Page 159 - GreenRE_Sustainable Real Estate Book

subsidies that encourage the growth of a grassroots approach CARBON PRICING
to the low-carbon transition. There are also examples of
“ CPI revenues being used to fund reductions in income and What is it?
corporate taxes, and these too could be targeted.
Carbon pricing assigns an explicit price to each unit of GHG
Such a transparent and accountable process makes it more
Introducing transparency likely for the broad public to accept the implementation of emitted. This creates a price signal for trade, taxes or other
government regulations.
CPIs; enhancing the likelihood that CPIs can persist gives
into carbon tax revenue these policies the bandwidth to have a steady but strong

long-term influence on Malaysia’s low-carbon transition.
collection and expenditure Indeed, carbon pricing should be accompanied by the Why is it important?

process could serve to introduction of climate budget tagging, a process by which Carbon pricing incentivises the reduction of GHG emissions
by imposing a financial cost on carbon-intensive activities,
public expenditures on climate change mitigation and
build public support for adaptation efforts are tracked, making it straightforward to shifting the burden for the damage from GHG emissions back
assess the government’s commitment to addressing climate to those who are responsible for it.
Malaysia’s CPI journey. change.

Eight years since the landmark Paris Agreement, global
efforts towards limiting global warming to 2 0C remain insuffi- What is the Social Cost of Carbon?
cient. The latest IPCC report finds that surface temperatures The social cost of carbon dioxide (SCC) measures the
have already risen by an average of 1.1 0C, and predicts that monetised value of the damage done to the society by
theoretical and empirical findings. CPIs can generate it is more likely than not that we surpass 1.5 0C in the 2030s. each additional ton of carbon dioxide emission. It is also an
significant revenues; a carbon tax of just RM35/tonne in 2025 Emissions must peak by 2025 and then drop by almost 50% estimate of the benefits reaped by the society of any action
would generate revenues of RM4.2 billion, assuming existing by 2030. These are challenging targets, but failing to meet taken to reduce a ton of emission. It is an effective gauge
emissions trajectories and low-carbon targets. them will lead to a significantly more challenging future. It’s of the economic costs of carbon dioxide emissions into the
time for climate policy to step up. Carbon pricing can be atmosphere.
Introducing transparency into carbon tax revenue collection an important component of the solution by offering a broad
and expenditure process could serve to build public support correction to the GHG market failure that cuts across sectors
for Malaysia’s CPI journey; this could be achieved by ensuring and economic activities.
revenues are used to deliver outcomes beneficial to society. What is the cap-and-trade system?
This includes further actions to mitigate and enhance the A cap and trade works by the government setting a “cap,”
nation’s resilience to climate change. The vast nature of (maximum for total emissions) for a particular industry, then
the climate change means carbon tax-funded government Note: This article is largely based on a study titled ‘Carbon Pricing and the issuing permits allowing the companies within the industry to
programming could reach a wide range of sectors and Business Case for Emissions Reductions and Nature Conservation in Malaysia’ emit up to that cap. These permits can then be traded within
positively influence livelihoods across rural and urban conducted by The Asia Foundation, in collaboration with the Institute of Strategic the industry, creating an economic signal for carbon dioxide
Malaysia. Revenues can also be used to further support and International Studies (ISIS) Malaysia and Climate Governance Malaysia. The emissions.
Malaysia’s B40, through rebate mechanisms or targeted research summary can be found on The Asia Foundation website. A longer-form
technical report will be published imminently.

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