National Climate Change Policy 2.0

1 Preamble 14

2 Malaysia’s National Circumstances and Actions 18 Malaysia’s greenhouse gas emissions profile 20 Climate change impacts to Malaysia 22

3 The Need for this Policy 26 International trends, obligations and commitments 28 Paris Agreement and national obligations to the UNFCCC 28 Other international obligations, cooperation, and agreements 29 Domestic challenges and constraints 30 Challenges in climate policy-making 30 Limited application and diffusion of low carbon technologies 31 Further need to strengthen human capital and data-driven decision making 32 Need for a supportive ecosystem for climate friendly business practices 32 New and emerging issues 35 Direction and integration of climate policies 37

4 The Structure and Key Elements of the Policy 40 Policy Statement 41 Policy Objectives 42 Principles 43 Objectives, Strategic Thrusts, Strategies and Key Actions 44 Enablers 46

5 Strategic Thrusts 52 Strategic Thrust 1: To strengthen climate governance and institutional capacity for effective planning, regulation and implementation of climate action 53 Strategy 1: Create a comprehensive legal framework to regulate climate action 54 Strategy 2: Establish an effective institutional framework and governance structure to enhance management of climate action 55 Strategy 3: Enhance institutional capacity and data systems towards an informed climate action 56 Strategic Thrust 2: To achieve low carbon development that aligns with national sustainable development agenda and international climate commitment 58 Strategy 1: Reduce greenhouse gas emissions in key sectors 59 Strategy 2: Increase the capacity of carbon sinks and reservoirs of greenhouse gases 62 Strategic Thrust 3: To emphasise adaptation and climate resilience measures that benefits socio-economic and development goals 63 Strategy 1: Implement risk-based planning and strategies to integrate adaptation across all policies, sectoral and development plans 64 Strategy 2: Undertake integrated approach and best practices to maximise co-benefits 66 Strategy 3: Utilise the best available science and data to support evidence-based, risk-informed actions and decision-making for climate action. 68 Strategy 4: Intensify research and development to better understand climate risks and develop innovative solutions to enhance climate preparedness 69 Strategic Thrust 4: Scale up blended financing and enable a sustainable market to increase involvement of private sectors 70 Strategy 1: Stimulate a green economy through market enablers 71 Strategy 2: Scale up domestic and investments to combat climate change 72 Strategic Thrust 5: Foster collaborative climate action through domestic partnerships and international cooperation 74 Strategy 1: Contribute to international goal and process on climate change including the UNFCCC 75 Strategy 2: Promote cooperation in line with national circumstances through bilateral and multilateral frameworks, institutions and mechanisms 76 Strategy 3: Strengthen partnerships to synergise efforts in harnessing opportunities and reduce negative impacts of climate change 76 Strategy 4: Enhance community awareness, preparedness and adaptive capacity to build climate resilience in an inclusive manner 77

6 Policy Delivery 78 Regulatory and financing instrument 79 Institution and governance 80 Monitoring and review mechanism 80 Glossary 81 Reference 84 | National Climate Change Policy 2.0 Executive Summary Climate change is one of the most profound global challenges of our time, significantly impacting Malaysia’s people, economy, infrastructure, and natural environment. The country faces spectrum of natural hazards that is intensified by climate change including extreme weather events, flooding, drought, sea-level rise, and increasing temperatures. The Intergovernmental Panel on Climate Change (IPCC) projects that, without strong intervention, global warming will exceed the 1.5°C threshold, leading to further climate risks. Malaysia’s vulnerability to both transition and physical underscores the urgency for the nation to enhance its resilience. Malaysia’s greenhouse gas emission has increased from 250 million tonnes of CO2eq in 2005 to 330.4 million tonnes of CO2eq in 2019, as reported in Malaysia’s Fourth Biennial Update Report. Simultaneously, the country has suffered RM 7.9 billion in losses from floods alone since 2021 and require nearly RM 400 billion to fully adapt to climate change over the next 50 years. The first National Policy on Climate Change, introduced in 2009, aimed to mainstream climate change in Malaysia’s institutional and implementation capacity to ensure a climate-resilient development. This policy has effectively guided the country and established the initial framework for the nation’s climate objectives, serving as a fundamental document for addressing climate change. Over the past 15 years, significant changes have occurred both internationally and domestically, including the adoption of the landmark Paris Agreement in 2016, which Malaysia ratified in 2016. Since then, Malaysia has reviewed its Nationally Determined Contributions (NDC) and pledged to be a net-zero nation by 2050. Various transition risks associated with climate change have emerged, encompassing shifts in policy, regulation, technology, and market dynamics, alongside new issues such as just transition, carbon trading, and the trade- sustainability nexus, including carbon border tariffs. These transformations carry profound implications for Malaysia’s export-oriented and fossil fuel-based economy. Additionally, climate change impacts continue to threaten Malaysia’s socio-economy, resource security and public health, disproportionately affecting vulnerable sectors and communities. The National Climate Change Policy 2.0 is pivotal in steering Malaysia’s climate action against the backdrop of evolving global and domestic landscapes. This policy integrates the requirements of the Paris Agreement into the national climate policy framework and addresses the latest development associated with climate change. It serves as the authoritative source for the government to develop relevant regulatory instruments, including the National Climate Change Act and economic instruments such as carbon pricing and market. Additionally, the policy forms the basis for coordinating and implementing climate-related policies and strategies in an integrated manner, including the NDC Action Plan and Roadmap, Long-Term Low Emissions Development Strategies and the National Adaptation Plan. It also complements and aligns with sectoral policies such as the National Energy Transition Roadmap and the Water Sector Transformation Plan 2040. The National Climate Change Policy 2.0, through its 5 strategic thrusts, 15 strategies, and 92 key actions, sets out a direction and framework for Malaysia to pursue a transition to a low-carbon economy and enhancing climate resilience in line with national sustainable development agenda and international climate commitments. 13 National Climate Change Policy 2.0 Chapter 1 / Preamble Preamble | National Climate Change Policy 2.0 Climate change has emerged as one of the defining issues of our time. The Intergovernmental Panel on Climate Change (IPCC), the world’s leading authority on scientific knowledge pertaining climate change, stated in its Sixth Assessment Report that the current state of global warming at 1.1°C has already caused unprecedented climate impacts on all parts of the world1. This includes an increase in disasters and extreme weather events such as heat waves, floods, droughts, forest fires, as well as slow onset events such as sea level rise, land degradation and ocean acidification. These events have already caused significant losses and damages to economies, societies, infrastructure, and the natural environment. They are projected to become more frequent and intense in the future if global warming is not limited to below 1.5 degrees Celsius above pre-industrial levels, in line with the objective of the Paris Agreement. Given the urgency and significance of this challenge, addressing climate change has become a crucial aspect of public policy to ensure well- being, sustainable development, and planetary health. Dry banks of the Pahang river in Chenor, Pahang. 15 National Climate Change Policy 2.0 | Preamble Two main approaches have been adopted to address climate change: mitigation and adaptation2. Mitigation refers to human interventions to avoid and reduce greenhouse gas (GHG) emissions in the atmosphere, as elevated concentrations of anthropogenic GHGs, particularly CO₂, are observed to be the main cause of global warming. By the end of 2023, CO₂ levels reached around 422 parts per million, which is already contributing to adverse climate impacts3. Emissions reductions can be achieve by either reducing GHG sources, such as the burning of fossil fuels for energy production; or enhancing their removal by carbon sinks, for example, through preserving forests and coastal ecosystems. While mitigation tackle the root cause of climate change by lowering GHG emissions, adaptation is essential for managing its immediate and unavoidable impacts. Adaptation generally refers to actions taken to help communities and ecosystems cope with actual or expected impacts of climate change. This approach aims to reduce vulnerability and increase adaptive capacity to dangerous impacts, such as floods and droughts, as well as cascading effects on water resources, food security and the wider economic and societal systems. The effects of climate change have already been affecting communities worldwide and can potentially lead to 14.5 million deaths and $12.5 trillion in economic losses, which corresponds to over 10% of global GDP4. Climate change is also expected to increase a multitude of challenges, particularly from the global responses that will continue to impact almost all sectors and segments of society. The transition towards a low carbon and resilient development is resulting in various emerging risks in international trade, investment and security. In particular, the growing demand for Environmental, Social and Governance (ESG) investments has required many investors and financial institutions to incorporate climate-related criteria into their investment and lending decisions; where alignment with climate goals and net zero commitment are pre-conditions for receiving capital allocation and investments. In most jurisdictions, regulatory bodies and policymakers have introduced certain forms of regulations to mandate ESG integration, reporting and disclosure, as well as climate-risk disclosures for companies operating within their jurisdictions. During the 28th Conference of Parties (COP28), the outcome of the first Global Stocktake (GST) signified a landmark decision in acknowledging the need to “transition away from fossil fuels in 16 Preamble | National Climate Change Policy 2.0 energy systems”5, including the recognition of abatement and removal technologies for hard-to-abate sectors as well as the role of transitional fuels; the first of its kind at the international stage. In line with the Paris Agreement’s principles of equitable solutions, it is important to recognise that the transition to a low-carbon economy and decarbonisation may cause significant disruptions for certain industries, sectors, and communities. As a fossil fuel-based economy and oil- and gas-producing nation, workers may experience job losses or economic hardships as a result of the decline of the fossil fuel industry. In the context of adaptation, climate hazards such as flooding and sea level rise affect different groups of people disproportionately, in particular those most vulnerable and marginalised such as those already living below the poverty line and in climate-vulnerable regions. Additionally, climate change impacts can include disruptions to agriculture, health challenges and economic instability, which further exacerbate the vulnerabilities of these groups. The scale of the ambition and the cross-cutting nature of the challenge means that climate action calls for a whole of nation approach. Collective responsibility and action are needed to both mitigate and adapt to climate change. This includes actions from the government, businesses, civil society, communities Malaysians using umbrella to shield against and individuals that contribute towards mitigating and adapting scorching hot weather in Kuala Lumpur. to climate change. The National Climate Change Policy 2.0 is the second iteration of Malaysia’s climate policy, designed to address new and emerging challenges at both global and domestic levels while taking into account national circumstances. Despite contributing only 0.69% to global GHG emissions6, the Malaysian government is committed to enhancing climate actions and supporting subnational and non-state actors such as cities, companies, organisations and communities in taking more leading roles in climate action. The NCCP 2.0 provides the direction and framework for Malaysia to transition to a low-carbon economy and adopt a more resilient approach to development. It will facilitate the work needed to operationalise the Paris Agreement, helping Malaysia fulfil its commitments and obligations. Furthermore, it will guide relevant parties in responding to climate change issues in various international fora beyond the UNFCCC. Given Malaysia’s numerous sectoral policies and strategies on climate change and the environment, NCCP 2.0 leverages these policies in an integrated manner by consolidating and setting out comprehensive strategies for the nation’s climate action. Flood in 2021 following heavy rainfall in Shah Alam, Selangor. 17 National Climate Change Policy 2.0 Chapter 2 / Malaysia’s National Circumstances and Actions Malaysia’s National Circumstances and Actions | National Climate Change Policy 2.0 Rainforest near Pos Kuala Mu in the Banjaran Titiwangsa of Sungai Siput, Perak. International obligations, in particular under the UNFCCC, has increased since 2009 with countries, including Malaysia, are encouraged to enhance their efforts over time by submitting increasingly ambitious Nationally Determined Contributions (NDCs) under the Paris Agreement and strengthen its climate reporting. At the domestic level, Malaysia has long had a focus on climate change with the establishment of the National Steering Committee on Climate Change (NSCCC) in 1994. The 1st National Subsequently, the first National Policy on Climate Change Policy on Climate Change was was introduced more than a decade ago in 2009 to outline Malaysia’s policy direction. Since then, the country has seen tremendous population formulated in 2009 growth as well as socioeconomic changes as it aims to with the purpose transition from a developing to a developed nation. The population has increased from 27.4 million in 2009 to of mainstreaming 33.4 million in 20237. Malaysia’s GDP has increased by three times and the country’s export has doubled. More climate action in townships, industries and infrastructure have been built; the country. which contributed to 1.3 times increase of greenhouse gas emissions (GHG) from 246 to 330.4 million tonnes in 2005 and 2019 respectively8. Recognising the environmental challenges that comes with this expansion, Malaysia’s five-year plans increasingly place greater emphasis on sustainable development and green growth. These plans aim to strike a balance between development needs and environmental preservation, while also promoting the shift towards a low-carbon economy. 19 National Climate Change Policy 2.0 | Malaysia’s National Circumstances and Actions Cityscape of Kuala Lumpur. The cultural, financial, and economic centre of Malaysia. Malaysia’s greenhouse gas emissions profile Malaysia experienced a steady increase in GHG oil and gas industry (energy sector), the cement emissions over the years. In fact, for most years industry (Industrial Processes and Product Use before 2004, Malaysia was a net carbon sink, [IPPU] sector), and organic farming programs largely due to the significant amount of carbon (agriculture sector), as quantified in the fourth sequestered via our tropical forest ecosystems Biennial Annual Report. Among these, the most (Figure 1). According to the Malaysia’s Fourth significant reductions were observed in initiatives Biennial Update Report, Malaysia’s GHG such as transitioning to renewable energy emissions in 2019 totalled 330.4 million tonnes through hydropower generation, minimising CO2eq, an increase from 250 million tonnes venting and flaring in the oil and gas industry, CO2eq in 20059. In terms of the emissions and decreasing waste through paper recycling. portfolio, the energy sector accounts for more Additionally, efforts include the implementation than 79 per cent of emissions, mainly through of Renewable Energy (RE) through mechanisms energy production and transportation (Figure 2). such as the Feed-in Tariff and the execution of the National Energy Efficiency Action Plan, Despite the increase in absolute emissions, the among others. emission intensity has reduced by 35.9 per cent10. Malaysia’s efforts in mitigation have resulted in a reduction of emissions by 30,402.76 Gg CO2eq without Land Use, Land-Use Change, and Forestry (LULUCF) and 48,040.54 Gg CO2eq with LULUCF as of 2019. In addition, emissions reduction have been achieved through initiatives in the 20 300,000 GHG Emissions (Gg CO2 eq.) 200,000 Malaysia’s National Circumstances and Actions | National Climate Change Policy 2.0 100,000 400,000 0 19 19 19 19 19 19 1990 91 92 93 94 95 96 300,000 19 19 19 20 20 20 20 20 97 98 99 00 01 02 03 20 20 20 20 20 20 20 04 05 06 07 08 09 10 11 20 20 20 20 20 20 2 12 13 14 15 16 17 GHG Emissions (Gg CO2 eq.) -100,000 200,000 -200,000 100,000 -300,000 0 19 19 19 19 19 19 1990 91 92 93 94 95 96 97 19 19 20 20 20 20 20 20 98 99 00 01 02 03 04 19 20 20 20 20 20 20 20 05 06 07 08 09 10 11 12 20 20 20 20 20 20 13 14 15 16 17 -100,000 Energy IPPU Waste Agriculture LULUCF Total Net Emissio 20 18 19 -200,000 -300,000 Energy IPPU Waste Agriculture LULUCF Total Net Emissions Figure 1: Emissions Time Series from 1990 to 2019 Waste 8.9% Agriculture 3.1% Waste10.4% IPPU 8.9% Agriculture 3.1% IPPU 10.4% 81.8% Energy 81.8% Energy Figure 2: Greenhouse Gas Emissions for the Year 2019 Note: Greenhouse Gas Emissions excluding LULUCF emissions with total emissions of 316.83 million tonnes CO2eq; IPPU refers to industrial processes and product use; LULUCF refers to land use, land use change, and forestry. 