The National Guidance on Voluntary Carbon Market Mechanisms includes provisions related to the institutional arrangement in the carbon market in Malaysia, specifically on the roles and responsibilities of project participants and the ministry in charge of climate change. The guidance sets out the technical requirements for a carbon project and requirements for project registration and reporting. The guidance also provides a short description and status of Malaysia's domestic emissions trading scheme.
Responsibilities of the carbon project developer
Project participants shall report the following to the Ministry in charge of climate change (Ministry of Natural Resources and Environmental Sustainability of Malaysia) and National Steering Committee on Climate Change (NSCCC):
a) Information on the carbon project;
b) The scope of the activity and the crediting periods;
c) The project boundary;
d) The methodology used and baselines developed;
e) Policy guidance applied to achieve the emission reductions; and
f) Annual reporting of units generated, sold, retired and cancelled.
For forestry projects, a project developer shall report the above to the National Steering Committee on REDD Plus (NSC REDD Plus)
Responsibilities of the Ministry in charge of climate change (Ministry of Natural Resources and Environmental Sustainability of Malaysia)
a) Host the Secretariat to the National Steering Committee on Climate Change (NSCCC) or any specific committee established under the NSCCC;
b) Provide guidance on carbon markets and propose mechanisms for domestic carbon markets as appropriate;
c) Maintain a registry to track all carbon projects;
d) Verify that no double counting occurs when reporting on nationally determined contribution (NDC) progress and achievement;
e) Undertake corresponding adjustments consistent with the decisions of the United Nations Framework Convention on Climate Change (UNFCCC) on Article 6 of the Paris Agreement;
f) Report to UNFCCC on Malaysia’s participation in market mechanisms under the UNFCCC and voluntary carbon market;
g) Maintain Malaysia’s NDC in accordance with Article 4 paragraph 2 of Paris Agreement and decision 4/CMA.1 under the UNFCCC;
h) Ensure Malaysia’s participation in the voluntary carbon markets contributes to the implementation of Malaysia’s NDC and long-term low GHG emission development strategy;
i) Any other requirements agreed under Article 6 of the Paris Agreement.
Technical requirements of a carbon project
Activity design
- The mitigation activity must
a) deliver real, measurable and long-term benefits related to climate;
b) minimise the risk of reversals and displacements of emission reductions, and where such reversals occur, ensure that they are fully addressed;
c) avoid negative environmental and social impacts;
d) avoid double financing;
e) establish a robust accounting system
- In developing a carbon project, project developer/proponent must undergo stakeholder consultations including with local communities and indigenous peoples
- There must be a transfer of technology, the applied technology must be environmentally sound and applicable for local environment
- The mitigation activity must also 1) set a baseline 2) be additional 3) be monitored and 4) be quantifiable.
In addition to activity design, the national guidance also sets out the key requirements for carbon accounting, risks and reversal, corresponding adjustments, validation and verification, monitoring, issuance and renewal (Section 4.3 of the Guidance), as well as guidance on project registration and reporting (Section 5).
