Johari: Palm oil sector well-positioned to participate in carbon market

Minister of Plantation and Commodities Datuk Seri Johari Abdul Ghani said the palm oil sector is well-positioned to participate in the carbon market, having already embedded sustainability and circular-economy practices across its value chain.

He said that although palm oil does not yet have a standalone carbon credit system, the government has already introduced measures to account for industry-wide emission reductions, including efforts to curb deforestation.

“For the palm oil sector, I immediately instructed that there be no deforestation as part of our sustainability commitment, given that it is one of the country’s major economic contributors. We want to ensure that the palm oil we export is fully sustainable.

“In other sectors, such as manufacturing, we can encourage greater adoption of solar energy as part of their overall energy mix. Over time, and by 2050, we hope (that through these efforts,) we can achieve success and aim for net-zero emissions,” he told the media after launching the second phase of the Malaysia-United Kingdom (UK) Partnering for Accelerated Climate Transitions (UK PACT) fund here on Thursday.

British High Commissioner to Malaysia Ajay Sharma presided over the launch.

On circular economy efforts, the minister said the palm oil sector has begun maximising resource efficiency by capturing and converting palm oil mill effluent into biogas, while used cooking oil is increasingly collected and processed as feedstock for sustainable aviation fuel.

“Oil palm trunks from replanting programmes are now utilised for furniture production, and empty fruit bunches are being converted into pellets for green energy.

“These are key circular economy initiatives within the plantation sector, and our next step is to scale them further into downstream industries,” he said.

Meanwhile, Johari said the government has not made a final decision on implementing a carbon tax, as it will first pass Malaysia’s Climate Change Bill (RUUPIN) and conduct comprehensive engagements with companies and industry players.

“We will brief them thoroughly. From there, the Ministry of Finance and all relevant stakeholders will drive the process and determine the appropriate approach. The mechanism will evolve based on market supply dynamics,” he said.

According to Johari, the RUUPIN, which is expected to be tabled for its first reading in Parliament next year, will provide the legal framework for companies to record, reduce and trade their carbon emissions.