21 National Climate Change Policy 2.0 | Malaysia’s National Circumstances and Actions Climate change impacts to Malaysia The central tenet of the Paris Agreement is Observing the prevailing trend in weather events, to hold the increase in the global average Malaysia has already begun and is projected to temperature to well below 2°C above pre- continue facing the repercussions of climate industrial levels and pursue efforts to limit change across various dimensions, affecting the temperature increase to 1.5°C above pre- the community, economy and infrastructure in industrial levels. The Intergovernmental Platform diverse ways. The impacts of climate change on Climate Change (IPCC) 6th Assessment are already observed and will continue to impact Report, published in 2021, found that in almost Malaysia’s national development as well as most all emission scenarios, warming is expected to vulnerable sectors and community. exceed the 1.5°C threshold in the early 2030s. Based on parties’ existing Paris Agreement Water security is threatened by the influence commitment to reduce emissions, the world is of climate change to the water cycle. The on track to reach 2.4°C warming by the end of intensification of the water cycle brings more the century without strong intervention11. The frequent and intense dry spells, while increased climate system changes as warming increases, rainfall can result in more intense flooding. influencing frequency, intensity, timing, and With more than 97 per cent of water supply spatial distribution of climate hazards. As a result, being derived from surface water in rivers and Malaysia’s people, economy, infrastructure, and reservoirs, increase in dry spells and extreme natural environment are increasingly impacted drought events, compounded with an increase by climate hazards which include extreme in demand, these factors will result in water weather events such as flooding and drought as stresses. On the other hand, heavy precipitation well as slow-onset events such as sea level rise events are causing large scale flooding and rising temperature. events. Heavy rainfall can also affect water infrastructure for example, where several dams Over the past five decades, increased temperature were at critical levels due to heavy rainfall, trends of 0.13°C to 0.24°C per decade have been resulting in excess water releases. This in turn, observed12. The IPCC report found that emissions leads to downstream flooding. According to the of greenhouse gases from human activities are Department of Irrigation and Drainage, 10.1% of responsible for approximately 1.2°C of warming the country’s total area is a flood-prone area with since 1850-1900, and averaged over the next 20 nearly 5.67 million people affected by floods15. years, global temperature is expected to reach or Flood risks in Malaysia have been exacerbated exceed 1.5°C of warming13. by local factors, such as rapid urbanisation, ineffective drainage systems, deforestation The average annual temperature in Malaysia is and logging, which reduce permeability and projected to warm by 1.1 – 1.5 degrees Celsius natural sponge capacity. Official flood reports by 2050, and 1.7 – 2.1 degrees Celsius by 2100, have increased exponentially in the last two with Sabah and Sarawak facing higher levels of decades, from 91 in 2002 to 1057 in 202116. It increments. The increase in temperature is likely is estimated that floods caused at least RM 7.9 to put an impact on the country and this includes billion in losses to the country between 2021 water security, food security, public health and 2023, with the highest losses occurring in and biodiversity, with compounding effects on 2021, totalling RM 6.1 billion17. vulnerable sectors and community14. 22 Malaysia’s National Circumstances and Actions | National Climate Change Policy 2.0 Being a maritime nation with over 8,840 km of coastal lines, Malaysia coastal zones are also vulnerable to storm surges and inundation influenced by sea level rise that have caused coastal erosion and loss of land. In Peninsular Malaysia, sea level has averagely risen by 3.2 mm and 2.9 mm for Sabah, Sarawak and Labuan. The Malaysian coastline is projected to face a maximum sea level rise of 0.25 m by 2050 and 0.74 m by 210018. This will impact Malaysia’s coastal and food resources, settlements, coastal infrastructure, and livelihood of fisherman and coastal communities. Agriculture and food security is also impacted Photo 1: Unusual intense flood in Dec 2021 - by temperature increases and changes in Jan 2022 across Peninsular Malaysia rainfall pattern. Vulnerability and adaptation assessments for granary areas in Peninsular The tropical depression of Typhoon Rai made landfall in the Malaysia demonstrate significant reductions in peninsula, resulting in a ‘one-in-100-year flood’ – a month’s worth of rainfall fell in 24 hours. The flood was considered unusual as average rice yields productions by 2030, ranging it took place in the economic hub of the country – Klang Valley from a reduction of more than 30 per cent over – a region that rarely receives torrential rainfall. The Department the main season in 2030 in the Integrated of Statistics estimated that the overall losses due to the floods in 2021-2022 amounted to RM5.3-6.5 billion of living quarters, Agriculture Development Area in Barat Laut vehicles, business premises, manufacturing, agriculture sector as Selangor (IADA BLS) to 12.5 per cent reduction well as public assets and infrastructure with 55 deaths, 71,000 in Muda Agriculture Development Authority displacements and affected over 130,000 people. (MADA). The impact extends to our commodities as well. Specifically, Malaysia’s vital palm oil industry, which contributes over RM 130 billion in export revenue, is expected to experience a 3.3% reduced yield during El Nino and La Nina events. Moreover, it is anticipated that the proportion of oil palm plantations vulnerable to flooding will increase to 7.48% by 2100, with 7.02% at risk from sea level rise19. Our cities and settlements are becoming increasingly vulnerable to the impacts of climate change. Currently, 75% of the population resides in urban areas20, a number projected to reach approximately 90% by 2050, mirroring global trends of rising urbanisation. In addition to the growing risk of flash floods, where 96 out of 281 towns and cities are projected to be flood prone Photo 2: Disappearing shorelines in Malaysia up to 210021, cities are also experiencing elevated Coastal erosion is severely impacting Malaysia, sweeping away temperatures due to the urban heat island homes and public infrastructure. Driven by a combination of effect. Over the past century, warming trends natural processes, human activities and climate change, NAHRIM have been observed in cities like Kuala Lumpur, reports that out of Malaysia’s 8,400 kilometres of shoreline, approximately 1,347 kilometres are affected, with 55.4 kilometres Kuching, and Kota Kinabalu, with temperature critically eroded, particularly in Sarawak and Terengganu increases ranging from a minimum of 1.35°C to a maximum of 6.33°C. Preliminary assessments indicate that critical infrastructure, including healthcare facilities, roads, railways, ports, 23 National Climate Change Policy 2.0 | Malaysia’s National Circumstances and Actions airports, power stations, and flood relocation centres, are exposed to floods and sea-level rise, with impacts expected by 2030 and 2050. Malaysia is also confronted with substantial health risks due to climate change. The surge of vector-borne diseases including malaria and dengue have been observed with higher temperatures. Infrastructure damages caused by natural disasters also compromise access to basic needs including food, water, hygiene and sanitation services, aggravating disease transmission. The World Health Organisation in its country report also stated that heat-related deaths could reach 45 per 100,000 by 2080 Photo 3: Paddy fields devastated by dry spell and with high emissions scenario22. Climate change scorching heat wave and biodiversity loss, two intertwined systemic challenges, are also identified as drivers of In May 2024, Padi farmers in the Muda Agricultural Development Authority (MADA) areas in Keda are facing a 40% reduction in the emergence of new and ancient zoonoses, income due to a prolonged hot spell, which has significantly similar to Covid-19, which has caused one of the impacted crop yields. The extreme weather, along with rare crop greatest disruptions to the world’s sustainable diseases, has led farmers to seek alternative income sources or repair their fields and use water more efficiently while awaiting the development trajectory. next planting season. Adding to the list, Malaysia is at risk of losing its biodiversity which concurrently impacts the country’s economic development that depends on its ecosystem service. For instance, the effects of peatland and inland forest fires would be exacerbated by projected prolonged dry spells, destroying forest reserves and degrading the land. The disappearance of mangroves due to rising sea levels and salt-water intrusion has led to depletion of vital fish nursery areas and weakens the coastal defence against coastal inundation and storm surges, directly impacting the livelihoods of coastal communities. Additionally, coral bleaching, often exacerbated during El Niño episodes, further disrupts fisheries and the tourism supply chain, as over 40% of corals succumb to bleaching, posing a significant Photo 4: The decline of Mangroves in Malaysia threat to marine-based industries and coastal community livelihoods. According to Forest Research Institute Malaysia (FRIM), Malaysia’s mangroves have been diminishing by 788 hectares annually Climate change will have a significant impact on between 1990 and 2017, dropping from 650,311 to 629,038 hectares, primarily due to conversion to land use activities such as vulnerable, disenfranchised and marginalised aquaculture, agriculture and settlements. The decline may affect communities including children, women, the country’s resilience to climate change, as mangroves serve as significant carbon sinks, storing 40% more carbon than dry land youth and indigenous people. Climate change forests, and act as natural buffers against storm surges, flooding and shifting weather patterns jeopardise the and sea level rise. Additionally, the reduction in mangrove areas close and intricate connection the Orang Asal disrupts fisheries breeding grounds, decreasing fish stock and affecting fishermen’s livelihoods. and Asli communities have with nature. In particular, their food sources and income are at Hamdan, O., Tariq Mubarak, H. & Ismail, P. (2020). Status of Mangrove in Malaysia. Forest risk since these communities are particularly Research Institute Malaysia, Malaysia. pp. 288. 24 Malaysia’s National Circumstances and Actions | National Climate Change Policy 2.0 Pulau Gaya in Sabah is a region highly sensitive to climate changes, experiencing both seasonal variations and long-term climatic shifts. The island is home to many undocumented children from low-income families, a significant number of whom are aged 6 to 12. These children engage in various economic activities at the market, including selling items, sewing clothes, and even participating in gambling. The community faces significant challenges stemming from climate change, particularly the increased frequency of destructive typhoons and the looming threat of rising sea levels. Additionally, environmental degradation has intensified due to improper waste disposal, resulting in the accumulation of garbage in the waters surrounding Pulau Gaya. Photo 5: Well-being of the Orang Asli and stateless communities in Pulau Gaya, Sabah dependent on the rainforest for their livelihoods, insecurities and increased household burdens. including hunting, fishing, and gathering. As for children and youth, nine out of ten young Altered weather could harm crops and disrupt Malaysians experience climate-related effects, seasonal cycles, while extended dry spells may such as floods and maladies, affecting their well- deplete water bodies, impacting fish supply and being and education23. cultural practices. Meanwhile, women, who are traditionally the bearers of unpaid care work, are disproportionately affected by climate impacts due to bearing the brunt of livelihood 25 National Climate Change Policy 2.0 Chapter 3 / The Need for this Policy The Need for this Policy | National Climate Change Policy 2.0 The first National Policy on Climate Change, published in 2009 (will be referred to as NPCC 1.0) served the Over the past 15 purpose of mainstreaming climate change in Malaysia’s years, the climate institutional and implementation capacity to ensure climate-resilient development to fulfil national landscape has evolved aspirations for sustainability. Its goals remain pertinent towards the country’s ongoing climate ambitions. But significantly with given the rate of global development over the years, new international including more in-depth understanding of climate risks and progress of international climate agenda, there arises commitments, a need to reassess the country climate strategies. This entails aligning measures with the latest national targets emerging challenges and international commitments, including reducing carbon emission intensity against GDP by 45% by 2030 and global trends. compared to 2005 levels, as well as achieving net-zero GHG emissions by 2050. In essence, the National Climate Change Policy 2.0 (NCCP 2.0) aims to facilitate the country’s transition towards a low-carbon economy and climate-resilient development, as well as operationalising the Paris Agreement at the domestic level. The Rawang Bypass, which features a 2.7 km viaduct to protect the endemic Giam Kanching trees and minimise habitat fragmentation along the Selangor State Park in Rawang, Selangor. 27 National Climate Change Policy 2.0 | The Need for this Policy International trends, obligations and commitments At the international level, Malaysia is committed to contribute towards efforts highlighted in the United Nations Framework Convention on Climate Change (UNFCCC). As a Party to the UNFCCC and its legally binding treaties such as the Paris Agreement and Kyoto Protocol, Malaysia has implemented and will continue to fulfil its obligations and commitments to address climate change. The NCCP 2.0 will further strengthen the policy framework for Malaysia to fulfil its national obligations, commitments and pledges made in the intergovernmental processes. Paris Agreement and national obligations to the UNFCCC The Paris Agreement is a landmark agreement support its long-term decarbonization strategy, made in 2015 by all Parties and reaffirms the Malaysia has, at the time of writing, finalised long-term global goal of limiting global warming its NDC Roadmap and Action Plan to guide to well below 2°C compared to pre-industrial implementation until 2030, along with the Long levels and urges Parties to pursue efforts Term Low Emissions Development Strategies towards a more ambitious 1.5°C threshold. The (LT LEDS) to achieve its net-zero GHG emissions Agreement upholds the UNFCCC principle of aspiration by 2050. “common but differentiated responsibilities and respective capabilities, in the light of different In addition to reporting obligations such as the national circumstances”. Parties are required to National Communications (every four years), communicate or update their climate pledges, Biennial Update Report (every two years) and also known as Nationally Determine Contributions the Biennial Transparency Report (every two (NDC) every five years; where successive climate years from 2024 onwards) under the Enhanced pledges must have a progression beyond current Transparency Framework (ETF), Malaysia is ones that is fair and ambitious in light of its developing various policy instruments such national circumstances. as a climate change legislation, Malaysia’s National Adaptation Plan (MyNAP) and studying Malaysia ratified the Paris Agreement on the feasibility of developing a carbon pricing November 12, 2016, and submitted its first NDC mechanism in Malaysia. A national policy on four days later. In 2021, Malaysia enhanced its carbon market, aligned with the principles and NDC targets to reduce economy-wide emissions requirements of Article 6 of the Paris Agreement, intensity of GDP by 45% by 2030, compared to is also in development. 2005 levels, on an unconditional basis24. This revision expanded the scope of greenhouse gas coverage from three to seven types and included information on adaptation strategies for vulnerable sectors and cross-cutting issues. To 28 The Need for this Policy | National Climate Change Policy 2.0 An electric car charging station at outdoor parking place in Kuala Lumpur. Coral reefs in Pulau Tioman, Pahang. Other international obligations, cooperation, and agreements Besides the UNFCCC, Malaysia is also party to change in regional trade agreements has various multilateral environmental agreements expanded steadily since 201225. The European that have interlinkages to climate change. Union (EU) which is an important trade partner This includes the ratification of United Nations of Malaysia, plans to implement regulations Convention on Biological Diversity (CBD), that will implicate Malaysia’s trade-oriented, Sendai Framework for Disaster Risk Reduction, export-reliant and high-carbon economy. This Ramsar Convention on Wetlands, United is to meet the EU Green Deal aspirations via Nations Convention to Combat Desertification rulings such as the EU Deforestation-Free (UNCCD), Basel Convention on the Control Product Regulation (EUDR) and Carbon Border of Transboundary Movements of Hazardous Adjusted Mechanism (CBAM) which comes into Wastes and Their Disposal, and various regional effect starting 31st December 2024 and in 2026, agreements including the ASEAN Transboundary respectively26). In addition, climate change and Haze Pollution agreement. Malaysia is also part green transition have emerged as key areas for of the Carbon Offsetting and Reduction Scheme regional corporations and strategic engagements for International Aviation (CORSIA) that aims to such as the United States Indo-Pacific voluntarily incentivise emission reduction in the Economic Framework for Prosperity (IPEF). The aviation sector. Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) that Malaysia Climate change is also progressively garnering has signed includes a transition to a low-emission attention within international cooperation and economy under the environmental chapter. international trade policies as more developed nations recognise how trade can have an impact on climate change due to the inherent or embedded carbon in products and services. While climate change is not explicitly mentioned in World Trade Organisation (WTO) agreements, it is recognised that the level of detail on climate 29 National Climate Change Policy 2.0 | The Need for this Policy Domestic challenges and constraints Challenges in climate policy-making The cross-cutting and complex nature of climate Despite growing recognition on the importance of change requires its integration into national, climate adaptation for sustainable development, sub-national and sectoral policies. In this Malaysia’s climate policies and actions remain regard, Malaysia has taken significant steps to unbalanced, with a predominant focus on establish the Majlis Tindakan Perubahan Iklim mitigation over adaptation. Despite the increasing Negara (MTPIN) as the apex body responsible acknowledgment of the importance of climate for providing policy and strategic direction. Over adaptation within the framework of sustainable the years since the inception of the NPCC 2009, development, Malaysia’s climate policies and climate action measures and considerations have actions are unbalanced between mitigation and increasingly been integrated into policies and adaptation; and have predominantly focused development plans, such as the Malaysian Plan, on the former. The government’s emphasis on National Physical Plan, and sectoral policies. low-carbon incentives and enablers has been Despite these advancements, a notable gap exists instrumental in advancing Malaysia’s mitigation in the absence of a robust policy implementation efforts, particularly in renewable energy and framework, leading to challenges in coordinating green technology. However, without a more vertically and horizontally across national and strategic and proactive approach in climate sub-national levels. adaptation, Malaysia can potentially lose its development gains including its low-carbon For instance, cross-cutting matters such as climate investments. The cost of inaction could be adaptation and disaster risk management often severe, as the impacts of climate change are involves numerous institutions and jurisdictions already being felt and are expected to intensify across the federal, state and local level. In the in the future. area of natural resources and forestry, Malaysia has pledged to maintain at least 50 percent of its land as forest and tree cover. However, land falls under the purview of state governments, which may have different development and conservation priorities. On the other hand, more states are also proactively developing their own climate strategies and policy instruments. These state-level priorities and initiatives need to be synchronised with federal targets and strategies to ensure cohesive and effective climate action across the country. In addition, a lack of policy harmonisation is observed in certain sectors, such as transportation, where there is a need to transition from an environment that promote affordable, mass-market and private vehicle ownership to a more holistic approach that supports green mobility and sustainable transport systems. An electric bus operating in Kuala Lumpur. 30 The Need for this Policy | National Climate Change Policy 2.0 Limited application and diffusion of low carbon technologies Limited diversification of low carbon Lack of green mobility access and ecosystem technology portfolio for the masses Malaysia acknowledges that transition requires The transport sector makes up 20% of total development of new technologies. Current GHG emissions in Malaysia, largely from low-carbon technology in Malaysia relies road transportation27. The government has on a limited set of technologies, primarily recognised the need to transition towards a solar and hydro, which account for 2.8% and cleaner transportation system by setting a target 17.1% of RE installed capacity, respectively. of increasing the share of urban public transport Due to the limitations of RE sources in terms and electric vehicles (EV) by 50% and 38%, of intermittency and grid stability, there is a respectively, by 2040 under the Low Carbon need to diversify our low carbon technology Nation Aspiration 2040. While the government portfolio as a strategic approach to providing is encouraging the adoption of EVs and investing a balanced and comprehensive transition to in public transportation, notably the expansion a low carbon future. This can provide several of mass rapid transit and light rail transit in the benefits, including reducing risks, encouraging Klang Valley, there is still a lack of a holistic green technological innovation, creating new market mobility system that is accessible, affordable, opportunities, and providing greater flexibility and safe for the masses nationwide. Most cities and adaptability. The National Energy Transition are still facing challenges in ensuring first- and Roadmap and the National Energy Policy 2022– last-mile connectivity to the public transport 2040 acknowledges the need for diversification system. Greening the automotive sector remains by incorporating new technologies for energy a challenge without a fuel economy standard to storage solutions (e.g., hydrogen and battery ensure new vehicle fleets are less emissions- storage) to address system stability issues and intensive moving forward. Additionally, the carbon capture, utilisation, and storage (CCUS) high costs associated with replacing existing facilities to assist in decarbonising industries, fleets compound this challenge. Despite the especially in hard to abate sectors. increasing affordability of electric vehicles (EVs), they remain inaccessible to the masses due to the high cost of ownership and low confidence among road users, stemming from range anxiety caused by insufficient EV charging infrastructure nationwide. Moreover, the notable upfront cost discrepancy between electric two-wheelers (E2W) and internal combustion engine two- wheelers (ICE 2W) presents a further obstacle to widespread adoption. 31 National Climate Change Policy 2.0 | The Need for this Policy Further need to strengthen human capital and data-driven decision making Given the global push for decarbonisation, low- With the establishment of the Intergovernmental carbon industries offer significant opportunities Panel on Climate Change (IPCC) as a climate for economic growth and employment. Skilled science authority, the credibility and legitimacy and knowledgeable human capital is crucial for of scientific knowledge on climate change have driving research, development, operation, and increased at an astounding rate. However, maintenance of diverse low carbon and climate generating localised, trustworthy, and high- resilient technologies. Presently, there is a quality data to improve risk understanding significant gap in the country’s labour force and and promote evidence-based decision- human capital development to ensure a sufficient making for climate adaptation and resilience pool of qualified professionals to support the remains a significant challenge. Besides deployment of these technologies, particularly building capabilities and leveraging scientific nascent fields such as hydrogen and CCUS. understanding, there is an imperative need The gap encompasses not only technological to utilise climate data in decision-making expertise but extends to policymakers, processes at all levels. regulators, scientists, and entrepreneurs who play integral roles in steering the trajectory of low-carbon industries. Need for a supportive ecosystem for climate friendly business practices Carbon pricing instruments and carbon market Carbon pricing has emerged as a popular policy standardised contracts. To enhance forestry tool to capture the external costs of greenhouse sector role in climate action, the Malaysia Forest gases and encourage investments in renewable Fund was established to implement the REDD energy and low-carbon technologies, often Plus Finance Framework, offering two innovative through carbon taxes, compliance emission financing mechanisms: the Forest Conservation trading schemes or hybrids. As of 2023, there Certificate (FCC) and the Forest Carbon Offset are 73 carbon pricing instruments implemented (FCO), the latter enabling offsetting of carbon globally with the share of global GHG emissions emissions through forest conversation. At the covered around 23%28. By putting a price on time of writing, the National Carbon Market carbon, policymakers send a strong market signal Policy is in development as the main instrument and create economic incentives for businesses to to support the implementation of compliance reduce their carbon footprint and invest in cleaner and voluntary carbon markets. alternatives, thereby supporting the growth of low-carbon markets including renewable energy Despite these positive move, Malaysia doesn’t projects and lowering technology costs through have a formal carbon pricing mechanism to economies of scale and innovation. limit GHG emissions and further accelerate economic decarbonisation, explore revenue Malaysia has made some progress in these areas opportunities for reinvestment in low-carbon by launching its first voluntary carbon market, growth and nature-based solutions, and prepare the Bursa Carbon Exchange (BCX) in 2022. This for emerging cross-border carbon taxes from exchange allows companies to trade technology- other jurisdictions. In this regard, Malaysia based and nature-based carbon credits through is currently conducting a feasibility study on 32 The Need for this Policy | National Climate Change Policy 2.0 implementing carbon pricing mechanisms that In Malaysia, there’s an urgent need for a system and suit its requirements and circumstances. infrastructure that can integrate the domestic and international carbon markets that is interoperable Meanwhile, Article 6 of the Paris Agreement with the UNFCCC system. This integration should underscores the significance of implementing encompass mechanisms for corresponding market mechanisms, such as carbon trading, adjustments on Internationally Transferred to support emission reduction projects while Mitigation Outcomes (ITMO) and credits traded fostering sustainable development. It calls for within the global carbon market. As the demand the establishment of a framework for cooperative for carbon credits increases, it is important international efforts among parties to address for Malaysia’s carbon market development to climate change. However, challenges remain uphold high standards of integrity. Alongside regarding the authorisation, formulation and providing clear guidelines for market players, implementation of rules, including issues related it’s crucial to establish robust environmental to reporting, double counting, environmental and social safeguards, particularly to protect the integrity, market manipulation, and the quality of rights of local and indigenous communities, and emission reductions. Dialogues and negotiations addressing jurisdictional challenges on carbon. At on Article 6 is expected to continue at the UNFCCC the same time, the country needs to also prevent level, aimed at refining its operational aspects. the risks of overselling to not jeopardised its own Nationally Determined Contributions (NDCs). Climate financing gap There is generally a large gap in financing climate that biodiversity and ecosystem services can action globally, especially in developing countries generate31. One major challenge is the absence such as Malaysia. While the Organisation for of a dedicated fund specifically allocated for Economic Co-operation and Development climate change. Moreover, the technology (OECD) states that the US$100 billion climate costs associated with renewable energy and finance target was likely met in 202329, loan- emerging technologies remain relatively high, based assistance largely prevails (making up further impeding progress. Additionally, banks more than two-thirds of climate financing), as and financial institutions perceive low-carbon ongoing issues surrounding increasing adaptation investments as risky, which hampers their finance and mobilising loss and damage finance. willingness to provide adequate financing Malaysia has received RM364.8 million external options. There is a need to accelerate the financing30, however estimates from NETR capacity and enabling environment in Malaysia’s alone indicate RM1.2–1.3 trillion in investments financial industry to support the green economy. needed by 2050; hence international sources need to be utilised in order for Malaysia to meet the financial needs for the low-carbon transition and climate resilience development. Currently, climate and environmental-related initiatives are funded largely through public financing. Public budgetary allocations remain low in absolute terms (<1% of the total GDP), and relative to the significant potential benefits 33 National Climate Change Policy 2.0 | The Need for this Policy Penetration of green products Despite the government’s efforts to provide with obtaining certifications inhibit widespread tax incentives for green technology since adoption. Second, the voluntary nature of green 2014, the lack of green product penetration certification limits the reach and impact of green in Malaysia remains a problem with multiple initiatives. Third, the scarcity of locally produced obstacles. Firstly, the high cost of testing and and affordable green goods exacerbates the green certification creates financial obstacles for problems, as the domestic market lacks a robust businesses attempting to introduce sustainable supply chain and consumer awareness. products to the market. The costs associated Domestic green financing and investments Malaysia’s low uptake of domestic green financing Technology Financing Scheme (GTFS), Green and investments remains an issue with multiple Investment Tax Allowance (GITA), and Green obstacles despite a growing trend of green Income Tax Exemption (GITE) puts the same products. While Malaysia has provided various pressure on businesses. However, the skewness economic instruments and financial incentives of financing towards renewable energy projects to boost deployment of low-carbon technology, neglects other crucial solutions, such as climate only 42 precent of financial institutions have adaptation technologies. The low take-up was made commitments on net-zero32. The increasing also hampered by other factors related to lack efforts being made by the JC3 in assisting of information, expertise, confidence, awareness financial institution to integrate climate and and bureaucracy, such as the complexity of environmental risks in development of climate applying for these schemes. Finally, without hard strategies and the introduction of Climate Change instruments such as carbon pricing to provide and Principle Based Taxonomy (CCPT) by Bank strong market signals, most business lack the Negara Malaysia provides further opportunities incentives to take up the existing financial to fund climate resilience measures including schemes offered by the government and drive renewable energy and energy efficiency. the growth of low-carbon industries. Other government through initiatives such as the Fit-in Tariff system, Large Scale Solar, Net Energy Metering as well as schemes such as the Green Suasana Putrajaya, a Green Building Index-certified development, exemplifies sustainable design and construction in Putrajaya. 34 The Need for this Policy | National Climate Change Policy 2.0 New and emerging issues Transition risks from shifting to low carbon economy The global responses to climate change have Finally, the shift in the investment landscape, seen one of the largest shifts in society and changes in consumer preferences and demand economy, towards a low carbon and climate are expected to become more prevalent as the resilient future. These shifts pose various risks to market move towards low carbon solutions. countries as economies and businesses have to This includes notable preferences by large be aligned with the changes in relation to policy, asset managers and institutional investors to regulation, technology and the market. commit to investments that are grounded in science-based targets to implement climate Policy and regulatory risks may directly impact action as well as those with net-zero targets. society, especially vulnerable groups. There’s Increasing demand for climate friendly products a need to ensure transitions are implemented and services creates new market for green and in a just manner. Policy and regulatory risks low carbon technologies while carbon intensive that occur when changes in the rules governing products and services face reputational risks climate change changes may result in stricter and unfavourable stakeholder actions such as policies and regulations thus increasing the boycotts. The introduction of a carbon pricing overall cost of doing business. These may include instrument or an establishment of a carbon the establishment of carbon pricing instruments, market could also potentially spur investments reporting obligations as well as formulating and mobilise financing. legislation which needs to take into account the societal impacts. Significantly, compliance and As a trading nation and an oil producing enforcement have span beyond Malaysia’s border country, navigating these transition risks with countries implementing climate measures require a strategic response. Policy, regulatory, that has a significant influence on regional, technological and market shifts are likely multilateral and bilateral trade relations. to significantly impact Malaysia’s economy. Currently, 20-30% of Malaysia’s economy rely Possible stranded assets as the economy on sectors which will likely face transition risks transitions needs to be examined carefully. which include oil and gas, power generation, The accelerated pace of change has also seen metals and mining33. Bank Negara Malaysia drastic introduction of technology to support estimated that the country stands to lose US$ transition to a low carbon economy. This includes 65.3 billion worth of annual export revenue transitioning to more and diversified renewable if it fails to comply to these transition risks34. energy technology, significant utilisation of This is also in response to the global energy energy efficiency as well as green and low carbon transition which will require less reliance on mobility solutions. In turn, these may lead to the oil and gas sector. substitution of existing products and services and impact the valuation of existing and future assets and technologies. 