CCUS Bill not ‘silver bullet’ for green transition

The passing of the Carbon Capture Utilisation and Storage (CCUS) Bill 2025 in March was lauded as a defining step in positioning Malaysia as a regional carbon capture and storage (CCS) hub.

Economy minister Rafizi Ramli, who spearheaded the initiative prior to his resignation, cites the driving force of the bill to secure long-term investment opportunities and alongside it, assisting with emission reductions to achieve Malaysia’s net-zero by 2050 target. Among others, it aims to promote industrial growth, increase gross domestic product (GDP) and facilitate job creation.

While the bill is ambitious in nature, its rapid development and passing may have been at the expense of governance standards and misaligned priorities – placing economic investments over environmental utility and setting Malaysia up to be a scapegoat for carbon colonialism.

Industrialisation over environmentalism?

CCUS is listed under both the National Energy Transition Roadmap (NETR) and New Industrial Master Plan (NIMP) 2030 as a key component of Malaysia’s decarbonisation pathways. The Long-Term Low Emission Development Strategy (LT-LEDS) also positions CCUS as a “cross-sectoral strategy” in reaching our net-zero target.

In this sense, a significant portion of our decarbonisation road map hinges upon the successful deployment of CCUS technologies.

However, CCUS remains nascent in nature within Southeast Asia, including both technological developments and understanding of environmental risks surrounding it. For its implementation to be efficient and secure, whilst conforming to environmental and social safeguards, it requires crucial regulatory standards enshrined by legislation, such as Malaysia’s long-discussed Climate Change Act (Rang Undang-Undang Perubahan Iklim Negara – RUUPIN) helmed by the Ministry of Natural Resources and Environmental Sustainability (NRES). Only then can CCUS play its intended role in Malaysia’s decarbonisation road map.

Instead, the rapid development of the CCUS Bill 2025 by the Ministry of Economy took precedence. Mainstream news and information portals also largely emphasised an idealised utility and role of CCUS as a national economic driver, which projects a biased perception onto public understanding. This alongside a lack of detailed safeguards could lead to environmental risks for which are inadequately accounted.

Sources, such as the Intergovernmental Panel on Climate Change, have delved into the potential risks and recommended safeguards of CCUS as a nascent technology. Within the bill’s context, it is vital to highlight concerns surrounding longevity, including accountability, of what is referred to as “permanent carbon storage”.

A study published in the Communications Earth & Environment journal states that effective carbon dioxide removal via carbon storage requires a 1,000-year storage period, yet existing technologies only allow for 50 to 100 years at best. Beyond the pre-existing risks of leakage and other accidents, a reliance on unproven CCUS technology could prolong the problem for future generations. These include health impacts via contamination, exacerbation of environmental hazards such as ocean acidification, and a generation of stranded assets.

With carbon storage elements of the bill being inadequately planned, there is a real risk of such hazards playing out, with a lack of mitigative measures to resolve them.

Uncertain data points and clauses

While policies such as NETR and LT-LEDS emphasise CCUS as an emerging technology, they also make broad claims upon it as a silver bullet towards achieving net-zero.

LT-LEDS not only frames CCUS as a cross-cutting strategy for decarbonisation but also hinges reliance onto four out of six primary sectors – power, oil and gas, industries and waste – and identifying “high viability” implementation for local hard-to-abate sectors. Its language also suggests ambitious developments over the next 25 years, wherein the “with additional measures” scenario presumes CCUS will undergo significant improvement in capture rates less than 30 years ahead of us, including a 90% capture rate from gas plants and commercial-scale applications achieved globally.

Simultaneously, NETR projects a 32% decrease in national emissions by 2050, wherein CCUS projects greenhouse gas (GHG) reductions as 12% of emissions by the energy mix – overall comprising of 5% reduction of total emissions by 2050.

This adds inconsistences to the bill’s practicality on three fronts – investment costs, human capital and lack of clarity on implementation.

