Lawmakers, NGOs decry lack of safeguards in Malaysia’s new carbon capture and storage bill

The CCUS bill, which was unveiled in the country’s lower house of parliament on Tuesday, will govern how Malaysia imports, transports and permanently stores carbon dioxide on land and under the ocean floor.

CCUS technology, which involves capturing and injecting carbon dioxide into the ground, is listed as one of six key decarbonisation levers under Malaysia’s National Energy Transition Roadmap, published in 2023. However, critics have called it an ineffective climate solution.

Opposition lawmakers questioned why the CCUS bill was being rushed through parliament, calling for more time to study and debate its merits. However, the Ministry of Economy, which had tabled the bill, said that the law had to be enforced by 31 March so that Malaysia could “seize long-term investment opportunities”.

“International tenders for carbon capture are ongoing now,” said minister of economy Rafizi Ramli. “If Malaysia does not enforce this law by then, we are out of the running [for CCUS projects].”

Citing a 2022 report by Malaysia’s national oil company Petronas, which is also pioneering the country’s first large-scale CCUS project in Sarawak, the ministry said that the CCUS industry could unlock investments of over US$200 billion over 30 years. It could also create up to 200,000 new jobs each year.

However, opposition lawmakers and non-governmental organisations (NGOs) argued that the bill is at odds with Malaysia’s own decarbonisation agenda, despite it being framed as part of Malaysia’s commitment to lowering emissions in line with the Paris Agreement.

“I thought this bill would smell of trees, but it actually reeks of money,” said Wan Ahmad Fayhsal Wan Ahmad Kamal, Malaysian member of parliament for Machang, in parliament on Wednesday. He observed that it was the minister of economy and not the environment minister who was tabling the bill.

Fayshal added that he is not opposed to the CCUS industry “monetising carbon dioxide for economic growth” but questioned its lack of environmental safeguards. “If we look at the CCUS bill in terms of environmental objectives, it is unclear how it will help Malaysia meet net-zero because it’s clearly about economics alone,” he said.

The risk of carbon dioxide leaking from carbon storage sites is also a major concern. “Such ventures of storing carbon from other countries are certainly not efforts to reduce our own domestic carbon emissions, but in fact risk raising emissions nationally, should any leakage happen,” said Meenakshi Raman, president of environmental non-profit Friends of the Earth Malaysia.

Globally, carbon dioxide leaks from CCUS projects have contaminated drinking water, as seen in Illinois, United States, and led to the government of Australia banning CCUS projects in the Great Artesian Basin as they risked contaminating groundwater with toxic metals such as lead and arsenic.

“If carbon dioxide dissolves in seawater, leakages could increase ocean acidity levels and endanger our seafood,” said Fayhsal.

A diagram by Malaysias national oil company Petronas showing how carbon capture and storage technology works to sequester carbon dioxide offshore. Image: Petronas

Under the bill, a national CCUS agency will be established to supervise and regulate the industry by issuing permits for geological assessment activities and licences for permanent carbon storage sites. It would also control the transport of carbon dioxide within Malaysia, and import of carbon dioxide from other countries.

In Malaysia, the government plans to implement the permanent storage of carbon dioxide in offshore areas first, until feasibility for onshore carbon storage is conducted by the Ministry of Economy this year. Rafizi said that the implementation of carbon taxes in countries such as Singapore, Japan and South Korea would boost demand for carbon storage sites in Malaysia.  

In the meantime, project operators are responsible under the CCUS bill for monitoring their carbon storage sites and carrying out corrective measures if there are any leakages or irregularities.

Still, the CCUS bill is not currently robust enough to address the public health and environmental hazards of carbon dioxide in high concentrations, argued Raman. “It is claimed that strict monitoring and safety protocols will be enforced to prevent leaks and environmental damage. However, these safety protocols have yet to be elaborated on,” she said in a letter to the media on Monday.

On top of that, the bill does not mandate environmental impact assessments for proposed CCUS projects and is unclear on what laws currently regulate greenhouse gasses, including carbon dioxide. Raman suggests that such emissions are supposed to be addressed by Malaysia’s upcoming climate change law, which is still being drafted by the Ministry of Natural Resources and Sustainability.

“Pushing ahead with the CCUS law without waiting for the Climate Change Act appears to be jumping the gun, and is without proper policy and legislative coherence,” she said.

