . Notably , Singapore was the first country in Southeast Asia to introduce a carbon tax in 2019 .
The question is , will Malaysia and other countries follow ? And are the proposed carbon tax rates high enough ?
Graph 1 shows that even though Singapore plans to ramp up its carbon tax by 2030 drastically , it falls short of the polluters pay principle , as Singapore ’ s social cost of carbon ( SSC ) at RM230 per tonne CO2eq exceeds the proposed carbon tax .
In the case of Malaysia , which currently has no carbon tax in place , one may refer to the recommendations of a detailed carbon tax study published by Darshan Joshi from the Penang Institute in 2019 .
The study recommends a gradual ramping up of the carbon tax to RM150 per tonne CO2eq by 2028 , which would match the social cost of carbon in Malaysia . Interestingly , the study also showed that carbon taxation could be introduced without financially burdening the lowincome segment of the population through the mechanism of targeted subsidies .
The study concluded that “ carbon pricing can put Malaysia on the path towards long-term sustainability with few consequential costs in the near future and monumental benefits in the long run ”.
Another factor that will spur the adoption of carbon taxation is introducing a carbon border adjustment mechanism by the European Union . This is a carbonpricing system for imports to the EU . The aim is to adjust the price of imported products to the amount of CO2 emissions incorporated in them , to equalise the cost of carbon between EU products and these imports .
For countries exporting to the EU , it might make better economic sense to match their domestic carbon tax to that of EU , thereby keeping the carbon tax revenues within their own country instead of paying them to the EU at the border . The carbon border adjustment mechanism will take effect in 2026 and is part of the European Green Deal to make the EU carbon neutral by 2050 .
IEA recommends ramping up rates
Looking towards 2050 , when most developed nations have pledged to achieve zero carbon emissions , the International Energy Agency ( IEA ) has made the following recommendations for ramping up the carbon tax rates to ensure that the world achieves Zero Carbon emissions in 2050 .
By 2025 , the IEA recommends a carbon tax for developing and advanced economies of RM188 and RM314 per tonne CO2eq , respectively . By 2050 , the IEA recommends a carbon tax for developing and developed economies of a whopping RM836 and RM1045 per tonne CO2eq , respectively .
At first glance , the carbon taxation rates in Graph 2 might seem excessive or even radical .
However , when one realises that the world is on the brink of an irreversible climate crisis that poses an existential threat to humanity and that business-as-usual carbon emissions from fossil fuels are the root cause of the climate catastrophe , it becomes clear that the decision not to tax carbon pollution is the radical position - and not the other way around .
In other words , we should all get ready to implement substantial carbon taxation - and the sooner it happens , the better . Otherwise , we have to answer to our kids , grandkids and future generations . Or , as the UN Secretary-General Antonio Guterres recently formulated it : “ The abdication of [ climate ] leadership is criminal .” — @ Green
Gregers Reimann is from IEN Consultants Sdn Bhd - a pioneering green building consultancy in Malaysia specialising in energy-efficient and healthy buildings .