35 National Climate Change Policy 2.0 | The Need for this Policy Just transition Just transition refers to the concept of the green economy, the adoption of cleaner ensuring that the shift from high-carbon to technologies and the influx of new industries low-carbon economies is fair and equitable can lead to job displacement in high-emitting for all stakeholders, particularly workers and sectors such as energy, oil and gas, and the communities that may be affected by the automotive sector. There is a need to strengthen changes. Driven by its international obligations labour policies that incorporate the principles of and global shift towards sustainability as a just transition, focusing on upskilling existing manifested in regional cooperation frameworks workers and developing a new workforce to meet and trade agreements such as the US Indo- the demands of a high-value green economy. Pacific Economy Framework (IPEF), the As the world transitions to a low-carbon future, Comprehensive and Progressive Agreement for there is a need to ensure that certain groups are Trans-Pacific Partnership (CPTPP), and the Asia- not discriminated against, resulting in the loss of Zero Emission Community, Malaysia’s aspiration jobs and sources of livelihood, while propelling to shift to a low-carbon economy will bring green growth as a new engine for job creation. multifaceted challenges. While this transition can bring new employment prospects and spur Pursuing climate resilient development Although Malaysia is on the right track on the navigating the complex interactions between way to pursue a climate resilient development, these different systems so that action in one area mitigation and adaptation are still being treated does not have adverse effects elsewhere and as separate in policy, planning and public opportunities are harnessed to cut greenhouse discourse; not embedded and integrated in gas emissions, conserving biodiversity and a holistic manner. Climate change is strongly reducing exposure and vulnerability to climate interlinked with other sectors and all societal hazards. Overcoming these challenges requires aspects including energy, biodiversity, health, strong political will, cooperative governance, industry, food, water, built environment, housing evidence-based decision-making, financial and transport. Therefore, shifting towards resources, technological innovation, public climate resilience development requires awareness and participation. The Bakun hydroelectric dam on the Balui River, Sarawak. 36 The Need for this Policy | National Climate Change Policy 2.0 Direction and integration of climate policies Given the multifaceted and cross-sectoral nature of climate change, many existing policies had indirectly incorporated climate change elements. Sectoral policies that support mitigation and adaptation efforts that have been formulated by other Ministries are listed in the table below. These policies, as well as future policies on climate change are not isolated but interwoven with the NCCP 2.0. This integrated approach not only amplifies the effectiveness of individual policies but also synchronise targets to ensure policy coherence across all sectors. Recently, several complementary sectoral policies and targets have been produced which contributes to Malaysia’s climate goals. For instance, the Power Sector Development Plan 2020-2038, which set an ambitious target to achieve 31 per cent of the total installed capacity on renewable energy by 2025 and 40 per cent by 2035. Additionally, in March 2023, the government launched the National Energy Transition Roadmap, aiming for RE capacity to reach 70% by 2050 as means to boost economic growth by attracting investments from multinational companies and enabling cross-border energy trade. Policy Ministry Malaysia Green Technology Policy 2009 Ministry of Natural Resources and Environmental Sustainability Malaysia Policy on Forestry 2021 Ministry of Natural Resources and Environmental Sustainability National Agricommodity Policy 2021-2030 Ministry of Plantation and Commodities National Agrofood Policy 2021-2030 Ministry of Agriculture and Food Security National Coastal Zone Physical Plan 2 Ministry of Housing and Local Government National Energy Policy 2022-2040 Ministry of Economy National Energy Transition Roadmap Ministry of Economy National Industrial Master Plan 2030 Ministry of International Trade and Industry National Physical Plan 4 Ministry of Housing and Local Government National Policy on Biological Diversity 2022-2030 Ministry of Natural Resources and Environmental Sustainability National Policy on the Environment 2002 Ministry of Natural Resources and Environmental Sustainability National Science, Technology and Innovation Policy Ministry of Science, Technology and Innovation 2021-2030 National Urbanisation Policy 2 2016-2025 Ministry of Housing and Local Government National Water Resources Policy 2012 Ministry of Natural Resources and Environmental Sustainability 37 National Climate Change Policy 2.0 | The Need for this Policy Edra Melaka Power Plant in Masjid Tanah, Melaka. The NCCP 2.0 is the first document in Malaysia to collate the main initiatives on climate change that are being implemented in Malaysia. The policy provides the basis and jurisdiction for the Ministry of Natural Resources and Environmental Sustainability to pursue the development of other relevant policy instruments. This includes the legislative bill on climate change and market-based instruments such as the carbon market. In driving the transition towards a low-carbon economy and climate-resilient development, the NCCP 2.0 sets a broad direction and scope for climate policies in Malaysia. The NCCP 2.0 serves as guidance not only to Ministry of Natural Resources and Environmental Sustainability but also other ministries, agencies and relevant stakeholders involved or impacted by climate change. The Policy does not prescribe detailed and sector-specific targets, except for the Nationally Determined Contribution (NDC) and net-zero target. The specific targets and implementation will be materialised through strategies such as the Long-Term Low Emission Development Strategy (LT-LEDS), Nationally Determined Contribution (NDC) Roadmap and sectoral plans such as the National Energy Transition Roadmap (NETR) and the National Policy on Biological Diversity; as well as action plans for respective ministries. This intentional flexibility in implementation aligns with the dynamic nature of the policy, which is without a fixed implementation period and remains a living document open to periodic amendments and reviews. In essence, while the NPCC 2009 aimed to mainstream climate action into the national development agenda and insituitions, the NCCP 2.0 aspires to guide the country’s transition towards a low carbon economy and climate resilient development through various policy instruments with clear national targets and aspirations. 38 The Need for this Policy | National Climate Change Policy 2.0 Institutional arrangement on climate action in Malaysia Institutionally, the National Green Technology and Climate Change Council was enhanced with the introduction of the Majlis Tindakan Perubahan Iklim Negara (MTPIN) in 2023. The MTPIN is now the highest decision-making body for discussing and setting the direction of climate change policies and actions. It provides strategic direction on green economic growth, catalysing green technology, and promoting low-carbon growth at all levels, particularly within federal and state governments. To ensure policy coherence and coordinate effective actions, the Council’s membership includes key Federal Ministers and state Chief Ministers. Below the MTPIN, operational matters on climate change are guided and endorsed by the National Steering Committee on Climate Change (NSCCC), chaired by the Secretary General of the Ministry of Natural Resources and Environmental Sustainability. At the state level, the Mesyuarat Menteri-Menteri Alam Sekitar dan Ahli-ahli Majlis Mesyuarat Kerajaan Negeri yang Bertanggungjawab Mengenai Alam Sekitar (MEXCOE), chaired by the Minister of Natural Resources and Environmental Sustainability, serves as a vital platform. It facilitates coordination and cooperation between the Federal government and state administrations to foster stronger and more streamlined climate action. Other governmental committees also discuss climate change matters, including the National Energy Council, the National Physical Planning Council, and the National Water Council. 39 National Climate Change Policy 2.0 Chapter 4 / The Structure and Key Elements of the Policy The Structure and Key Elements of the Policy | National Climate Change Policy 2.0 Policy Statement Pursuing the transition to a low- carbon economy and enhancing climate resilience in line with national sustainable development agenda and international climate commitments. The National Climate Change Policy 2.0 (NCCP 2.0) is informed by recent developments, international commitments and our national development agenda, which includes the five-year development plan. In accordance with Malaysia’s international commitments, the Policy incorporates the essential elements of Malaysia’s national obligations under the United Nations Framework Convention on Climate Change (UNFCCC), including the Paris Agreement and the essence of the 17 Sustainable Development Goals, in particular SDG 13: Climate Action. 41 National Climate Change Policy 2.0 | The Structure and Key Elements of the Policy Policy Objectives Building upon the previous policy, the policy objectives of the NCCP 2.0 aim to: 01. 02. 03. 04. Meet its Mainstream Catalyse the Undertake risk- climate targets, climate action means of based planning which include in decision making implementation in building climate reaching net-zero GHG process which results of climate action resilience to better emissions by 20501 in the improvement harness opportunities by integrating responses and to meet current of socio-economic and reduce negative into national policies, and future updated wellbeing and impacts of climate plans and programmes. Nationally Determined to strengthen change. Contributions as well as accountability of all recent developments stakeholders. and other international obligations. 1 This target is subjected to the outcome of the Long-Term Low Emissions Development Strategy (LT-LEDS) 42 The Structure and Key Elements of the Policy | National Climate Change Policy 2.0 Principles The Policy will be guided by four key principles to ensure that the goals and key actions support climate action in Malaysia. 01. 02. Common but Differentiated Just and Equitable Responsibility and Respective Transition Capabilities Malaysia’s participation at the international Transitioning to low carbon economy level will be done in an equitable manner and climate resilient development in accordance with the Paris Agreement’s should protect livelihoods of the rakyat, principle of “common and differentiated vulnerable groups and affected economic responsibilities with respective capabilities sectors to ensure no one is left behind. in the light of national circumstances”. 03. 04. Whole of Society Integrated and and Nation Approach multi-sectoral solutions Planning and implementation of climate Climate mitigation and adaptation action must be carried out in a participatory, interventions should strive to deliver co- inclusive and transparent manner with all benefits to society, building on the best segments of society. available science and local knowledge. 43 National Climate Change Policy 2.0 | The Structure and Key Elements of the Policy Objectives, Strategic Thrusts, Strategies and Key Actions The NCCP 2.0 has a set of objectives, strategic thrusts, strategies and key actions to guide Malaysia’s transition towards a low carbon economy and climate resilient development. The strategic thrusts- strategies-key actions framework is designed to achieve the policy objectives. There are four objectives within the policy which interlinks to the five strategic thrusts, supported by 15 strategies and 90 key actions (Figure 3). Strategic Thrust 1 aims to strengthen climate governance and institutional capacity. This is to ensure effective regulation and policies for climate action in line with Malaysia’s goal of achieving net-zero GHG emissions by 20502 and meeting our National Determined Contributions. To accomplish this, 3 overarching strategies and 12 key actions have been identified. These strategies encompass creating a robust legal framework, establishing an effective governance structure, enhancing institutional capacity and strengthening monitoring, reporting and verification (MRV) mechanism. The catalytic initiative, which is a legal instrument on climate change is essential to enhance accountability and streamline responsibilities. Strategic Thrust 2 centres on achieving low- carbon development that aligns with Malaysia’s national sustainable development agenda and international commitments. In this thrust, efforts will be enhanced in decarbonising key sectors and conserving natural sinks to reduce the nation’s greenhouse gas emissions. The approach involves 2 strategies and 23 key actions to reduce emissions in key sectors and enhancing carbon sinks and reservoirs. All actions are aligned with Malaysia’s sectoral policies and plans, guided by the Nationally Determined Contributions (NDC) Roadmap and Action Plan and the Long-term Low Emissions Development Strategy (LT-LEDS). 2 This target is subjected to the outcome of the Long-Term Low Emissions Development Strategy (LT-LEDS) 44 The Structure and Key Elements of the Policy | National Climate Change Policy 2.0 Strategic Thrust 3 emphasis climate resilience and adaptation measures that benefits socio-economic and development goals. Malaysia will adopt a risk-based approach to integrate adaptation into policies, sectoral plans, and development agendas – guided by the Malaysia National Adaptation Plan (MyNAP). Adaptation interventions will be risk-informed and evidence-based according to the best available scientific knowledge and data. This thrust comprises 4 strategies and 26 key actions. Strategic Thrust 4 focuses on scaling up blended financing and enabling a sustainable market to increase involvement of private sectors for a green economy. Under this thrust, the 2 strategies and 17 key actions will catalyse market-enabling instruments, including but not limited to carbon pricing, carbon markets, blended financing, incentives, and enhanced support for businesses. Strategic Thrust 5 prioritises collaborative climate action through domestic partnerships and international cooperation, aligned with global climate goals. Malaysia remains committed to proactive collaboration with partners to realise its climate aspirations, actively participating in international goals and processes on climate change, including the UNFCCC. This strategic thrust also seeks to fortify domestic partnerships with all stakeholders and intensifying support for society and vulnerable communities; as part of whole-of-nation approach in climate action. This thrust has 4 strategies 14 key actions. 45 National Climate Change Policy 2.0 | The Structure and Key Elements of the Policy Enablers The National Climate Change Policy 2.0 has four main enablers on cross-cutting issues to support the implementation of key actions across the five strategic thrusts: 1. 2. Human Capital Financing & Investment The implementation of the NCCP 2.0 require Significant funding and financing is required to substantial capabilities, capacities, and implement the NCCP 2.0. In this regard, Strategic competencies. This challenge is most pronounced Thrust 4 has already specifically addressed the need in the context of decarbonisation and energy to scale up blended financing and enabling market transition, which include transitioning workers to creation, in particular to increase greater involvement new employment opportunities and align existing from private sectors to stimulate a green economy. job profiles with growing demand for green skills In addition, the government will continue to facilitate in low carbon and new technologies such as and promote financing towards mitigation and hydrogen and carbon capture, storage and solutions. adaptation through various fiscal instruments and The enhancement of human capital also entails sources, including financing schemes, tax allowance, strengthening our scientific and research capabilities tax exemption, green sukuk issuances and budgetary to harness advanced scientific insights to improve allocations to relevant ministries. climate modelling and data analytics in promoting risk-informed planning and implementation. Efforts under the NCCP 2.0 will complement other relevant sectoral plans in green reskilling, enhancing capacity and increasing awareness in society as part of a holistic approach in advancing the national low- carbon economy and climate resilient agenda. 46 The Structure and Key Elements of the Policy | National Climate Change Policy 2.0 3. 4. Technology, Innovation Communication, Education & Infrastructure & Public Awareness Technology and innovation are critical enablers to The NCCP 2.0 calls for a whole-of-society achieve the objectives of the NCCP 2.0. Efforts will approach and shared responsibility in climate be intensified to create a conducive environment action that requires harnessing commitments for fostering innovation in the public and private from government bodies, private sectors, research sector for technologies such as clean energy institutions, academia, civil society organizations sources, low-carbon technologies, efficient water (CSOs), local communities and individuals. Efforts technologies and practices, resilient agriculture, in communication, education, public awareness, circular economy, and disaster risk reduction. In and outreach (CEPA) will be increased to enhance addition, this also involves substantial investments in awareness and education on climate action, supportive infrastructure for energy transition, green fostering behavioural and lifestyle changes while mobility, sustainable waste management, as well enabling adaptation to the adverse effects of as resilient infrastructure, including flood-resistant climate change. The crucial role of CSOs will designs and advanced water management systems. be further strengthened, leveraging on their More support will be provided in encouraging experience and community networks to ensure an innovation, research and development, streamlining inclusive transition to a low-carbon future and to technology transfer, and implementing local content prepare for the impacts of climate change, leaving requirements to ensure local sourcing. Collaboration no one behind in the collective efforts. Information among government, the private sector and research accessibility for climate action will be strengthened, institutions will be promoted to harness the potential including effective communication of government of technology and infrastructure solutions for a low initiatives to stakeholders. carbon and climate-resilient future. 47 National Climate Change Policy 2.0 | Kuala Lumpur, Malaysia. 48 Policy "Pursuing the transition to a low-carbon economy and enhancing climate resilience in line with Statement national sustainable development agenda and international climate commitments."

