AS climate change continues to become an increasing concern for the planet, various regions across the globe including Sarawak are finding solutions to mitigate its effects.
The pressing nature of climate change has ignited a wave of inventive strategies and collaborative ventures that transcend borders.
Governments, scientists and businesses are pooling resources and expertise to develop sustainable technologies, reduce carbon footprints, and adapt to the changing environmental conditions.
In gearing towards its aspirations to become a developed and high-income state by the year 2030, Sarawak has been actively exploring a sustainable and green economy.
Under the stewardship of Premier Datuk Patinggi Tan Sri Abang Johari Tun Openg, Sarawak is ploughing more resources into the development of its renewable energy sector.
This strategic emphasis is steering the state away from its dependence on oil and gas resources, paving the way for a more diversified and resilient economic foundation.
Significant inroads have been made in exploring the hydrogen industry as well as its production, leveraging on hydropower potential for generating electricity as well as attention to the application of microalgae as an energy source.
While Sarawak looks to be an energy powerhouse, it also looks to explore carbon trading, leveraging on its vast forest cover to do its part to preserve the environment.
WHAT IS CARBON MARKET?
Carbon market refers to a trading system in which carbon credits are sold and bought.
This is where companies purchase carbon credits from entities that remove or reduce greenhouse gas emissions to compensate for their own emissions.
Carbon credit is tradable, and one unit is equal to one ton of carbon dioxide, or the equivalent amount of a different greenhouse gas reduced, sequestered, or avoided.
Carbon sequestration is the process of capturing and storing atmospheric carbon dioxide. It is a method of reducing the amount of carbon dioxide in the atmosphere.
Another thing to note is the term carbon capture and storage (CCS) which is a three-step process which involves capturing the carbon dioxide produced by power generation or industrial activity, such as steel or cement making; transporting it; and then storing it deep underground.
In Sarawak, the state government is looking to create an environment whereby carbon trading can take place, enacting laws for both enforcing carbon emissions regulations, forest carbon activities and undertaking its first CCS project in June this year.
The vast forest cover as well as advantages in geographical location puts Sarawak in pole position to benefit from this industry, having 30 trillion cubic metres of carbon storage capacity in the seabed of its continental shelf New Sarawak Tribune recently met with Universiti Putra Malaysia (UPM) Bintulu Campus senior lecturer Dr Waseem Razzaq Khan who shared about carbon trading and credit.
An expert in forestry and environmental sciences, Waseem’s research interest revolves around mangroves ecology and stable isotopes ecology; forest degradation and nutrient cycling; forest productivity and ecological restoration; silviculture, sustainable forest management and REDD+.
REDD+ is an abbreviation for reducing emissions from deforestation and forest degradation in developing countries, additional forest-related activities that protect the climate namely sustainable management of forests, the conservation and enhancement of forest carbon stocks.
KYOTO PROTOCOL
According to Waseem, carbon trading is not a new phenomenon as it was first mooted back in the 1990s.
Carbon trading started formally in 1997 under the United Nations’ (UN) Kyoto Protocol on climate change which had more than 150 nations as signatories.
The concept emerged as a response to growing awareness about the impacts of human activities on the Earth’s climate system and the need to mitigate global warming.
“It is a fact that developed countries are responsible for significant carbon emissions which disproportionately affect developing countries.
“The mechanism revolves around wealthier countries providing financial support to those countries that are absorbing carbon emission thus resulting in the creation of carbon credits.
“These credits hold both monetary value and certificates which could be channeled into the developing countries’ development agenda,” he explained.
Waseem said this may appear to be a new thing for countries like Malaysia which are beginning to participate in the activity.
Referring to Indonesia, he said the country received an advanced payment of USD 20.9 million or IDR 320 billion under the Emissions Reduction Payment Agreement between the Government of Indonesia and the World Bank’s Forest Carbon Partnership Facility (FCPF) for REDD+ in 2022.
Indonesia has become the first country in the East Asia Pacific region to receive payments through the World Bank’s FCPF which represents 13.5 per cent of the value of the emissions reduction reported in the Government of Indonesia’s Monitoring Report for the 2019 – 2020 crediting period.
“I believe the Premier is working hard to get carbon trading take off in Sarawak because it is another source of income for the state. As a visionary and farsighted leader, the Premier is charting the ways in exploring sustainable and green economic opportunities.
