By Lian Cheng
“We are committed to fostering inclusive growth through sustainable resource use, ensuring that our economic growth does not lead to an overconsumption of resources and high GHG (greenhouse gas) emissions. We were also the first in Malaysia to pass laws that support CCUS and other carbon-related activities. This demonstrates our strong commitment to achieving our net zero emissions goal and sets a benchmark for others to follow.” Abang Johari (August 29, 2024)
ACUTELY aware of the escalating challenges posed by climate change and the urgent need to transition towards a greener, more sustainable future, Sarawak has embarked on an ambitious journey to build its carbon capture, utilisation and storage (CCUS) industry. This initiative represents a transformative step in positioning Sarawak as a low-carbon powerhouse, aligning with global efforts to combat climate change while ensuring continued sustainable economic growth.
By capitalising on its unique geographical and environmental advantages and embracing innovative technologies, Sarawak is emerging as a regional leader in the green energy transition. Situated outside the Ring of Fire, the State offers vast storage potential in depleted and abandoned oil wells, saline aquifers, and expansive forests, establishing itself as a key player in the burgeoning CCUS sector.
Unlocking the Potential of Carbon Capture
According to the CCUS Market Global Opportunity Analysis and Industry Forecast 2023–2032, the global CCUS market is expected to grow at a compound annual growth rate (CAGR) of 13.3 per cent, presenting a compelling opportunity for Sarawak.
As a visionary leader, Premier of Sarawak, Datuk Patinggi Tan Sri Abang Johari Tun Openg, recognises the State’s significant advantage in CCUS storage, particularly due to its vast gas reserves, which fall under the Sarawak Land Code. Anticipating this potential, he envisions repurposing Sarawak’s abandoned oil wells for carbon injection and storage, further strengthening the State’s CCUS capabilities.
Sarawak’s oil and gas (O&G) sector, bolstered by CCUS, is projected to contribute over RM60 billion to the State’s Gross Domestic Product (GDP) by 2030. As early as November 2019, Abang Johari has already taken a proactive step by launching Sarawak’s first carbon credit project in collaboration with Shell International, following the signing of a Memorandum of Understanding (MoU). This initiative marked a turning point, as Sarawak’s vast forested areas, long overlooked, are now recognised as valuable assets for diversifying the State’s revenue streams while supporting decarbonisation and environmental conservation. The CCUS industry is not only a driver of economic growth; it also plays a vital role in the global fight against climate change by enabling industrial decarbonisation through effective carbon capture and storage technologies.
Abang Johari’s initiatives, aligned with Sarawak’s climate action commitments, aim to strike a harmonious balance between environmental stewardship and economic prosperity, earning global recognition for the State’s forward-thinking approach.
Establishing Legal Frameworks
Abang Johari laid the foundation for Sarawak’s CCUS industry by establishing a legal framework that positioned the State as the first in the Asia Pacific region to enact carbon trading laws. On May 19, 2022, the Sarawak Legislative Assembly passed the Forests (Amendment) Bill, 2022, enabling the licensing of forest carbon activities on State land, permanent forests, and alienated land. This law allows for the reduction of carbon dioxide and other greenhouse gas (GHG) emissions through carbon sequestration and carbon sinks, which are now classified as forest products under the amended Ordinance, making them eligible for global trade.
Licensing is subject to applicable fees and charges, creating new revenue streams for the State. Licensees are granted full beneficial and legal ownership of carbon stocks, GHG stocks, and carbon credit units generated through their activities. The Forests (Amendment) Ordinance stands as a proof of Sarawak’s commitment to climate change mitigation, aligning with international protocols such as the Kyoto Protocol. It also supports carbon sequestration through afforestation and reforestation efforts under the Clean Development Mechanism (CDM), as part of Land Use, Land Use Change, and Forestry (LULUCF) activities.
Sarawak’s dedication to addressing carbon emissions from forests also aligns with the Paris Agreement under the United Nations Framework Convention on Climate Change (UNFCCC). Malaysia, a signatory since 2016, has pledged to reduce greenhouse gas emissions by 45 per cent by 2030.
Strengthening Sarawak’s Environmental Legislation
Further cementing its commitment to transitioning towards a greener economy, Sarawak took another significant step forward on November 20, 2023, when its Legislative Assembly enacted the Environment (Reduction of Greenhouse Gases Emission) Ordinance 2023. This groundbreaking law establishes a comprehensive regulatory framework covering clean and renewable energy, carbon credits, carbon levies, and emission thresholds, making Sarawak the only state in Malaysia with standalone carbon trading legislation.
