Page 86 - CMA Journal (May-June 2025)

O TH ER F EATURES

• Nature-Based Solutions (NbS)
Integration: Malaysia’s carbon
credit market includes NbS, as
seen in the Kuamut Rainforest
Conservation Project, which
generates high-integrity credits
certified under the CCB
Standards. These credits offer
biodiversity and community
co-benefits, demonstrating the
potential for high-value,
multi-benefit carbon assets from
Malaysian forests.
• Readiness for Broader Sectoral
Expansion: The carbon tax may
be extended to other CBAM-affected sectors such as Conclusion
cement, aluminum, fertilizers, and hydrogen,
Both carbon taxes and climate support levies play vital
aligning national policy with international trade and
roles in steering economies toward lower-carbon
climate expectations.
pathways: the former directly prices emissions at their
How Pakistan Can Enhance Its Climate source, while the latter raises dedicated funds for
Support Levy resilience and clean-energy investments. Pakistan’s new
Climate Support Levy and NEV Adoption Levy
1) Set a Clear Trajectory: Adopt a multi-year roadmap demonstrate a pragmatic, phased approach mirroring
to gradually increase the levy (e.g., from PKR 2.50/L global best practices to disincentivize fossil fuels,
to PKR 10 by 2030), sending a strong market signal promote zero-emission transport, and mobilize revenue
like Singapore. for green infrastructure. By setting clear price trajectories,
widening sectoral coverage, enabling credible
2) Widen Sectoral Coverage: Expand beyond fuel to carbon-credit offsets, and reinvesting proceeds in a just
include industrial and power sectors, similar to transition, Pakistan can build on these foundations to
Malaysia and Chile—especially those exposed to achieve meaningful emissions cuts and sustainable
CBAM. growth. As other economies have shown, the
effectiveness of these fiscal tools hinges on transparency,
3) Enable Carbon Credit Offsets: Allow partial offset
of levy obligations through verified domestic carbon stable policy signals, and the integration of
credits, encouraging investment in local mitigation complementary measures that support industry
projects. adaptation and safeguard vulnerable communities.
References:
4) Link with a National Carbon Market: Develop a
Pakistan Carbon Exchange to trade credits https://en.tempo.co/read/1906873/10-countries-with-highest-carbon
transparently, supporting hybrid pricing models like -tax-in-the-world
Malaysia’s VCM. https://fbr.gov.pk/Budget2025-26/default.html
https://www.ciat.org/ciatblog-las-iniciativas-de-precio-a-las-emision
5) Support Vulnerable Sectors: Design transition es-de-carbono-en-america-latina-y-en-el-mundo-siguen-creciendo-e
frameworks to support energy-intensive n-2023/?lang=en
exporters—a critical lesson from Singapore to avoid https://www.nccs.gov.sg/singapores-climate-action/mitigation-effort
carbon leakage. s/carbontax/

6) Promote Nature-Based Solutions: Incentivize https://www.pwc.com/my/en/perspective/esg/241121-malaysia-carb
on-tax.html
reforestation, soil carbon, and wetland restoration
with high-quality, co-benefit generating credits https://www.pakwheels.com/blog/budget-2025-26-the-auto-sector-a
modeled on Malaysia’s Kuamut Project. -detailed-summary/
(This article is prepared by Maiyra Ahmed, Assistant Director,
7) Revenue Recycling: Earmark levy proceeds for clean R&P, under the guidance of Shahid Anwar, Director R&P)
energy transition, climate resilience projects, and
social safety nets, reinforcing public trust.

84 ICMA’s Chartered Management Accountant, May-June 2025