4 Objective Meet climate targets Mainstream climate action Catalyse means of implementation Undertake risk-based planning 1 2 3 4 5 Strengthen climate Achieve low carbon Emphasis adaptation Scale up blended financing Foster collaborative

5 Strategic governance and development that aligns and climate resilience and enable a sustainable climate action through Thrust institutional capacity for with national sustainable measures that can market to increase domestic partnerships effective planning regulation development agenda and benefits socio-economic involvement of private and international and implementation of international climate and development goals sectors for a green economy cooperation climate action commitment Catalytic • Climate Change Act • LT-LEDS • Carbon pricing instruments • Stakeholder engagement 8 • National Adaptation Plan Initiatives • Climate Change Entity • NDC Roadmap • Carbon market policy platform

15 Strategy 3 strategies 2 strategies 4 strategies 2 strategies 4 strategies The Structure and Key Elements of the Policy

92 Key 12 key actions 23 key actions 26 key actions 17 key actions 14 key actions Actions | Technology & Enablers Human Capital Financing & Investment CEPA Infrastructure Figure 3: Framework of the National Climate Change Policy 2.0

49 National Climate Change Policy 2.0 National Climate Change Policy 2.0 | The Structure and Key Elements of the Policy Under the five strategic thrusts, there are a total of 15 strategies and 92 key actions. Out of the 92 key actions, there are 8 catalytic initiatives to bring transformative changes that help lead to more significant policy outcomes (Figure 4). STRATEGIC THRUSTS STRATEGIES CATALYTIC INITIATIVES Strategic Thrust 1: Strategy 1: Create a comprehensive legal framework to regulate climate action To strengthen climate governance and Strategy 2: Establish an effective institutional Climate Change Act institutional capacity framework and governance structure to for effective planning, enhance management of climate action Climate Change Entity regulation and implementation of Strategy 3: Enhance institutional capacity climate action and data systems towards an informed climate action Strategic Thrust 2: Strategy 1: Reduce greenhouse gas Nationally Determined emissions in key sectors Contributions (NDC) To achieve low carbon Action Plan & Road Map development that aligns with national sustainable Long-Term Low development agenda and Strategy 2: Increase the capacity of carbon Emissions Development international climate sinks and reservoirs of greenhouse gases Strategy (LT-LEDS) commitment Strategic Thrust 3: Strategy 1: Implement risk-based planning and strategies to integrate adaptation across policies, sectoral and development plans To emphasise adaptation and climate Strategy 2: Undertake integrated approach resilience measures and best practices to maximise co-benefits that benefits socio-economic and National Adaptation Plan Strategy 3: Use best available science and development goals data to support evidence-based and risk-informed actions and decision making Strategy 4: Intensify research and development to better understand climate risks and develop innovative climate solutions Figure 4: Strategies and catalytic initiatives of the National Policy on Climate 2.0 50 The Structure and Key Elements of the Policy | National Climate Change Policy 2.0 STRATEGIC THRUSTS STRATEGIES CATALYTIC INITIATIVES Strategic Thrust 4: Strategy 1: Stimulate a green economy through market enablers Scale up blended Carbon pricing financing and enabling a instruments sustainable market to increase involvement of Carbon market policy Strategy 2: Scale up domestic and private sectors for a investments to combat climate change green economy Strategic Thrust 5: Strategy 1: Contribute to international Foster collaborative goal and process on climate change climate action through including the UNFCCC domestic partnerships and international cooperation Strategy 2: Promote cooperation in line with national circumstances through bilateral and multilateral frameworks, institutions and mechanisms Stakeholder engagement platform Strategy 3: Strengthen partnerships to synergise efforts in harnessing opportunities and reduce negative impacts of climate change Strategy 4: Enhance community awareness, preparedness and adaptive capacity to build climate resilience in an inclusive manner 51 National Climate Change Policy 2.0 Chapter 5 / Strategic Thrusts Strategic Thrusts | National Climate Change Policy 2.0 Strategic Thrust 1: To strengthen climate governance and institutional capacity for effective planning, regulation and implementation of climate action As climate change intensifies, there is an urgent need for improved governance, regulation, and coordination of climate action. The cross cutting and complex nature of climate action, which spans various sectors and ministries, has presented significant challenges for effective coordination and implementation. At the sub-national level, the challenge are exacerbated by the misalignment between national and state-level approaches to managing land and natural resources. Additionally, there is a lack of an overarching framework for both mitigation and adaptation to guide effective policy and planning at the state level. In response, Malaysia has taken a significant step forward by establishing the Malaysian Climate Action Council, which serves as the apex body for providing policy and strategic guidance. 53 National Climate Change Policy 2.0 | Strategic Thrusts Looking ahead, this policy reinforces the imperative to strengthen our climate governance and institutional capacity through several strategies and catalytic initiatives. These initiatives include developing a specific legislation on climate change and establishing a dedicated an entity for climate action. Enhanced coordination will be emphasised at the sub-national level, as land, water, and natural resources-essential components of climate resilience-fall under the jurisdiction of state governments. Therefore, it is crucial to empower state and local institutions and build their capacity to effectively address climate challenges. This strategic thrust consists of three strategies and 12 key actions. Strategy 1 Strategy 2 Strategy 3 Create a comprehensive Establish an effective Enhance institutional legal framework to institutional framework capacity and data regulate climate action and governance structure systems towards an to enhance management informed climate action of climate action Strategy 1: Create a comprehensive legal framework to regulate climate action Currently, Malaysia lacks a comprehensive climate change legal framework. While numerous legislations are relevant to climate change, there is currently no overarching climate change act or clear legal mechanisms specifically addressing it. Moving forward, this Policy emphasises a shift towards governing and establishing rules for climate action by defining key responsibilities, obligations and procedures to coordinate implementation in an integrated manner. KEY ACTION DESCRIPTION ST1S1KA1 Develop a regulatory framework on climate change to regulate and (Catalytic Initiative) coordinate climate action across all sectors and levels to fulfil climate obligations and commitments ST1S1KA2 Promote integration of climate actions into all relevant policies and legislations in sectors identified in NDC, LT-LEDS, MyNAP and any other related sector 54 Strategic Thrusts | National Climate Change Policy 2.0 Strategy 2: Establish an effective institutional framework and governance structure to enhance management of climate action This strategy will prioritise the establishment of a well-organised and efficient system of institutions and governance mechanisms to enhance the management and oversight of climate-related efforts and initiatives. This will involve the implementing a catalytic initiative to create a dedicated entity responsible for overseeing climate action in Malaysia, including the implementation of this Policy. Additionally, it will focus on strengthening the institutional structure to support a robust legal framework for addressing climate change. KEY ACTION DESCRIPTION ST1S2KA1 Strengthen current institutions and mechanisms to coordinate (Catalytic Initiative) the national climate change agenda together with international obligations, such as establishing a dedicated entity for climate change ST1S2KA2 Strengthen the governance and coordination of climate change legal framework across federal and state levels including by establishing appropriate institutional structure ST1S2KA3 Strengthen sectoral institutions and capacities to govern climate action towards meeting Malaysia’s NDC and climate targets, including sectors identified in the NDC, LT-LEDS, MyNAP and other related sectors ST1S2KA4 Enhance disaster risk governance to ensure effective operations in all phases of the disaster management cycle to improve preparedness in view of more frequent and extreme weather events ST1S2KA5 Enhance the governance of water and coastal sectors by implementing and exploring suitable institutional frameworks and governance structures to enhance climate resistance, such as the Integrated River Basin Management ST1S2KA6 Strengthen the capacity and capabilities of local authorities to enable effective planning, implementation, monitoring and evaluation of low carbon and climate resilience initiatives Padas River, Beaufort, Sabah. 55 National Climate Change Policy 2.0 | Strategic Thrusts BOX 1: Malaysia’s Nationally Determined Contributions to the Paris Agreement In 2021, Malaysia has submitted its second updated Nationally Determined Contributions to the United Nations Framework Convention on Climate Change (UNFCCC). As part of the revised NDC, Malaysia pledged to unconditionally reduce 45% of economy-wide carbon intensity (against GDP) by 2030 compared to the 2005 levels. Five main sectors were selected which is energy, industrial processes and product use, waste, agriculture and LULUCF. In addition, Malaysia has included seven greenhouse gases in the scope, which include methane and nitrous oxide in addition to carbon dioxide. As part of its updated NDC, Malaysia has included accompanying information on its adaptation strategies; focusing on the management of water resources and security, coastal resources, agriculture and food supply, urban and infrastructure resilience, public health as well as forestry and biodiversity. In addition, key adaptation cross sectoral areas are included on 1) disaster risk management; 2) climate financing support, technology transfer and capacity building and 3) monitoring and evaluation mechanism. Source: Malaysia’s Update of Its First Nationally Determined Contribution, UNFCCC Strategy 3: Enhance institutional capacity and data systems towards an informed climate action This strategy aims to strengthen institutional capacity and improve the data collection framework by investing in data infrastructure, capacity development, and fostering collaboration among diverse stakeholders. The dedicated entity on climate change is expected to play a pivotal role as the central hub for gathering, managing and analysing crucial data while establishing higher standards. Additionally, there will be a concerted effort to increase human capital and promote green jobs to meet the growing demand for skilled labour in low-carbon development and achieve net-zero aspirations. 56 Strategic Thrusts | National Climate Change Policy 2.0 KEY ACTION DESCRIPTION ST1S3KA1 Strengthen national GHG emissions inventory through establishing a data repository for collecting, analysing, managing and reporting GHG emissions data ST1S3KA2 Improve climate modelling, monitoring and evaluation systems to support low carbon and climate resilience planning ST1S3KA3 Communicating climate-related data including climate hazards through a multi-hazard data centre that promotes efficient data and information sharing, improving accessibility and meeting various stakeholder needs ST1S3KA4 Enhance technical capacity and collaboration among the local and international research community to generate and understand best available science on climate change Solar panels in Semporna, Sabah. 57 National Climate Change Policy 2.0 | Strategic Thrusts Strategic Thrust 2: To achieve low carbon development that aligns with national sustainable development agenda and international climate commitment In contributing to the mitigation of global climate change and pursuing low carbon development, the largest extent of the challenge is in decarbonising critical sectors to meet international commitments and addressing the transition risks associated with climate change. This challenge is uniquely intricate for Malaysia, given its status as an oil and gas-producing country. As a developing nation, Malaysia also relies on fossil fuels as the bedrock of its economy. Notably, the energy sector, responsible for approximately 78% of the nation’s greenhouse gas emissions as of 2020, will be the primary focus for reducing greenhouse gas emissions. However, Malaysia possesses a valuable natural endowment in the form of substantial forest and tree cover, which stands at 54.58% as of 202035. This natural asset functions as a vital carbon sink, offsetting about two-thirds of the country’s greenhouse gas emissions— an indispensable component in our trajectory towards achieving net-zero. The strategic thrusts presented herein delineate a two-pronged approach aimed at achieving a net- zero GHG emissions nation by 2050. This overarching strategy will be shaped by the Long-Term Low Emissions Development Strategy (LT-LEDS), emphasising extensive decarbonisation strategies and carbon dioxide removals, both nature- and technology-based. The roadmap for the immediate 58 Strategic Thrusts | National Climate Change Policy 2.0 future, leading up to 2030, will be guided by the Nationally Determined Contributions (NDC) Roadmap and Action Plan, focusing on curbing emission intensity in key sectors. All key actions are aligned with Malaysia’s existing sectoral plans, notably the National Energy Transition Roadmap (NETR) and the Low Carbon Nation Aspiration 2040. This strategic thrust consists of two strategies and 23 key actions. Strategy 1 Strategy 2 Reduce greenhouse gas Increase the capacity of emissions in key sectors carbon sinks and reservoirs of greenhouse gases Strategy 1: Reduce greenhouse gas emissions in key sectors This overarching strategy outline the measures to reduce sectoral emissions across energy, transportation, agriculture, waste management, industrial processes, and product use. It will be guided by two catalytic initiatives. First is the NDC roadmap, aimed at reducing emission intensity by 45% by 2030 compared to 2005 levels3, which contains short-term and readily attainable climate mitigation measures. Second, the LT-LEDS will outline long-term strategies and establish science- based targets to ensure that our mitigation and decarbonisation pathways are grounded in scientific evidence. Malaysia has already embarked on an energy transition away from fossil fuel-based systems, with appropriate plans and initiatives in place, such as the National Energy Transition Roadmap and Low Carbon Nation Aspiration 2040. This transition will also necessitate new technological solutions, such as hydrogen and batteries including the human capital and skills necessary to explore, develop, and maintain them. Additionally, the policy focuses on creating a holistic green mobility system by augmenting the public transport modal share and facilitating electric vehicle adoption. The scope also extends to sustainable urban planning, effective waste management, promoting a circular economy, reducing agricultural emissions and curbing methane emissions. CODE KEY ACTIONS ST2S1KA1 Develop, track and review the Nationally Determined Contributions (Catalytic Initiative) (NDC) Roadmap and Action Plan to chart the actions needed to achieve Malaysia’s climate action goals. ST2S1KA2 Implement the Long-Term Low Emission Development Strategy (Catalytic Initiative) (LT-LEDS) to meet Malaysia’s aspiration to achieve net-zero GHG emissions by 2050 3 This target is contingent upon future revisions of Malaysia’s updated NDC under the Paris Agreement as of 2021 59 National Climate Change Policy 2.0 | Strategic Thrusts CODE KEY ACTIONS ST2S1KA3 Enhance efforts to increase renewable energy (RE) capacity and percentage of generated electricity from renewable energy to meet relevant national targets ST2S1KA4 Reduce dependency on coal power plants to meet targets based on the National Energy Transition Roadmap ST2S1KA5 Develop just transition strategies to address risks of energy transition including impacts on jobs, labour and community and upskilling workforce in green jobs ST2S1KA6 Study the usage of fossil fuel sources for the transition to a low- carbon