The Ordinance seeks to regulate GHG emissions, promote CCUS, and mitigate climate change, with the overarching goal of achieving net-zero carbon emissions by 2050. It applies to all forests and lands within Sarawak’s jurisdiction, including the continental shelf, thereby granting the State authority over activities such as afforestation and reforestation. Businesses operating in designated economic sectors are required to register and submit annual carbon emission reports in accordance with international standards. Entities failing to meet set emission thresholds will be subject to a carbon levy, with the rate to be determined by the Sarawak Cabinet.
The Ordinance also governs the flaring and venting of petroleum and greenhouse gases in the O&G industry, supports forest carbon activities, and promotes CCUS projects. All projects must adhere to the Carbon Standards Rules for issuing Sarawak carbon credit units and comply with international CO₂ measurement methodologies based on the latest assessments by the Intergovernmental Panel on Climate Change (IPCC). Furthermore, the Ordinance establishes a robust system for verifying and validating carbon credits through appointed Carbon Standard Administrators, ensuring the integrity and credibility of Sarawak’s carbon credits in both compliance and voluntary markets. It also creates avenues for Sarawakians to participate in global warming mitigation efforts, earn carbon credits, and generate income through these credits.
Commitment to CCUS
In collaboration with Sarawak Petroleum Berhad (PETROS), Sarawak is committed to establishing four carbon storage sites by 2030 to drive CCUS innovation and contribute to regional net-zero goals. To ensure the success of these CCUS projects, the State has developed four essential frameworks: Legal Framework, Technical Framework, Financial, Business, and Taxation Framework, and Human Resource Framework.
However, for Sarawak to fully progress, it is essential that the Federal government introduces a national policy and legal framework to support the State’s green initiatives, particularly in carbon trading. Citing Singapore’s MoU with Indonesia on carbon pricing and green initiatives as a model, Abang Johari emphasised the urgency of accelerating efforts to establish a national legal framework for carbon trading.
Abang Johari’s commitment to developing Sarawak’s CCUS based on international best practices is evident in his proactive efforts to understand how other countries are utilising CCUS. In August 2023, he led a delegation on a working visit to Norway’s Northern Lights facility in Øygarden, the country’s first large-scale CCS project, and the Technology Centre Mongstad, Europe’s largest facility for testing carbon capture technologies. Abang Johari also closely follows the progress of CCUS initiatives in the United Kingdom (UK) and Belgium, where dedicated legislation has been introduced to support both regional and national interests in the sector.
Licensing Success and Future Plans
As of February 2025, the Sarawak government, through the Forest Department Sarawak (FDS), had issued carbon trading licences to two companies: PETROS and SaraCarbon Sdn Bhd. PETROS, which has been appointed as the resource manager for CCUS, was granted a licence in recognition of its pivotal role in implementing this government initiative.
SaraCarbon, a subsidiary of the Samling Group, has established itself as a leader in forest carbon initiatives in Sarawak. It became the first company in the State to receive a forest carbon study permit, awarded during the Asia Carbon Conference 2023. The company’s inaugural initiative, the Marudi Forest Conservation and Restoration Project in Miri, seeks to reduce GHG emissions while promoting sustainable forest management. By adhering to international standards such as Verra, SaraCarbon aims to produce high-quality carbon credits that meet global market requirements, supporting environmental conservation and contributing to economic growth in line with Sarawak’s strategic objectives.
Turning Vision into Reality
In July 2024, Sarawak launched its Bid Round, offering three carbon storage sites with a combined estimated storage capacity of 1,000 million tonnes of CO₂. That same year, Abang Johari announced the signing of three major CCUS projects: the Kasawari-M1 project, the Lang Lebah-Golok project, and the M3 project, all of which are focused on the storage of industrial CO₂ emissions.
It was a promising start for Sarawak’s CCUS industry where local companies are encouraged to seize the opportunity to participate. Believing that Sarawakians are uniquely positioned to capitalise on this emerging market, Abang Johari urged them to develop expertise in CCUS and establish themselves as leaders in the field. With this ambitious vision, Sarawak is poised to play a crucial role in the global effort to decarbonise industries and foster sustainable economic growth through its CCUS strategy.
The content featured here is an excerpt from the book “Rise of Sarawak: Abang Johari’s Era of Transformation”, published by Sage Salute Sdn Bhd.
