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BLOOMBERG reported that Malaysia is planning to introduce a carbon tax at an initial rate of RM15/tCO₂e. Discussions are ongoing, and details could still evolve.
Under the proposed mechanism, companies would be allocated specific emission quotas, with those exceeding their limits required to either pay the tax, purchase credits via Malaysia’s carbon exchange, or buy unused quotas from other firms.
However, Minister of Finance II Datuk Seri Amir Hamzah Azizan clarified yesterday that the final rate has yet to be determined. The framework resembles Singapore’s carbon pricing model, where the tax is levied at a fixed rate per tonne of CO₂ equivalent on Scope 1 emissions once a facility exceeds a defined threshold.
Within the power sector, coal and natural gas plants represent the dominant sources of Scope 1 emissions, and would therefore bear the brunt of any carbon tax implementation.
“Encouragingly, under the IBR framework, carbon tax should be fully passed through to consumers, consistent with global practice,” said APEX Securities.
This implies minimal direct earnings impact for regulated utilities. To illustrate the downside risk if pass-through is delayed or disallowed, APEX model a worst-case “no-pass-through” scenario below.
“We expect the proposed carbon tax to be earnings neutral for utilities, as costs are likely to be incorporated into the IBR pass-through mechanism. To mitigate political backlash, we think domestic and low-usage consumers will likely be exempted or subsidised. Under a no-pass-through scenario, we estimate FY26F earnings impact of -10% for TENAGA, -81% for MALAKOF, and -4% for PETGAS,” said APEX.
APEX maintain an Overweight stance on the Power & Utilities sector. The proposed carbon tax should be earnings-neutral in practice. —Nov 7, 2025
Main image: Ambipar Group
The post Govt weighs carbon pricing model similar to Singapore’s framework first appeared on Focus Malaysia.
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