ENVIRONMENT (REDUCTION OF GREENHOUSE GASES EMISSION) ORDINANCE, 2023

The Minister may appoint different dates for the coming into force of different parts or provisions of this Ordinance.

Interpretation

the Carbon Credit Units Register established under this Ordinance; or

an electronic database system or other system that is established and operated by or under a Carbon

Standard or on their behalf including the holding, delivery, retirement, cancellation, and replacement of Carbon Credit

Units in accordance with applicable Carbon Standard Rules;

“Carbon Standard” means a program or standard administrated by a mandatory or voluntary domestic or international GHG program, certification, scheme, protocol pursuant to which any activity or project for reduction, abatement and capture and storage of greenhouse gases is formally accepted and registered pursuant to the Carbon Standard Rules and in respect of which Carbon Credit Units are issued for into a Carbon

Register;

“Carbon Standard Administrator” means the Carbon

Standard Administrator appointed under section 11(3);

“Carbon Standard Rules” shall have the same meaning assigned to it under Section 70B of the Forests Ordinance, 2015

[Cap. 71] and includes any amendment, modification, replacement or substitution thereof;

“Carbon Storage Rules” shall have the same meaning assigned to it in the Land (Carbon Storage) Rules, 2022 [Swk. L.N.

349/2022]

and includes any amendment, modification, replacement or substitution thereof;

“carbon trading” means the buying, selling, trading of

Carbon Credits Units in accordance with this Ordinance and

Carbon Standard Rules in the voluntary or regulated markets

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within Malaysia or outside in international emission trading exchanges or mechanisms established pursuant to the Paris

Agreement or in the open market;

“Controller” shall have the same meaning assigned to it under the Natural Resources and Environment Ordinance, 1993

[Cap. 84 (1958 Ed.)];

“CO2” or “carbon dioxide” refers to carbon dioxide in its gaseous, liquid, liquefied or solid form including CO2 in CO2

streams;

“Emissions Reductions” shall have the same meaning assigned to it under Section 70B of the Forests Ordinance, 2015

[Cap.71] and includes any amendment, modification, replacement, or substitution thereof;

“facility” means any building, premise, platform, site or place on land within Sarawak either onshore or offshore where

CO2 is emitted in consequence of any process or activity of the scheduled economic sectors specified in the First Schedule and includes the owner or occupier of the facility;

“Government” means the State Government of Sarawak;

“greenhouse gases” or “GHG” means any carbon dioxide, methane, nitrous oxide, hydrofluorocarbon, perfluorocarbons, sulphur hexafluoride and any other substance recognised as greenhouse gas by the United Nation Framework Convention on

Climate Change (UNFCCC);

“low carbon solutions” means such measures, actions or programmes taken or adopted by any facility, commercial or industrial corporation or organisation for reduction of carbon emission in Sarawak or towards decarbonisation of operation or industrial process;

“Minister” means the Minister having responsibility for the environmental sustainability;

“Nationally Determined Contribution” means the Nationally

Determined Contribution submitted by Malaysia, from time to time, to the UNFCCC in accordance with the Paris Agreement including any amendment, treaty or agreement in replacement or substitution thereof;

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“Paris Agreement” shall have the same meaning assigned to it under the Forests Ordinance, 2015 [Cap. 71] and includes any amendment, modification, replacement or substitution thereof;

“petroleum” shall have the same meaning assigned to it under the Oil Mining Ordinance [Cap. 85 (1958 Ed.)] includes any amendment, modification, replacement or substitution thereof;

“Registrar” means the person appointed under Section 32 to maintain, administer and make entry into the Carbon Credit Units

Register;

“scheduled economic sector” means those economic sectors stipulated in the First Schedule;

“State” means the State of Sarawak;

“storage sites” shall have the same meaning assigned to it under the Carbon Storage Rules and includes any pipeline or terminal for the conveyance of greenhouse gases for storage or sequestration at the storage site; and

“usage” in reference to carbon dioxide means the processing or conversion of carbon to other products for industrial or other uses.

In this Ordinance, any reference to⎯

the scheduled economic sectors specified in the First

Schedule;

the activity of voluntary reduction or abatement, capture and storage of greenhouse gas towards Emissions Reductions of such gases into the atmosphere by any process carried out in any facility on land whether onshore or offshore of Sarawak;

the activity of promoting and regulating the energy transition toward green, renewable energy and adaptation of low carbon solutions; and

the issuance of Carbon Credit Units for any activity or project to capture and store greenhouse gases undertaken in accordance with the State law in Sarawak and the registration, trading, retirement and cancellation of such Carbon Credit Units.