Criticism is also levelled against NETR’s capital demands to finance Malaysia’s energy transition. Similarly, neither NETR, LT-LEDS nor the government’s CCUS portal clarify how Malaysia is projected to benefit from a “socio-economic perspective”, including “150,000 to 250,000 direct and indirect jobs at peak operations by 2050 cumulatively”, not to mention the nature of these jobs. At the same time, these policies project a RM860 billion to RM1.070 trillion (US$200-250 billion) GDP increase “at the peak of activities in 2050”.

Aside from these dubious statistics, the CCUS bill seems insufficiently backed by complementary policies and fails to adequately address these items. One may be led to believe that these developments were rushed to capitalise on investment opportunities rather than prioritising the environmental considerations and practicality of tangible benefits surrounding CCUS.

Conflict of interest

When the bill was first mooted, among the grievances and objections included failure to consult environmentalists on concerns and safeguards surrounding CCUS implementation.

There was also a notable lack of public input as the scrutiny period was limited to between 28 May and 14 June 2024, with the final framework only unveiled at the first reading. It was later disclosed that Global CCS Institute served as a consultant for the CCUS Bill 2025.

Given that the institute’s appointment as a technical consultant is informed by its role as an oil and gas industry advocate, the same weight should be given to engagements with environmental practitioners to provide the necessary check-and-balance between the industrialisation of CCUS against its potential environmental impacts.

The bill’s broad definition of “prudent (CCUS) practices” as “any practice, method, measure and standard generally followed by the global carbon capture, utilisation and storage industry during the applicable period” is problematic. Applying global best practices unilaterally to Malaysia’s CCUS initiatives is unsuitable given the country’s unique environmental and geographical characteristics.

For instance, Malaysia’s Kasawari project will present itself as the largest offshore CCS project in the world thus far, and effects of offshore injection on such a scale, including adverse effects, remain unclear. Such projects must be subject to regulatory standards specific to their geographical make-up rather than predetermined standards.

A failure to do so leads to the conclusion that such elements were deliberately left unaddressed, and the gap between industrial policy and lived impacts unbridged.

Jurisdictional issues

It should also be emphasised that the bill’s jurisdiction currently excludes Sabah and Sarawak, despite a majority of large-scale CCS projects being localised in these two states. Particularly Kasawari which, as aforementioned, is set to be the world’s largest offshore CCS project, located in Sarawak. It is also the flagship Petronas initiative which much of NETR and LT-LEDS’s CCUS projections are rooted.

Given that the storage phase of Kasawari is set to commence in 2026 and its nature as a pilot initiative, it is unclear how the green transition goals outlined in these policies factor into Malaysia’s net-zero projections.

Reconciliation of federal-state legislation on CCUS should have been conducted as part of the bill’s drafting process rather than rushed for its gazettement. Its details and timeline remain limited as of writing.

Sabah and Sarawak are a crucial part of this equation, especially given the latter’s independent developments in CCUS. Should their inclusion remain unresolved, not only would this hurt the implementation road map of CCUS, including both economic and emission reduction incentives, it also obstructs federal regulation and oversight over carbon storage, including its brokers and potential liabilities.

‘Permanent’ carbon storage

While the economy minister justified the CCUS Bill 2025’s rapid timeline for securing carbon storage tenders, Malaysia had already placed the cart before the horse by signing agreements with Japan, Korea and Singapore.

Foremost being the February 2024 agreement between Petros, Petronas and a Japanese consortium to study and develop CCS value chains, including CO2 storage in Malaysia. Meanwhile, the Korean and Singaporean agreements were signed under the Article 6.2 mechanism on bilateral carbon markets for internationally traded mitigation outcomes, including developments into CCS.

These agreements warrant attention because of their nature concerning transboundary carbon storage. This pertains to importing carbon from other countries and storing it within our borders as a manner of foreign direct investment (FDI).

This begs two questions: first, why did Malaysia sign these agreements prior to proper outlining of accountability mechanisms pertaining to transboundary carbon storage?

Transboundary carbon storage adds an element of complexity to national GHG reporting, where “ownership” of stored carbon between countries remains unclear and would adversely affect our emission reduction efforts should leakage or other risks take place.

The CCUS Bill 2025 fails to outline regulatory measures based on transboundary storage, even as its concerns were explicitly listed as “priorities” in LT-LEDS.