Liability in question

Rafizi pointed out that a report by the Intergovernmental Panel on Climate Change (IPCC) deemed the storage of carbon dioxide in geological formations as safe, with only a 0.001 per cent risk of leakages. He cited Japan’s Tomakomai carbon storage project as an example of a project that has successfully withstood earthquakes and achieved its planned carbon dioxide injection target.

Other government lawmakers also cited the suitability of Malaysia’s geological location for CCUS projects, as the country sits just outside the Ring of Fire, an area of active volcanoes and earthquakes surrounding the Pacific ocean.

According to the Global CCS Institute, which the ministry of economy had hired as a consultant for the bill, Malaysia has the potential to store over 150 gigatonnes of carbon dioxide in its oceans, with 13.3 gigatonnes in its depleted oil and gas fields and about 140 gigatonnes in saline aquifers, which are undersea saltwater storage sites.

However, the IPCC report also cited the high costs of CCUS transporting carbon dioxide, since storage sites are not located close to emissions sources. Also, even in reservoirs with large storage potential, the rate of injection might be limited by the subsurface pressure of the reservoir, it said.

Malaysia’s lawmakers questioned what would happen if problems or delays occur during CCUS projects, leading to higher costs. Dr Siti Mastura Muhammad, representing Kepala Batas, pointed out that in countries such as Norway and Canada, governments have spent significant amounts to support CCUS projects.

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“If we look at the CCUS bill in terms of environmental objectives, it is unclear how it will help Malaysia meet net-zero because it’s clearly about economics alone.” 

Wan Ahmad Fayhsal Wan Ahmad Kamal, Malaysian member of parliament for Machang

In Norway, the government plans to spend 20 billion Norwegian kroner (US$1.8 billion) or about two-thirds of the cost of the proposed Longship carbon capture and storage project, which could have a total capacity of 5 million tonnes of carbon dioxide a year.

But these government subsidies could come at a cost to taxpayers – a recent report by the Institute for Energy Economics and Financial Analysis showed that Canada’s tax credit scheme for CCUS projects could cost taxpayers as much as 5.7 billion Canadian dollars (US$3.8 billion), while the operating costs of these projects exceed how much income they can generate.

Lawmakers in the United Kingdom are also pressuring their government to reconsider the need for CCUS, saying that the technology could burden taxpayers and consumers with higher costs of living. Last month, the UK’s Public Accounts Committee warned in a report that the government had not assessed the likely impact on consumer energy bills as a result of the country’s carbon capture programme.

But in Malaysia, the government will not bear any costs of CCUS projects, said Rafizi. Nor will it reap any benefits other than income taxes on companies operating the projects, if they are profitable. The main benefits to the country are expected to be the 200,000 jobs created for the industry by 2050 and economic growth for the country’s current economic oil and gas hubs like the state of Terengganu, where gas reserves are rapidly shrinking, he said.

In terms of liability, Rafizi argued that an injection levy to be imposed on project operators via the CCUS bill would help the government cover any future costs of these projects. The rate of this levy has yet to be announced.

“For every tonne (of carbon dioxide) injected into the ground, operators must pay a levy to the government,” Rafizi said. “That is why this bill is necessary, so that these [levies can be collected] and the funds can be kept as insurance once liability for the projects is transferred to the government.”

The bill states that operators will still be responsible for monitoring their carbon storage sites and addressing leakages even after the site has been closed, until liability for the site is transferred to the government.

“The concept is the same as if an oil company were to operate an offshore oil platform – criminal liability is subject to existing laws,” said Rafizi. “The difference for CCUS projects is that the contract for the site is for a certain period – 20 to 30 years – after which [responsibility for the site] will be returned to the government.”

Consultation stalemate

The minister also addressed concerns about the speed at which the bill was passed, stating that consultations and briefings had been held with lawmakers and relevant civil society groups. But significant differences in opinion about the value of CCUS as a decarbonisation solution meant that there was no point in furthering discussions, he said.

However, Friends of the Earth Malaysia’s Raman expressed regret that these consultations had not gone into the details of the bill’s provisions.

Concerns were also raised by Kepala Batas’ Mastura about the risk of the bill being used as a greenwashing tool by large oil and gas companies. Machang’s Fayhsal, citing both his and Rafizi’s former employment with Petronas, also pointed out that CCUS has historically been used for enhanced oil recovery, a method to boost production of the fossil fuel.

Raman warned against commercial interests of large corporations trumping public interest and the environment.

“The government must balance all interests and not cave in to the powerful corporations and their lobbies,” she said. “There is still time to course correct, if there is the political will to do so. It is better to be safe than sorry.”