The compliance with this Ordinance shall not relieve any person or economic sector from compliance or observance of any other laws relating to environmental quality or climate change which are in force in Sarawak.

This Ordinance shall be read together with the Land (Carbon

Storage) Rules, 2022 [Swk. L.N.349/2022] and the Forests (Forest

Carbon Activity) Rules, 2022 [Swk. L.N. 350/2022] in so far as these latter Rules are applicable.

reduction or abatement of greenhouse gas emission in the State from activities or projects related to the use or occupation of land, forests and in waters within the territory of the State;

mitigating the effects of climate change in the State;

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decarbonization and transition towards a low carbon solutions in the State towards attaining net zero carbon emissions;

the provision of incentives or other rewards and the issuance of Carbon Credit Units for activities or projects undertaken in accordance with this Ordinance or other State law for the capture and the storage of greenhouse gases; and

promotion of energy saving through the production and use of solar power and measures to be taken to improve or attain high energy performance rating for non-domestic buildings or dwellings.

Registration of persons and business entities undertaking activities in the scheduled economic sectors 5.⎯(1) All persons or business entities undertaking any of the activities in the scheduled economic sectors, shall within ninety days of the coming into force of this Ordinance register with the Controller in the prescribed form.

A Register of all persons and business entities registered under subsection (1) shall be maintained at the principal office of the

Board and the Register may be inspected by any person upon payment of administrative charges as may be determined by the Board.

Where any person or business entity fails or neglects to register with the Controller pursuant to subsection (1), he shall be guilty of an offence and upon conviction, be liable to a fine not exceeding fifty thousand ringgit or imprisonment not exceeding one year or, to both.

Submission of Carbon Emission Report 6.⎯(1) Any person undertaking any of the economic activities on land, water and forest areas in the State which belong to any of the scheduled economic sectors shall, within ninety days from the date of the registration under section 5, submit to the Controller, a report on the carbon equivalent emission level resulting from the economic activities undertaken by him (referred to in this section as a “carbon emission report”).

A carbon emission report shall comply with the accounting and reporting standards in the latest edition of the Greenhouse Gas Protocol

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published by the World Business Council for Sustainable Development and World Resources Institute or any other accounting and reporting standards as may be approved by the Controller and comply with the

Scope of reporting of GHG emission level to be determined by the

Board in accordance with rules made under section 57 and without prejudice to the foregoing shall contain the following:

The Controller may require a carbon emission report required under this section to be verified by an accredited external auditor.

Any person who fails or neglects to submit a carbon emission report required under this section or a report which contains any information or particulars which is false shall be guilty of an offence and upon conviction, shall be liable to a fine not exceeding fifty thousand ringgit or imprisonment not exceeding one year, or to both.

Reporting Period

The subsequent carbon emission reports shall be for the period of each calendar year ending 31st of December after the first reporting period.

The subsequent carbon emission reports under subsection (2)

shall be submitted to the Controller on or before the 28th of February of each year or within such extended period as the Controller may approve in writing.

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Any person or registered business entity who fails or neglects to comply with the requirements of subsection (1) or (2) shall be guilty of an offence and upon conviction shall be liable to a fine of up to fifty thousand ringgit or imprisonment of up to one year or, to both.

Regulating and controlling greenhouse gas emissions

direct the registered business entity to submit to him, for his approval, a plan, verified by an accredited external auditor for reduction or abatement of carbon emission to the said threshold level within a period specified in the direction; and

in the event the plan is approved by the Controller with such terms and conditions, as he may impose but when implemented, fails to reduce the GHG emission level to the said threshold, the registered business entity shall be required to capture and store the greenhouse gases in accordance with this Ordinance or any other written law relating to capture and storage of greenhouse gases in the State.

In the event that the registered business entity is unable or unwilling to reduce the GHG emission level to the threshold referred to in subsection (1), he shall be liable to payment of carbon levy imposed under section 24.

Voluntary Reduction or Abatement or Capture of Greenhouse Gas

Before the commencement of the process of mitigation, reduction, abatement or carbon capture and storage, the owner or the

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operator of the facility shall notify the Board by submitting to the Board in a prescribed form specifying the following:

Commencement of the process of greenhouse gas reduction, abatement, and capture and storage of greenhouse gases shall not take place until the prescribed form in subsection (2) is submitted to the

Controller.

The facility which reduces, abates, and captures greenhouse gas shall notify the Controller in writing on the use of the captured greenhouse gas for any purpose or application and shall submit an annual report, not later than the 28th February of every calendar year, to the Controller on the volume of captured greenhouse gas used for the said purpose and the description, quantity and value of the products derived from the use or application of the captured greenhouse gas during the previous year ending 31st December.