economy, such as natural gas and liquid natural gas, alongside the potential of new energy sources such as hydrogen. ST2S1KA7 Shift towards the use of public transportation by encouraging and facilitating greater public transport ridership, mode shift and addressing issues related to first-last mile connectivity, including the aim of achieving the relevant transport modal share4 ST2S1KA8 Promote modal and fuel shift for enhanced green mobility by improving public accessibility to electric vehicles and developing relevant standards for fuel efficiency ST2S1KA9 Promote the use of next-generation vehicles in line with policies such as National Automotive Policies and Low Carbon Mobility Blueprint ST2S1KA10 Scale up biofuel usage, including implementing relevant policies such as the National Biodiesel Programmes for transportation and industrial sector ST2S1KA11 Enhance measures to increase energy efficiency to achieve the targets of National Energy Efficiency Action Plan and National Energy Transition Roadmap ST2S1KA12 Encourage cities to develop plans to reduce emissions, aligned with relevant policies such as the National Low Carbon Cities Masterplan ST2S1KA13 Encourage adoption of green and resilient city concepts in urban and townships planning, such as the low-carbon city, sponge city, smart city and transit-oriented development through planning guidelines and nature-based solutions ST2S1KA14 Implement relevant initiatives in solid waste management such as separation at source; incentives for recycling activities to achieve solid waste recycling rate in line with sectoral targets5 4 The Low Carbon Aspirations set a 40-60 public-private transport modal split by 2025 5 Under the 12th Malaysia Plan, Malaysia has set a target of achieving national recycling rate of 40 per cent by 2025 60 Strategic Thrusts | National Climate Change Policy 2.0 CODE KEY ACTIONS ST2S1KA15 Enhance the adoption of circular economy and sustainable consumption and production for waste management including promoting mechanisms such as Extended Producer Responsibility (EPR), user-pay and polluter-pay principles, and self-regulation among industries. ST2S1KA16 Enhance efforts to reduce GHG emissions of the agro-food and Agricommodity sectors by facilitating improvements in output efficiency and adoption of sustainable agriculture practices. ST2S1KA17 Strengthen measures to reduce methane emissions, including reduction of intensity at upstream level and for waste, oil and gas production, the agriculture sector and other relevant sectors ST2S1KA18 Support the diffusion and promotion of new low -emission technologies and energy resources, including low-carbon hydrogen production and next-generation vehicles BOX 2: NATIONAL ENERGY TRANSITION ROADMAP (NETR) The National Energy Transition Roadmap (NETR) was launched in 2023 to guide the country’s energy transition away from fossil fuel-based systems. The NETR emphasises balancing climate mitigation and the need to bolster net socioeconomic values such as GDP and job creation to support Malaysia’s aim to achieve net-zero GHG emissions by 2050. The roadmap has four strategic pillars, 12 strategies, 31 action plans and five cross-cutting enablers which aims to reduce at least 10 metric ton of GHG emissions per year and targeting a 70 per cent share of renewable electricity capacity by 2050, a significant leap from the current 25 per cent. The NETR is guided by a broad spectrum of energy transition levers which include energy efficiency, renewable energy, hydrogen, bioenergy, green mobility, and carbon capture, utilisation and storage (CCUS) that can potentially generate an estimate of MYR 25 billion in investments. The breadth of NETR aspirations demonstrates Malaysia’s determination to tackle the energy transition from multiple angles while keeping options open to innovation and emerging technologies. Source: National Energy Transition Roadmap, Ministry of Economy 61 National Climate Change Policy 2.0 | Strategic Thrusts Strategy 2: Increase the capacity of carbon sinks and reservoirs of greenhouse gases Malaysia’s greatest asset in contributing to curbing global climate change has been in its rich natural assets, which play a pivotal role in its decarbonisation pathways and long-term climate ambitions. The country has established the direction and policy framework to safeguard the green lung of the country through policies such as Malaysia Policy on Forestry (2021) and National Policy on Biological Diversity 2022-2030. This strategy aligns with existing sectoral policies in promoting the protection, conservation and restoration of Malaysia’s nature and ecosystems, both land and oceans, towards achieving net-zero GHG emissions by 2050. This will be pursued through promoting sustainable forest management, expanding protected area systems and sustainable land practices. Besides natural carbon sinks, decarbonisation efforts will also be supplemented by a responsible deployment and utilisation of emerging technologies such as carbon capture, utilisation and storage (CCUS) which the NETR has identified as one of the energy transition levers. CODE KEY ACTIONS ST2S2KA1 Conserve and enhance land and marine-based carbon sinks though maintaining and extending forest and tree cover including a representative system of protected areas and other effective area- based conservation measures (OECM) ST2S2KA2 Scale up ocean-based mitigation action by strengthening protection, conservation, and restoration of marine and coastal ecosystems, such as mangroves and seagrass beds ST2S2KA3 Enhance efforts to conserve forest sustainably, including limiting the total oil palm cultivated areas (in line with the current cap6) ST2S2KA4 Promote sustainable land management practices that increase soil carbon sequestration including afforestation, reforestation and sustainable agricultural practices ST2S2KA5 Support the diffusion and investment in emerging technologies, such as carbon capture, utilisation and storage (CCUS), particularly in hard- to-abate sectors 6 In 2019, the government has announced the policy to limit total oil palm cultivated area at 6.5 million hectares until 2023 Community mangrove restoration efforts in Gelang Patah, Johor. 62 Strategic Thrusts | National Climate Change Policy 2.0 Strategic Thrust 3: To emphasise adaptation and climate resilience measures that benefits socio-economic and development goals Towards ensuring a climate resilient development, a major challenge lies in managing the physical risks associated with global climate change. According the IPCC 6th assessment report, the average global temperature have reached 1.1°C above the pre-industrial levels, and it was observed that global temperatures for most months in 2023 were 1.5°C above the pre-industrial levels36. While the imperative to adapt to climate change is clear, the uncertainty in fully understanding the extent of the impacts remains high due to the high complexity of the climate and environment system. How Malaysia copes with inevitable climate change will involve not only specific adaptation actions but enhancing our adaptive capacity and resilience to reduce, adjust to, and, if possible, take advantage of the consequences of these changes. Moving forward, Malaysia will adopt a risk-based approach that aims to integrate adaptation seamlessly across all policies, sectoral plans, and development agendas. But taking into cognisance that undertaking comprehensive planning is a long-term approach, immediate actions must be taken to curb climate change impacts that’s already affecting our economy and communities. In this regard, integrated approach and best practices will be undertaken to fortify our defences against climate impacts but also provide co-benefits with climate mitigation and broader development goals. More importantly, our measures will be anchored on best available science and data to foster evidence-based and risk- informed actions across whole of society. Research and developments will be intensified to generate knowledge for risks understanding and build solutions. 63 National Climate Change Policy 2.0 | Strategic Thrusts This strategic thrust consists of four strategies and 26 key actions. Strategy 1 Strategy 2 Strategy 3 Strategy 4 Implement risk- Undertake Use the best Intensify research based planning integrated available science and development to and strategies to approaches and and data to support better understand integrate adaptation best practices evidence-based climate risks and across policies, to maximise co- and risk-informed develop innovative sectoral and benefits actions and climate solutions development plans decision-making Strategy 1: Implement risk-based planning and strategies to integrate adaptation across all policies, sectoral and development plans To proactively anticipate and manage current and future climate risks, it is crucial to implement government-led risk-based planning to ensure a resilient development. The National Adaptation Plan will guide this strategic process to integrate adaptation across all relevant policies and plans. In addition, this policy will emphasise expanding vulnerability assessments to include high-risk regions and critical sectors, developing new risk frameworks, and boosting adoption of existing frameworks. From water resource management to flood risk reduction and drought preparedness, the focus will be placed on managing water-related hazards. In the meantime, adaptation planning will be prioritised in critical sectors including water resources, land use planning, coastal resources, infrastructure planning, and cities to build resilience against physical risks such as flood, sea level rise, drought, landslide, heat and saltwater intrusion. CODE KEY ACTIONS ST3S1KA1 Formulate and implement the National Adaptation Plan while (Catalytic Initiative) promoting its integration into national, sectoral and sub-national development plans and programmes ST3S1KA2 Integrate climate adaptation and disaster risk reduction by aligning relevant policies and plans such as the National Adaptation Plan and the National Policy on Disaster Risk Reduction 64 Strategic Thrusts | National Climate Change Policy 2.0 CODE KEY ACTIONS ST3S1KA3 Undertake a comprehensive national climate risks assessment to identify and understand the potential risks and vulnerabilities from climate change impacts in various sectors and regions including: • water and coastal resources; • agriculture and food security; • forestry and biodiversity: • infrastructure: • energy and built environment; and • public health ST3S1KA4 Explore mechanisms and tools to integrate climate change considerations at every level of the planning process ST3S1KA5 Develop and implement strategies and tools to manage water-related risks such as flood, drought, sea level rise and storm surge to enhance water resource management, services and security, aligned with the Water Sector Transformation Agenda 2040 and Climate Change Adaptation Framework for Water Sectors ST3S1KA6 Promote a shift towards climate-resilient infrastructure by facilitating risk-informed planning and design, such as considering climate risks in infrastructure projects, specifically flood and coastal protection measures, water infrastructure, energy systems, public health, disaster facilities, agriculture facilities and transportation ST3S1KA7 Strengthen the governance of coastal and marine areas to unlock the potential of blue economy in moving towards integrated, effective and sustainable management of ocean resources ST3S1KA8 Promote climate resilience landscape and seascape by integrating climate risks into land use and spatial planning, ecological connectivity and marine spatial planning ST3S1KA9 Enhance capacity building to undertake climate vulnerability and adaptation assessment in relevant sectors ST3S1KA10 Enhance planning and implementation of climate and disaster resilient cities among local authorities by widespread adoption of relevant guidelines and standards. 65 National Climate Change Policy 2.0 | Strategic Thrusts BOX 3: WATER SECTOR TRANSFORMATION 2040 The Water Sector Transformation 2040 (WST 2040) is a national agenda that aims to transform the water sector into a dynamic and vibrant economic sector that can contribute significantly to the national GDP, provide good quality and affordable water to the Rakyat, generate new job opportunities and facilitate resilient development of science, technology, innovation, and economy (STIE) and research, development, innovation, and commercialisation (RDIC) in the sector. Focusing on four main agendas, WST 2040 seek to 1) ensure continuous and sustainable water supply for the people; 2) improving the financial sustainability of the national water industry; 3) improving access to water supply and the efficiency of water industry operations; and 4) enhancing the resilience of the water sector against climate change. Source: Water Sector Transformation 2040 Strategy 2: Undertake integrated approach and best practices to maximise co-benefits Immediate actions are required to address the increasing scale and frequency of natural hazards exacerbated by climate change. These hazards, including floods, droughts, heat waves, sea level rise, and storm surges, threaten Malaysia’s economy, food security, infrastructure, natural environment, and communities. The policy will emphasise an integrated approach and best practices as part of its adaptation interventions that can deliver co-benefits to the greatest extent feasible. Rather than relying solely on conventional technological and infrastructure solutions, our natural assets will be leveraged as much as possible in this strategy by deploying nature-based solutions at scale to continue providing fundamental ecosystem services for building climate resilience. The promotion of climate-resilient and sustainable practices in water resources management, coastal and marine resource management, agriculture, biodiversity, and land use will be intensified. 66 Strategic Thrusts | National Climate Change Policy 2.0 CODE KEY ACTIONS ST3S2KA1 Promote and upscale ecosystem-based adaptation by conserving, restoring and sustainably manage ecosystems including coastal habitats to ensure provision of key ecosystem services for mitigation and adaptation including green cover expansion and watershed, wetlands and river conservation ST3S2KA2 Enhance diversification and exploration of alternative water sources such as off river storage, groundwater, coastal reservoir, underground water storage, rainwater harvesting and other sources suited to local characteristics ST3S2KA3 Increase sustainability of water resources and flood resilience by promoting application of nature-based and alternative technology, protecting water catchment areas and adoption of sustainable drainage and tidal gate systems at the local level ST3S2KA4 Undertake suitable coastal protection measures such as grey-green infrastructure and ecosystem-based adaptation in vulnerable areas depending on local characteristics ST3S2KA5 Promote sustainable agriculture practices that improve climate resilience, biodiversity conservation, soil health, productivity, waste reduction, and crop efficiency, particularly in climate-vulnerable areas, including through advanced farming techniques and technology ST3S2KA6 Increase protection of wildlife against climate change such as establishing wildlife reserves, preserving genetic diversity and enhancing human-wildlife conflict management in disasters ST3S2KA7 Promote responsible use of ocean and fisheries resources through appropriate measures designed to increase climate resilience and enhance the livelihoods of coastal communities ST3S2KA8 Pilot smart technologies adoption and innovation in reducing carbon emissions, climate adaptation, waste management and disaster risk reduction Impacts of flooding and landslide in Karak, Pahang. 67 National Climate Change Policy 2.0 | Strategic Thrusts Strategy 3: Utilise the best available science and data to support evidence-based, risk-informed actions and decision-making for climate action. Climate actions are strongly determined by climate science. Significant progress was made in understanding the impacts of climate change in Malaysia on critical sectors such as water resources, agriculture, natural resources, and public health, as well as forecasting climate trends through continuously improved climate modelling. Despite the abundance of available information and tools, there is a need to utilise this science more in our climate response, from planning and implementation to decision-making, especially in disaster risk management, agriculture, and water resources management at all levels and with all stakeholders. In the future, this policy will prioritise ensuring that adaptation measures are grounded in scientific evidence. CODE KEY ACTIONS ST3S3KA1 Enhance the data collection, analysis and management of hazard, disaster and climate risk-related data to improve risks understanding ST3S3KA2 Strengthen climate-disaster readiness and response by enhancing integrated weather and flood forecasting, multi-hazard early warning system and moving towards impact-based forecasting ST3S3KA3 Enhance adoption of indices and tools in all sectors including the agriculture sector to strengthen agricultural resilience to guide crop suitability, management practices and infrastructure planning ST3S3KA4 Explore indices, mechanisms and tools to monitor water stress level, sea level rise and coastal inundation for river basins to guide adaptation planning and actions in water resources management and river basin management Pantai Jambu Bongkok, Marang, Terengganu. 