By: Oswald Timothy Edward

As Malaysia strives to address environmental challenges, transition towards a low-carbon economy, and contribute to global sustainability goals, the implementation of a carbon tax has emerged as a potential solution.

Carbon tax has gained prominence on the global stage as a means to address environmental challenges while simultaneously contributing to broader sustainability objectives, such as the United Nations Sustainable Development Goals (SDGs).

Carbon tax is a policy tool designed to mitigate the impact of carbon emissions on climate change and promote the transition to a low-carbon economy.

A carbon tax is essentially a fee imposed on the carbon content of fossil fuels. The objective is two-fold: to reduce greenhouse gas emissions and encourage the adoption of cleaner and more sustainable energy sources. The principle is straightforward: by putting a price on carbon emissions, companies and individuals have a financial incentive to reduce their carbon footprint.

Malaysia, like many nations, is committed to achieving the SDGs by 2030. The SDGs encompass a broad spectrum of goals and targets, including poverty eradication, quality education, gender equality, clean water and sanitation, affordable and clean energy, climate action, and responsible consumption and production.

As part of this commitment, Malaysia has embarked on various initiatives to promote sustainability, but the introduction of a carbon tax could significantly bolster these efforts as follows:

Economic Incentives for Sustainable Practices

A carbon tax creates a financial incentive for individuals and industries to reduce their carbon emissions. This aligns with SDG 12 (Responsible Consumption and Production), encouraging sustainable practices in production and consumption.

Funding Climate Initiatives

The revenue generated from a carbon tax can be directed towards climate mitigation and adaptation projects. This contributes directly to SDG 13 (Climate Action) by supporting initiatives to combat climate change.

Fostering Clean Energy Transition

By making fossil fuels more expensive, a carbon tax encourages the transition to cleaner energy sources, furthering progress towards SDG 7 (Affordable and Clean Energy).

Improving Air Quality and Public Health

Reduced carbon emissions result in improved air quality, contributing to SDG 3 (Good Health and Well-being). Healthier populations are more likely to achieve other SDGs, such as quality education (SDG 4) and decent work and economic growth (SDG 8).

Advancing Sustainable Transportation

A carbon tax incentivises the use of cleaner and more efficient transportation options, aligning with SDG 11 (Sustainable Cities and Communities) and SDG 9 (Industry, Innovation, and Infrastructure).

Encouraging Sustainable Agriculture

Sustainable agriculture practices often result in reduced emissions. A carbon tax can motivate the adoption of such practices, supporting SDG 2 (Zero Hunger).

Ironically, while the introduction of a carbon tax in Malaysia presents significant benefits, it is not without challenges. Concerns include potential impacts on low-income households, the need for effective enforcement, and a transparent revenue allocation mechanism.

Regressive Impact on Low-Income Households

One of the primary challenges is the regressive nature of carbon taxes, which tend to disproportionately affect low-income households. Without appropriate measures in place, the carbon tax may place an undue financial burden on vulnerable populations and exacerbate social inequalities.

Effective Enforcement and Compliance

Ensuring the effective enforcement and compliance of a carbon tax presents significant challenges. Malaysia must establish robust mechanisms for monitoring carbon emissions, fuel use, and tax collection. Without adequate enforcement, the tax may not achieve its intended environmental goals.

Transparent Revenue Allocation

The transparent allocation of carbon tax revenue is essential to build public trust and demonstrate that the funds collected are being utilised for sustainability initiatives. Establishing clear and accountable mechanisms for revenue allocation is vital to prevent misuse or misallocation of funds.

In conclusion, the introduction of a carbon tax in Malaysia represents a proactive approach to addressing climate change and advancing progress towards the SDGs. It aligns with the nation’s commitment to sustainability, responsible production and consumption, and climate action.

By designing a carbon tax that balances environmental and socioeconomic considerations, Malaysia can contribute to a more sustainable and equitable future, in line with the global aspirations of the SDGs.

-- BERNAMA

Oswald Timothy Edward (oswaldte@gmail.com) is Senior Lecturer at the Faculty of Business & Management of Universiti Teknologi MARA (UiTM) Johor.