Carbon trading to yield sustainable revenue growth

SARAWAK is emerging as a major participant in carbon trading. It is simultaneously combating climate change and generating sustainable revenue from its vast tropical forests.

Resource-rich Sarawak sits on about three million hectares of thick, carbon-rich rainforest, which is almost 40 per cent of all Malaysia’s forests.

That’s a huge advantage as the world looks for real, trustworthy ways to offset carbon.

Right now, both the federal government and local leaders are exploring programmes like Reducing Emissions from Deforestation and Forest Degradation (REDD) and voluntary carbon markets.

REDD is a United Nations (UN) climate framework helping developing nations get paid for keeping forests standing, with conservation and sustainable management.

If things go right, Sarawak could easily become a top exporter of carbon credits, especially with big companies scrambling to hit their net-zero targets.

Sustainable forest management

Sarawak stands out because its ecosystems are still in good shape, and there’s a real push now for sustainable development.

Sarawak has also stepped up its commitment to sustainable forest management (SFM) and shifted its focus from timber extraction to conservation, biodiversity and climate change mitigation.

This trajectory aligns with the Post-Covid-19 Development Strategy (PCDS).

Its policy on sustainability focuses on finding a balance between economic progress and caring for the environment.

When Sarawak certifies its forests under big international standards, it catches the eye of global companies and investors looking for solid, trustworthy carbon offsets.

According to a World Bank report in 2024, the global carbon market looked set to hit US$50 billion to US$100 billion a year.

If Sarawak ramps up its efforts, it stands to tap into a serious new source of income.

Indeed, yes minister!

Yet, certain issues must still be addressed.

Where conflicts may exist between the conservation of the forest and any pre-existing palm oil or mining industries, or where governance must ensure the preservation of the ecosystem through proper and adequate governance, care must be taken.

Moreover, the uncertainties associated with the carbon prices and the fact that the rules and frameworks for the market are still being developed in Malaysia, also emphasise the imperatives for a systematic and transparent process.

Yes minister, if Sarawak can effectively maintain its natural capital in conformity with the international frameworks for climate change finances while ensuring that the benefits for the indigenous groups are also equitable, then the state can change its economic structures from commodities economies to a green growth model.

Balancing carbon trading, industrial development

The link between carbon trading and industry, especially involving palm oil and mining, brings to the fore an issue that presents a challenge to conservation globally.

Carbon trading can be viewed as placing a commercial value on carbon and, therefore, using it as an incentive to ensure that the forests are not cut down, but there are industries that are linked to deforestation.

Palm oil expansion may lead to the clearance of tropical forests, which are important carbon sinks.

Mines, on the other hand, lead to a loss of habitats through destruction and pollution, contributing to the degradation of the environment and increased cases of climate change.

Keeping pace with good governance structures are crucial.

Yes, minister!

In this regard, sound regulation is needed to be able to monitor strictly and enforce a deforestation-free process.

There also has to be accurate accounting for credits in order to avoid ‘greenwashing’ schemes.

It is also a challenge to keep in mind that there are local populations relying on these sectors.

In this regard, it is important to ensure governing for conservation and sustainable living.

Petros, resource manager for CCUS

Petroleum Sarawak Berhad (Petros) stands at the hub of Sarawak’s carbon trading, appointed as the resource manager for ‘Carbon Capture, Utilisation and Storage’ (CCUS) to develop carbon storage sites, which are old oil and gas fields for storing captured carbon dioxide (CO2); hence, enabling decarbonisation for local industries and potentially international emitters, making Sarawak a regional low-carbon hub through initiatives such as the Sarawak Bid Round 2024.

Petros and the China Jiangsu International Economic Technology Cooperation Group Ltd (CJI) signed seven memoranda of understanding (MoUs) with strategic partners that had expressed intention to invest in the development of the Kuching Low-Carbon Hub (KLCH).

The signing of the framework agreement was witnessed by Sarawak Premier Datuk Patinggi Tan Sri Abang Johari Tun Openg in Nanjing, China recently.

Right balance

Yes, minister! The future of carbon trading relies on finding the right balance.

If it’s not managed carefully, the tie between protecting nature and carbon trading could break down.

Governments and other groups need to step up.

By pushing for responsibility and working together, they can help save the environment and encourage fair growth, turning carbon trading into a real help for our climate.

The economics of carbon trade offers a very attractive prospect for the state of Sarawak, which is located in East Malaysia, to exploit its large forests and rich biodiversity.

The world is shifting towards a low carbon economy, and the need for carbon credits is rising; therefore, the carbon market is expected to grow.

The state of Sarawak is poised to exploit the market due to its large forests.

As the Sarawak government enters into carbon trading, it can be expected that this trade will offer significant export opportunities over the coming years, with potential purchasers of Japan, South Korea, and those countries of the European Union.

Carbon trading revenues to reinvest in sustainable forest management, conservation, and community development projects spark off further virtuous cycles of economic growth and environmental stewardship.

Carbon trade economics

Additionally, the efforts by the Sarawak government to develop an effective carbon pricing arrangement and carbon trading platform are set to encourage the involvement of local actors, including the indigenous groups and small-scale landowners, in the carbon market.

Yes, minister!

As the international carbon market is set to become even bigger, Sarawak is set to emerge as one of the leaders, utilising its resources for the development of the economy as well as for the effort to counter climate change.

The carbon market is set to become the key moving force for the sustainable development of Sarawak through its economics, posing immense export possibilities for the future.

Harmonising conservation, carbon finance

Sarawak faces the challenging task of protecting its natural environments while using money from carbon savings to promote economic growth.

It now requires collaborative plans from the government; thereby, integrating initiatives between nature loss and acquiring carbon credits.

This calls for the involvement of the local and indigenous peoples in decision-making, so that their traditions and needs are factored into the plan.

Satellites and artificial intelligence (AI) can monitor forests and wildlife conditions in near real-time to check whether a project is actually working as it should.

Sarawak has to focus on quality rather than mere quantity, to avoid the menace of sham eco-projects.

By merging all these: rules, collaboration, technology, and truthfulness, Sarawak can safeguard its natural jewels while remaining a favourite destination among investors.

It would require that every step that leads toward carbon money brings the state closer to a sustainable future.

* Toman Mamora is ‘Tokoh Media Sarawak 2022’, recipient of Shell Journalism Gold Award (1996) and AZAM Best Writer Gold Award (1998). A holder of PhD in Social Anthropology (Nottingham UK), this communication and research consultant remains true to his decades-long passion for critical writing as he seeks to gain insight into some untold stories of societal value.