Malaysia is also not a signatory of the London Convention on the Prevention of Marine Pollution by Dumping of Wastes and Other Matter, which provides the legal requisite and liability framework required for transboundary marine waste, including CO2. Current major transboundary carbon storage agreements largely hinge upon offshore projects. Where NETR and LT-LEDS refer to said convention as well as regulatory standards as a required part of the CCUS policymaking process, Malaysia does not act as a signatory to it while at least two engaged countries – Japan and Korea – do.

Such agreements being allowed to trump the completion of national legislature should be challenged.

Which leads to the next question.

Short-termism and carbon colonialism

Second, why is Malaysia positioning itself as a dumping ground for developed nations to perpetuate practices of carbon colonialism?

“Carbon colonialism” refers to the dynamic of wealthy countries, often Global North countries who dominate the international order, outsourcing carbon production and disposal onto more vulnerable Global South countries which are made dependent on the supply chain at a losing cost. The discourse surrounding waste imports, in which Malaysia is also entangled, exhibits a similar pattern.

Transboundary carbon storage does not benefit Malaysia at all when it comes to emission reductions, its only advantage being profit in nature. In this sense, the existing weaknesses surrounding CCUS, most crucially its lack of permanence, is compounded by the fact that Malaysia is importing other countries’ emissions into its borders.

No amount of profit generated from transboundary CCUS could make up for the environmental consequences undertaken, not to mention the economic costs incurred compensating from such damages.

More broadly, this perpetuates the historical trend of exploitation and imperialism often observed in global climate inequality. It is why the principles of equity and common but differentiated responsibilities is enshrined in the Paris Agreement, which all signatories should strive to abide by.

These principles seek to acknowledge historical inequities which shaped the modern world and ultimately inform global climate action The agreement outlines a shared obligation with nuanced responsibilities: that the developed world must mitigate its historical emissions rather than shift the burden, and ensuing fallout, onto the developing world.

Practices of carbon colonialism go directly against such principles, and Malaysia must be cautious to resist such manoeuvres.

Overall, despite purporting to prioritise local storage projects, the bill not only contravenes existing deals but also sidesteps NETR and LT-LEDS on CCUS deployment. Here, with CCUS being prioritised as a catalyst of immediate FDI rather than an extended decarbonisation strategy, this lack of foresight will only lead Malaysia to bear the long-term consequences.

People and planet over profit

The bill raises questions not only on the rapid industrialisation of CCUS, but also the lack of good governance in favour of short-term gains. While the CCUS Bill 2025 and its existing agreements will move forward, the government can still ensure due implementation.

First, the Malaysia CCUS Agency, which oversees licensing and compliance, should be placed under a separate regulator (as opposed to KE) to prevent conflict of interest and ensure alignment with overall environmental governance and GHG inventory reporting. This regulator could be appointed under NRES or the Department of Environment.

Second, feasibility studies and risk management surrounding CCUS projects should be directed by public accessibility and transparency, including the conduct of strategic environmental impact assessments, social impact assessments and direction for long-term accountability surrounding permanent carbon storage.

This also ties into improved consultation processes for civil society, academic experts and public interest for any CCUS-related initiative, guided by meaningful participation and a whole-of-nation approach.

Next, enhanced investment into existing and proven emission reduction strategies, such as promoting nature-based solutions via carbon sinks, as well as diversifying renewable energy sources. Proven measures should precede technological explorations where possible, and technological innovations to complement their shortcomings.

Finally, Malaysia should undertake a comprehensive assessment on its need for FDIs, rather than promote their uncritical overreliance. The country must strengthen its role in international governance to avoid falling into exploitative dynamics with other countries, especially as it moves towards developed nation status and intends on cultivating a sustainable economy for all.

Malaysia’s ongoing pattern of engagement with CCUS without adequate due diligence is equivalent to stoking a planet on fire. The invisible hand of the market has been proven unable to course-correct planetary destruction – and Malaysia should not be playing with fire at this critical juncture of tipping points.

The role CCUS plays in Malaysia’s green transition cannot be misconstrued as a silver bullet – our nation must have greater cognisance of its risks and move forward with a strategy which does not compromise on the environment, social wellbeing and sovereignty.