68 Strategic Thrusts | National Climate Change Policy 2.0 Strategy 4: Intensify research and development to better understand climate risks and develop innovative solutions to enhance climate preparedness Significant research has been conducted in Malaysia by the government and various Malaysian stakeholders, such as academia, civil society, and the private sector. These efforts will be intensified further to generate the best available science that is high confidence, granular, and credible in order to guide climate action in critical areas such as agriculture, food security, ecosystems, and human health. Additionally, research and development for innovation and climate solutions will be bolstered to stimulate and increase the uptake and adoption of products, technologies and services developed from R&D for climate mitigation and adaptation. CODE KEY ACTIONS ST3S4KA1 Enhance, intensify and implement a national R&D agenda and coordinating mechanism to oversee R&D activities on climate change including in water, coastal, estuary, cities & infrastructure, agriculture, forestry and public health ST3S4KA2 Promote agricultural research and innovations to increase varieties of climate-resilient and disease-resistant food crops, commercial crops, livestock breeds, fish as well as technologies and practices for sustainable farming systems ST3S4KA3 Intensify research to understand climate change impacts on biodiversity including ecosystems, species, genetic diversity and pollinations ST3S4KA4 Intensify research on health impacts of climate change including climate-sensitive diseases, particularly vector-, water-, zoonotic- and air-borne diseases as well as illness due to negative environmental impacts Hawksbill Sea Turtle in Sipadan Island, Sabah. 69 National Climate Change Policy 2.0 | Strategic Thrusts Strategic Thrust 4: Scale up blended financing and enable a sustainable market to increase involvement of private sectors Globally, there is generally a large gap in financing climate action. As a developing nation, Malaysia faces a similar challenge in securing adequate financial resources to transition to low-carbon development and tackle the adverse impacts of climate change. It is estimated that the country requires RM 350 billion in investments to achieve net-zero7 and an estimated RM 392 billion over the next 50 years to adapt and mitigate climate change impacts8. In 2021 alone, the country experienced losses amounting to RM 6.1 billion due to devastating floods9, which requires increasing pressure on government coffers for relief, restoration, and building back better. Furthermore, Malaysia, as an upper-middle-income country, has reduced its reliance on international finance for its own development as it is no longer a net recipient of Official Development Assistance (ODA). Moving forward, innovative ways of financing climate action will be introduced, particularly by increasing the involvement of the private sector, which is increasingly aware of climate risks. This policy emphasises the expansion of domestic green financing through several strategies, with the primary focus on market enablers to stimulate the green economy, which will be achieved through the implementation of carbon pricing instruments. Additionally, the policy aims to scale up domestic financing and investments by encouraging private sector participation and establishing a sustainable financing framework. This strategic thrust consists of two strategies and 17 key actions. Strategy 1 Strategy 2 Stimulate a green economy Scale up domestic financing through market enablers and investments to combat climate change 7 Bank Negara Annual Report 2022 8 The Star (2023) M’sia needs almost RM400bil to adapt to climate change, says Nik Nazmi. https://www.thestar.com.my/news/nation/2023/07/13/ m039sia-needs-almost-rm400bil-to-adapt-to-climate-change-says-nik-nazmi 9 DOSM 70 Strategic Thrusts | National Climate Change Policy 2.0 Strategy 1: Stimulate a green economy through market enablers This strategy aims to stimulate the green economy through market enablers such as enhancing policy and regulations, changing incentive structures, and deploying market-based mechanisms. This policy will assist in taking steps to correct the market failures related to climate change by exploring the feasibility of carbon pricing instruments that capture the external costs of greenhouse gas emissions. Moving forward, there is a need for clear direction, rules, and guidelines on Malaysia’s strategy for carbon pricing. Efforts will also be enhanced to ensure responsible carbon trading, particularly in response to the growing interest from the private sector in technological and nature-based carbon removal solutions as part of their net-zero and sustainability strategies. This policy will facilitate and guide Malaysia’s carbon market in promoting market creation for low-carbon and climate-resilient products through the actions. CODE KEY ACTIONS ST4S1KA1 Explore the feasibility of carbon pricing instruments which includes (Catalytic Initiative) various carbon pricing options and implementation ST4S1KA2 Develop a national policy for carbon market to provide guidance on (Catalytic Initiative) carbon trading including on international compliance and voluntary carbon markets ST4S1KA3 Develop strategies to address the impacts of international carbon pricing policies, such as those addressing carbon leakage, to Malaysia ST4S1KA4 Establish a system to coordinate the domestic and international carbon market, including for undertaking corresponding adjustments on Internationally Transferred Mitigation Outcomes (ITMO) in line with the UNFCCC ST4S1KA5 Support the adoption of ESG practices through reporting and climate risk disclosures for Micro, Small and Medium Enterprises to build competitiveness as to greening the supply chain ST4S1KA6 Enhance availability, accessibility and quality of climate data to improve the quality and accuracy of climate disclosures and reporting ST4S1KA7 Develop and publish harmonised climate and sustainability reporting guidelines, comparable to international standards, to support the adoption of ESG and climate-related disclosures, taxonomies, and reporting procedures ST4S1KA8 Encourage industries to explore low carbon business activities through provision of training, business opportunities and suitable incentives 71 National Climate Change Policy 2.0 | Strategic Thrusts ST4S1KA9 Develop a sustainable financing mechanism for REDD+ implementation and other recognised mechanisms ST4S1KA10 Explore rationalisation of environmentally inefficient subsidies including fossil fuel subsidies Strategy 2: Scale up domestic financing and investments to combat climate change This strategy aims to scale up domestic green financing by integrating climate change into macroeconomic policies, fiscal planning and mechanisms, budgeting, investment management, and procurement practices. Malaysia has reached a notable milestone by launching the world’s first sovereign sustainability sukuk and enhancing the financial industry’s capacity for integrating climate risk assessments into financial decision-making processes. Moving forward, concerted efforts will be intensified to unlock and expand green finance, facilitating substantial invest in a low-carbon and resilient future. CODE KEY ACTIONS ST4S2KA1 Explore mechanisms to fund the implementation of climate action, (Catalytic Initiative) including to strengthen institutions and mechanism such as establishing and operating a dedicated entity for climate change ST4S2KA2 Mobilise innovative financing instruments to facilitate financial flow to meet climate action needs ST4S2KA3 Enhance capacities of financial institution to evaluate and approve climate-related project proposals ST4S2KA4 Explore innovative fiscal mechanisms to incentivise state governments to conserve natural assets for climate action such as forest conservation certificates and forest carbon offsets ST4S2KA5 Strengthen market enabling instruments such as promoting green procurement and fiscal incentives ST4S2KA6 Conduct periodic financial needs assessments for Malaysia to achieve its adaptation and mitigation needs ST4S2KA7 Enhance processes to increase and monitor climate expenditure in federal Budgets such as determining the need for a climate budget tagging 72 Strategic Thrusts | National Climate Change Policy 2.0 BOX 4: Ecological Fiscal Transfer Ecological Fiscal Transfer (EFT) is a government fiscal policy and mechanism of transferring public revenue between levels of government within a country, based on agreed ecological indicators and indices. Since 2019, Malaysia has introduced the EFT as part of annual budget cycles to incentivise state government in the protection of Permanent Reserved Forest and Protected Areas. The government has increased the annual allocation of EFT; from RM 70 million in 2022, to RM 150 million in 2023 and MYR 200 million in 2024. The EFT mechanism is currently institutionalised under the Pemberian Berdasarkan Tahap Pembangunan Ekonomi, Infrastruktur dan Kesejahteraan Hidup (TAHAP). The government has aimed to enhance the implementation of EFT by incorporating them further into legal and institutional frameworks, which has been highlighted by several policies such as the National Policy on Biological Diversity 2022 – 2030. Source: Budget speeches, biofin.org, National Policy on Biological Diversity 2022 – 2030 73 National Climate Change Policy 2.0 | Strategic Thrusts Strategic Thrust 5: Foster collaborative climate action through domestic partnerships and international cooperation Climate change is a transboundary environmental issue as emissions released in one region can have impacts across borders. As a collective action problem, climate change requires international cooperation. Furthermore, climate change has increasingly become an issue of high diplomacy, requiring strategic responses at the international level. Throughout its history, Malaysia has maintained a commitment to combat climate change, dating back to the Kyoto Protocol and continuing with the Paris Agreement. This policy reaffirms Malaysia’s role in contributing to global climate change efforts, guided by the principles of common but differentiated responsibilities and respective capabilities in the light of national circumstances. Internationally, Malaysia will remain actively engaged in established treaties such as the United Nations Framework Convention on Climate Change (UNFCCC) while fostering cooperation through bilateral and multilateral frameworks and institutions. Domestically, Malaysia will strengthen partnerships and collaboration with all stakeholders, centred on the whole of nation approach to climate action. At the same time, efforts will increase on educating and enhancing the adaptive capacity of communities in regard to climate resilience. This strategic thrust consists of four strategies and 14 key actions. 74 Strategic Thrusts | National Climate Change Policy 2.0 Strategy 1 Strategy 2 Strategy 3 Strategy 4 Contribute to Promote Strengthen Enhance international goal cooperation in partnerships to community and process on line with national synergise efforts awareness, climate change circumstances in harnessing preparedness and including the through bilateral opportunities and adaptive capacity UNFCCC and multilateral reduce negative to build climate frameworks, impacts of resilience in an institutions and climate change inclusive manner mechanisms Strategy 1: Contribute to international goal and process on climate change including the UNFCCC As a Party to the UNFCCC and its legally binding instruments, Malaysia has implemented and fulfilled its reporting obligations and subscriptions to the various frameworks developed to address climate change. This Policy seeks to carry this mandate further by perpetually enhancing our capacity to meet the current and future requirements under the UNFCCC. CODE KEY ACTIONS ST5S1KA1 Enhance active participation with climate change related international (UNFCCC) and regional fora to contribute to international goals and processes on climate change ST5S1KA2 Strengthen the capacity on climate change reporting based on international standards to continuously meet the requirement of UNFCCC including enhanced transparency framework and global stocktake ST5S1KA3 Strengthen reporting mechanism for participation in the international carbon market, including developing the necessary infrastructure to support carbon market development, ensuring alignment with the UNFCCC requirements ST5S1KA4 Facilitate responses to cross border movements of goods and services affected by extraterritorial policies such as the EU Carbon Border Adjustment Mechanism (CBAM) and the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) 75 National Climate Change Policy 2.0 | Strategic Thrusts Strategy 2: Promote cooperation in line with national circumstances through bilateral and multilateral frameworks, institutions and mechanisms Despite being a developing country, Malaysia’s latest Nationally Determined Contributions are unconditional upon receiving financial, technology transfer and capacity building from developed countries. Nonetheless, the high level of scale and ambition require support from international sources. Towards this end, Malaysia will continue to work with its partners through bilateral and multilateral partnerships towards achieving its climate targets and pursuing climate resilient development. CODE KEY ACTIONS ST5S2KA1 Leverage multilateral and bilateral financing, as well as investment, through international and regional economic cooperation. ST5S2KA2 Enhance international collaboration on low carbon technology and innovations ST5S2KA3 Enhancing collaborations that will assist Malaysia in fulfilling national climate change obligations and commitments including capacity building and technical support Strategy 3: Strengthen partnerships to synergise efforts in harnessing opportunities and reduce negative impacts of climate change In line with the whole of nation approach to climate action, this strategy reaffirms Malaysia to broaden and deepen the scope of engagement with various stakeholders towards sharing of knowledge, expertise, technology, and financial resources. Malaysia will continue to enhance consultation and cross sectoral collaborations in enhancing dialogue, planning, implementation including on localised climate solutions. CODE KEY ACTIONS ST5S3KA1 Establish stakeholder engagement and consultation platforms (Catalytic Initiative) with the private sectors, CSOs, think tanks, academia, as well as representatives from vulnerable communities including indigenous peoples, women, youth and persons with disabilities, aimed at enhancing dialogue in climate action ST5S3KA2 Support institutions at the subnational level with climate change (Catalytic Initiative) agendas, such as state action councils, to enhance coordination of climate action between federal and state level ST5S3KA3 Strengthen cross-sectoral collaboration on climate action between ministries, agencies and government-related bodies towards a more coordinated and effective policy implementation ST5S3KA4 Enhance collaboration on climate solutions with non-government stakeholders including CSOs, NGOs and private sectors as advisory and delivery partners 76 Strategic Thrusts | National Climate Change Policy 2.0 Strategy 4: Enhance community awareness, preparedness and adaptive capacity to build climate resilience in an inclusive manner Addressing climate change necessitates mobilising commitments and actions at all levels of society. This strategy aims to induce behavioural shifts by elevating awareness and providing education about the pressing nature of climate change. Simultaneously, it prioritises adaptive interventions using a community-based approach, bolstering the resilience of local communities in adapting to the severe impacts of climate change while advocating for community-based natural resource management. In line with the principles of a just transition, these efforts ensure that all segments of society are equipped to withstand the effects of climate change. CODE KEY ACTIONS ST5S4KA1 Engage and educate the public and communities on green practices and environment sustainability such as through public touchpoint projects ST5S4KA2 Promote community-based natural resource management such as community-based agroforestry, agroecology practices and urban farming ST5S4KA3 Enhance local community preparedness and recovery for climate- related hazards and disasters, taking into account the requirements of vulnerable groups and gender perspective Disaster relief efforts for flood victims in Taman Sri Muda, Selangor. 