Posted on 24 Oct 2025
Malaysia’s planned carbon tax will sting utilities companies, especially independent power producers with coal-fired plants, MBSB Research flagged on Friday.
Tenaga Nasional Bhd (KL:TENAGA) would have incurred additional expenses of RM388 million, or a little over 9% of its 2024 net profit, according to the research house’s estimates. The assumption is for a starting rate of RM10 for every tonne of carbon dioxide equivalent emitted, it noted.
“There may, however, be higher pressure on independent power producers with high-emission and low-efficiency coal plants,” MBSB Research said. The impact will ultimately depend on whether regulators would allow the cost to be passed on to off-takers, the research house said.
The carbon tax will be introduced in 2026, targeting sectors such as iron, steel, and energy for a start, which are among the largest contributors to the country’s carbon footprint. The government, however, has yet to announce details about the tax, such as the rate and coverage.
Malaysia will join its neighbour Singapore in rolling out carbon tax. Initially set at S$5 (RM16.25) per tonne, the rate rose to S$25 in 2024 and will increase to S$45 by 2026. The tax, covering about 80% of Singapore’s national emissions, provides no exemptions or free allowance.
“We also view that the effective carbon tax exposure will decline over time as the power purchase agreements of coal plants expire and are not renewed or replaced with new coal capacity,” MBSB Research said.
As each agreement expires, the coal-fired plants will either cease operations or be repurposed, reducing the share of coal in the generation mix, which in turn will reduce the direct emissions by power producers, the research house added.
Coal currently accounts for more than 40% of Malaysia’s energy mix, and the government has committed to retiring coal-fired power plants by 2044 as part of its energy transition and climate change policy.
Source:The Edge