“It is also known that all these revenues will be channeled towards the state and Sarawakians,” he said.
BUYERS OF CARBON CREDITS
The buyers of carbon credits typically consist of individuals, organisations, or companies seeking to offset their carbon emissions as part of their efforts to mitigate climate change and adhere to environmental sustainability.
These buyers are often entities that have a carbon footprint due to their activities, operations, or processes that release greenhouse gases into the atmosphere.
Waseem said by purchasing carbon credits, these buyers are doing carbon offsetting by investing in projects or initiatives that help reduce or remove an equivalent amount of carbon dioxide or other greenhouses gases from the environment thus counterbalancing their emissions.
“There are various industries in Malaysia which have significant carbon emissions and they face stringent regulations to mitigate this. To comply, they must either reduce emissions at their facilities or invest in carbon offsetting projects.
“For instance, a company is emitting 1,000 metric tonnes of carbon dioxide so they would purchase approximately 1,000 carbon credits to balance the emission. Some may opt for tree replanting efforts or campaigns, but they often overlook the long-term care of these trees.
“This in turn defeats the objective and commitment to sustainability as the trees that are replanted are not being looked after,” he said.
COMMODITY OF THE FUTURE
Scientists use colour to classify carbon at different points in the carbon cycle based on its functions, characteristics and locations.
This creates a more descriptive framework compared to the traditional organic and inorganic labels.
Waseem said there are eight colours to classify carbon namely purple for carbon captured through the air or industrial emissions; blue for carbon stored in ocean plants and sediments; teal for carbon stored in freshwater and wetland environments; green for carbon stored in terrestrial plants.
Meanwhile, black is for carbon released through the burning of fossil fuels; grey for carbon released through industrial emissions; brown for carbon released by incomplete combustion of organic matter and red for carbon released through biological particles on snow and ice that reduce albedo.
“Sarawak has a lot of forests, and it is home to the second largest mangrove area in Malaysia. As such, there is great potential for carbon trading in the state,” he said.
On the question of whether green carbon or blue carbon is better, Waseem said the quality of blue carbon is far better than green carbon.
“The quality of blue carbon credit is better than green carbon credit. Scientists have claimed that the blue carbon ecosystem absorbs five to ten times more carbon dioxide compared to green carbon. Due to this absorption capacity, the carbon credit quality of the blue carbon ecosystem is better than the green carbon ecosystem,” he explained.
Waseem said the blue carbon credit has a higher value than the green carbon credit.
For instance, one green carbon credit is valued between USD4 and USD10 whereas one blue carbon credit is valued between USD13 to USD35.
“I think agencies, cooperations and organisations who are investing in green carbon should consider investing in blue carbon considering that they will get more carbon credits,” he said.
As such, Waseem said much still needs to be done to raise awareness and in dissemination of information on carbon and its different type to the public and industry players.
“I foresee that carbon credits will become a commodity like cryptocurrency in the future. Perhaps the next generations will use carbon credits for transactions of various goods,” he said.
SARAWAK’S POTENTIAL AND WAY FORWARD
It can be said that one of Abang Johari’s proudest achievements in transforming Sarawak’s economy is the fact that it is the first state to enact legislation for carbon and nature venture businesses.
In 2022, amendments were made to the state’s Forest Ordinance and Land Code which enabled Sarawak to initiate activities that will reduce emissions of greenhouse gases to mitigate the effects of climate change.
The amendments also cover airspace and properties above the surface of land as well as the seabed of the state’s continental shelf to provide a legal framework for carbon capture, utilisation and storage activities.
According to the state government, its target for carbon trading potential is RM140 million to RM230 million by the year 2025 based on one million hectares of high-yield and sustainable industrial forest plantation.
To further enhance the carbon trading potential, the state has outlined the forest carbon activities concept which represents approximately 10 per cent of the forestry sector under its green economy initiatives.
Waseem commended Abang Johari and his Cabinet for paving the way forward as well as being at the forefront of carbon trading in Malaysia.
“I really appreciate what the Premier is doing for Sarawak in carbon trading. I believe the state can be a model for other states in Malaysia and enjoy substantial revenues from carbon trading.
“Carbon trading is not only a lucrative source of revenue for Sarawak, but it shows how the state is doing its part in combating climate change. I am confident that Sarawak will be one of the main players in this,” he said.