77 National Climate Change Policy 2.0 Chapter 6 / Policy Delivery Policy Delivery | National Climate Change Policy 2.0 The NCCP 2.0 establishes a strategic framework for Malaysia’s climate policies and serves as a overarching guide for various ministries, agencies, and stakeholders. The delivery of the policy will be driven by implementing instruments including a legislative climate change bill and market-based mechanisms such as the carbon market. While the policy articulates overarching goals such as the Nationally Determined Contribution (NDC) and the net-zero target, specific sectoral targets and implementation will be delineated through plans such as the Long-Term Low Emission Development Strategy and the NDC Roadmap and Action Plan. As a living document, the NCCP 2.0 will be subject to periodic reviews to ensure it is responsive to emerging needs and circumstances. Regulatory and financing instrument The NCCP 2.0 provides the means for the government to promulgate the National Climate Change Act as a dedicated legal instrument to implement the policy. The Act will enable the establishment of policies, measures, and actions to address climate change in Malaysia and fulfil international obligations. Some of these actions includes establishing a governance system including a dedicated climate change entity, enhancing data and information disclosure, ensuring effective operation of the national carbon market, and establishing financial and funding mechanisms. Financing the implementation of the NCCP 2.0 will leverage a range of innovative mechanisms. This will include the establishment of a dedicated climate change funding mechanism, the implementation of climate budget tagging, and the exploration of suitable economic and financing instruments to support the national climate change agenda. Additionally, substantial funds for climate-related and carbon projects is anticipated to be generated through carbon market mechanisms, as developed and guided by the National Policy on Carbon Market. The revenue from carbon credit transactions is anticipated to generate additional income, attract The Prime Minister Office, Putrajaya both domestic and international investors, boost GDP and create employment opportunities in green jobs. 79 National Climate Change Policy 2.0 | Policy Delivery Institution and governance The proposed entity on climate change will be the main body overseeing the implementation and coordination of the NCCP 2.0. The entity’s mandate will advise, develop, coordinate, and implement the national climate change agenda and actions. The Majlis Tindakan Perubahan Iklim Negara (MTPIN), chaired by the Prime Minister and attended by state Chief Ministers, will continue to serve as the apex platform providing policy guidance and direction on the climate change agenda. Implementation will be supported through multi-national platforms such as the National Decarbonisation Committee, the National Committee on Energy Transition, the National Physical Planning Council, and the National Biodiversity Council by undertaking climate-related initiatives that supports NCCP 2.0. At the state level, the Meeting of Ministers of the Environment (MEXCOE) will facilitate further communication between Federal and State government representatives in charge of natural resources. Multi-stakeholder consultation platforms will be strengthened to enhancing dialogue in climate action among stakeholders to enhance partnership and assist in the delivery of the Policy. Monitoring and review mechanism To evaluate the overall progress of NCCP 2.0 a monitoring and review mechanism will be established for two main objectives. Firstly, to continuously track and assess the outcomes of Malaysia’s climate action efforts, ensuring alignment with the specified key actions outlined in the policy. Secondly, to evaluate the effectiveness of the policy instruments in achieving the objectives of the NCCP 2.0 and national climate change agenda, making necessary adjustments to strengthen the policy framework and implementation. This approach treats the NCCP 2.0 as a living document, subject to regular reviews and updates to maintain its relevance, effectiveness, and responsiveness to new challenges and opportunities in the evolving climate change landscape. MRT Train in service from Putrajaya to Kuala Lumpur. 80 | National Climate Change Policy 2.0 Glossary Adaptation Adjustment in natural or human systems in response to actual or expected climatic stimuli or their effects, which moderates harm or makes use of beneficial opportunities. Blended financing Strategic combination of different sources of funding, often combining public and private capital, to support development projects or initiatives. Blue economy Sustainable use of ocean-based resources and innovations, bringing inclusive economies and societal benefits, while conserving the integrity of natural ecosystems. Carbon sink Carbon reservoirs and conditions that take-in and store more carbon (i.e., carbon sequestration) than they release. Carbon sinks can serve to partially offset greenhouse gas emissions. Forests and oceans are large carbon sinks. Carbon Capture, Utilisation and The process of capturing carbon dioxide (CO2) emissions from Storage (CCUS) fossil power generation and industrial processes for storage deep underground or re-use. Climate resilient development Development that integrates adaptation measures and their enabling conditions with mitigation to advance sustainable development for all. Co-benefits The positive effects that a policy or measure aimed at one objective might have on other objectives, thereby increasing the total benefits for society or the environment. Decarbonisation Reducing the amount of greenhouse gas emissions that a society produces, as well as increasing the amount that is being absorbed. Disaster risk reduction Concept and practice of reducing disaster risks through systematic efforts to analyse and reduce the causal factors of disasters. Early warning systems The set of technical, financial and institutional capacities needed to generate and disseminate timely and meaningful warning information to enable individuals, communities and organizations threatened by a hazard to prepare to act promptly and appropriately to reduce the possibility of harm or loss. Ecosystem-based adaptation The use of biodiversity and ecosystem services as part of an overall adaptation strategy to help people to adapt to the adverse effects of climate change. Ecosystem services Ecological processes or functions having monetary or non- monetary value to individuals or society at large. These are often classified as (1) supporting services such as productivity or 81 National Climate Change Policy 2.0 | biodiversity maintenance, (2) provisioning services such as food or fibre, (3) regulating services such as climate regulation or carbon sequestration, and (4) cultural services such as tourism or spiritual and aesthetic appreciation. Exposure The presence of people livelihoods, species or ecosystems, environmental functions, services, and resources, infrastructure, or economic, social, or cultural assets in places and settings that could be adversely affected. Extreme weather events Any rare and/or unexpected destructive weather phenomena that is at the extreme of historical distribution. Greenhouse gases (GHGs) Gaseous constituents of the atmosphere, both natural and anthropogenic, that absorb and emit radiation at specific wavelengths within the spectrum of terrestrial radiation emitted by the Earth’s surface, the atmosphere itself and by clouds and causes the greenhouse effect. Hazard The potential occurrence of a natural or human-induced physical event or trend that may cause loss of life, injury, or other health impacts, as well as damage and loss to property, infrastructure, livelihoods, service provision, ecosystems and environmental resources. Just transition Transitioning to a low carbon economy and climate resilient development in a way that is as fair and inclusive as possible to everyone concerned, creating decent work opportunities and leaving no one behind. Loss and damage Harms resulting from sudden-onset events (climate disasters, such as floods) as well as slow-onset processes (such as sea level rise) that results in economic and non-economic losses. Low-carbon economy An economy that has minimal output of greenhouse gas emissions into the atmosphere. Mitigation Human interventions to reduce the emissions of GHGs by sources or enhance their removal from the atmosphere by “sinks”. Nationally Determined Contributions Non-binding pledges that describe efforts by each country to (NDCs) cut emissions and adapt to climate change impacts. The Paris Agreement requires each Party to prepare, communicate and maintain successive nationally determined contributions (NDCs) that it intends to achieve. Net-zero GHG emission Achieving an overall balance between greenhouse gas emissions produced and greenhouse gas emissions taken out of the atmosphere. Paris Agreement A legally binding international treaty on climate change. It was adopted by 196 Parties at the UN Climate Change Conference (COP21) in Paris, France on 12 December 2015 to hold “the increase in the global average temperature to well below 2°C above pre-industrial levels” and pursue efforts “to limit the temperature increase to 1.5°C above pre-industrial levels.” 82 | National Climate Change Policy 2.0 Physical risks Risks that arises from acute (event-driven) and chronic (long term shift) climate-related events that damage property, reduce productivity, and disrupt trade. Protected area A legally established land or water area that is regulated and managed to achieve specific conservation objectives. United Nations Framework International environmental treaty which aims to stabilise the Convention on Climate Change greenhouse gas concentrations in the atmosphere at a level that (UNFCCC) would prevent dangerous anthropogenic interferences with the climate system. REDD Plus (REDD+) Reducing emissions from deforestation and forest degradation, carbon sequestration/removal through, conservation, sustainable management of forests and enhancement of forest carbon stocks in developing countries. Resilience Ability of a social or ecological system to absorb disturbances while retaining the same basic structure and ways of functioning, the capacity for self-organisation, and the capacity to adapt to stress and change. Risk-based planning Strategic approach that involves assessing, prioritising and mitigating potential climate risks to inform policy and decision- making. Slow-onset events Risks and impacts that occurs gradually and often associated with: increasing temperatures; desertification; loss of biodiversity; land and forest degradation; glacial retreat and related impacts; ocean acidification; sea level rise; and salinisation. Sustainable development Mode of growth that meets the needs of the present without compromising the ability of future generations to meet their own needs, balancing economic, social, and environmental considerations for long-term well-being. Transition risks Risk that occurs as a result of adjustment to a low-carbon economy due to changes in public policy and strategy, legislative and regulatory framework, technological advancements, and/or shift in consumer and investor behaviour. Vulnerability Degree to which a system is susceptible to, and unable to cope with, adverse effects of climate change, including climate variability and extremes. Wellbeing A state of existence that fulfils various human needs, including material living conditions and quality of life, as well as the ability to pursue one’s goals, to thrive, and feel satisfied with one’s life. 83 National Climate Change Policy 2.0 | Reference 1 IPCC (2023) Climate Change 2023: Synthesis Report Summary for Policymakers. 2 Intergovernmental Panel on Climate Change (IPCC). (2022). Climate Change 2022: Impacts, Adaptation, and Vulnerability. IPCC Sixth Assessment Report, Working Group II Contribution to the IPCC Sixth Assessment Report 3 CO2. Earth. (2024). Daily CO2. Retrieved Jan 21, 2024, from https://www.co2.earth/daily-co2 4 World Economic Forum. (2024). Quantifying the impact of climate change on human health. 5 UNFCCC (2023) Outcome of the first global stocktake. 6 UNFCCC (2023). Asia Pacific Climate Week 2023 launches in Johor Bahru, Malaysia, showcasing regional commitment to climate action. Retrieved from https://unfccc.int/news/asia-pacific- climate-week-2023-launches-in-johor-bahru-malaysia-showcasing-regional-commitment-to 7 https://open.dosm.gov.my/dashboard/population 8 Ministry of Environment and Water (2022) Malaysia’s Fourth Biennial Update Report submitted to the UNFCCC. 9 Ibid. 10 Ibid. 11 Climateactiontracker.org (2021) 12 Ministry of Natural Resources and Environmental Sustainability (2024) Malaysia’s Fourth National Communications to the UNFCCC 13 IPCC (2018). Global Warming of 1.5°C: An IPCC Special Report on the impacts of global warming of 1.5°C above pre-industrial levels 14 IPCC (2022). Climate Change 2022: Impacts, Adaptation, and Vulnerability. Contribution of Working Group II to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change [H.-O. Pörtner, D.C. Roberts, M. Tignor, E.S. Poloczanska, K. Mintenbeck, A. Alegría, M. Craig, S. Langsdorf, S. Löschke, V. Möller, A. Okem, B. Rama (eds.)]. Cambridge University Press. Cambridge University Press, Cambridge, UK and New York, NY, USA, 3056 pp., doi:10.1017/9781009325844. 15 DID (2012). Updating of Condition of Flooding and Flood Damage Assessment in Malaysia. Department of Irrigation and Drainage Malaysia (JPS) 16 DID (2022). Kompendium 2022. Data dan Maklumat Asas. Jabatan Pengairan dan Saliran 17 Borneo Bulletin. (2024.). Flood damage costs Malaysia billions. Retrieved July 19, 2024, from https://borneobulletin.com.bn/flood-damage-costs-malaysia-billions/ 18 Ministry of Natural Resources and Environmental Sustainability (2024) Malaysia’s Fourth National Communications to the UNFCCC 84 | National Climate Change Policy 2.0 19 Ibid. 20 Key Findings of Population and Housing Census of Malaysia 2020: Urban and Rural 21 The 2009 UN Revision Population Database 22 WHO, (2015), Climate and Health Country Profile 23 UNICEF, 2021, Impact of Climate Change on Children: A Malaysian Perspective 24 UNFCCC (2021) Malaysia’s Update Of Its First Nationally Determined Contribution. 25 World Trade Report 2022: Climate change and international trade, WTO 26 https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism_ en#:~:text=CBAM%20definitive%20regime%20(from%202026),-EU%20importers%20 of&text=EU%20importers%20will%20declare%20the,corresponding%20amount%20can%20 be%20deducted. 27 Ministry of Environment and Water (2022) Malaysia’s Fourth Biennial Update Report submitted to the UNFCCC 28 World Bank. 2023. State and Trends of Carbon Pricing 2023. Washington, DC: World Bank. doi: 10.1596/978-1-4648-2006-9. License: Creative Commons Attribution CC BY 3.0 IGO 29 OECD (2023) Climate Finance Provided and Mobilised by Developed Countries in 2013-2021. 30 New Straits Times (2023) Malaysia to receive Rm364.8 mil in international funds to fight climate change. https://www.nst.com.my/news/nation/2023/10/967640/malaysia-receive-rm3648-mil- international-funds-fight-climate-change 31 Mahadi, A; Joshi, D; & Afandi, A. (2022). Economic Instruments for Climate Policymaking in Malaysia. Institute of Strategic and International Studies Malaysia 32 Joint Committee on Climate Change (JC3) Report on the Sustainable Finance Landscape in Malaysia, 2022 33 Department of Statistics Malaysia (2020) GDP by Kind of Economic Activity at Current Prices, S&P (2019) Sectoral ESG Risk Scores 2019, WWF, BCG (2021) Securing Our Future: Net Zero Pathways For Malaysia 34 Bernama (2021) Malaysia critically needs trade-based solutions, says BNM. https://www. bernama.com/en/business/news_pemerkasa.php?id=1995386 35 Malaysia. (2023) Country statement by Abdul Wahid bin Abu Salim, Deputy Secretary General (Natural Resources), Ministry of Natural Resources, Environment and Climate Change at the 18th Session of the United Nations Forum on Forests. 36 Copernicus Climate Change Service (C3S), 2024: European State of the Climate 2023 85 MINISTRY OF NATURAL RESOURCES AND ENVIRONMENTAL SUSTAINABILITY (NRES) National Climate Change Policy 2.0