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Malaysia will implement a carbon pricing mechanism starting in 2026, primarily targeting the iron, steel, and energy sectors. This initiative is aligned with global decarbonization efforts and will be supported by the forthcoming Climate Change Bill (RUUPIN), which is expected to provide the necessary legal framework.

Analysts estimate that a proposed carbon price of RM15 per tonne could lead to a profitability decline of over 5% for companies in these sectors. The government has indicated that additional measures, including a potential emissions trading system, are being explored. The final design of the carbon tax, including rates and sector coverage, is still pending as the Climate Change Bill is set to be presented by March 2026.