The Controller may require any report required to be submitted under this section to be verified by an accredited external auditor.

In the event that any registered business entity intends to be issued with Carbon Credit Units for activities or projects undertaken

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under this section to reduce, abate or capture and store greenhouse gases, the information or data contained in any report submitted under this section for the issuance of Carbon Credit Units shall also be verified by any Carbon Standard Administrator.

Restriction on flaring and venting of Petroleum or Greenhouse

Gases

Where the Controller is satisfied that there has been non compliance with subsection (1), he shall immediately issue a Stop

Order to the person flaring and venting the petroleum or greenhouse gases to direct him to forthwith cease the flaring and venting thereof.

If the person to whom the Order made under subsection (1)

fails, neglects or refuse to comply with the Order:

Any person who fails, neglects or refuse to comply with an

Order made by the Court under subsection 3(b) shall be guilty of contempt of Court and the Controller may apply to the Court, in accordance with procedures laid down by the Rules of Court, for an

Order of committal against any person who does not comply with the said Order.

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carbon capture and use of the captured CO2 for other applications or in the making of other products;

permanent storage of CO2 at storage sites approved under the Carbon Storage Rules;

the direct capture or removal of CO2 from the atmosphere in accordance with the rules made hereunder;

forests carbon activities under the Forests (Forest

Carbon Activity) Rules, 2022 [Swk. L.N. 350/2022]; and

projects reducing energy consumption or using low carbon solutions including solar or wind energy and measures to be adopted to reduce electricity consumption and improve energy performance ratings in non-domestic buildings or dwellings, to reduce or abate carbon emission.

The undertaking of all such activities and projects shall comply with applicable Carbon Standard Rules and carbon reduction emissions levels verified under Voluntary Carbon Markets (VCM)

standards or by other Carbon Standard Administrator.

For the purpose of this Part, the Carbon Standard

Administrator shall be an international organisation for certification and verification of verified carbon standards and the issuance and registration of Carbon Credit Units appointed by the Board by notification in the Gazette.

Application for entitlement to the Carbon Credit Units

The Carbon Standard Administrator, upon being satisfied that the entitlement to the Carbon Credit Units has been verified and confirmed based on the submission in subsection (1), shall determine, in accordance with section 13, the number of Carbon Credit Units to be issued for the activity or project referred to in subsection (1) having regard to the applicable Carbon Standards.

Such application made in subsection (1) shall be notified to the Registrar in a prescribed form, among others contain, on following:

The Carbon Standard Administrator shall notify the

Registrar:

It shall be the duty of the person undertaking the activities or projects in the State which have been issued with Carbon Credits

Units to ensure that the Carbon Standard Administrator furnish to the

Registrar all the information required under subsection (4) and if so required, provide written authorization to the Carbon Standard

Administrator to furnish the same to the Registrar.

The Registrar upon receipt of the information referred to in subsection (4) shall make appropriate entry in the Carbon Register

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relating to the issuance, sale, transfer, cancellation, and retirement of

Carbon Credit Units:

Provided that the Registrar shall not register any Carbon Credit

Units unless he is satisfied that the issuance thereof complied with the criteria specified by Majlis Mesyuarat Kerajaan Negeri by the rules made under section 57.

Crediting period

voluntary carbon markets; or

any emission trading scheme or market approved by guidelines issued by the Registrar under subsection (2), in accordance with the applicable Carbon Standards Rules or any rules made under section 57.

The Registrar, with the approval of the Minister, may issue guidelines for the trading of the Carbon Credit Units including those belonging to the Government, such guidelines shall include, but not limited to, types of market where such Carbon Credits Units be traded, sold or exchanged or be part of a Carbon Offset scheme allowed under an applicable Carbon Standard Rules.

Sale and other dealings of Carbon Credit Units

The sale of such Carbon Credit Units shall be subject to payment of carbon levy as provided under section 24.

Retirement of Carbon Credit Units

The retirement of a Carbon Credit Units occurs when the Unit is sold or purchased and taken out of circulation forever, never to be

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traded and exchanged or has been used for the payment of carbon levy as provided under section 24.

Where a Carbon Credit Units has been offset or has been claimed against the amount of greenhouse gas emission from a business facility, plant or premises, it shall be retired and taken out of circulation to ensure that it is not claimed twice.

Where there has been any retirement of Carbon Credit Units, the Carbon Standard Administrator with whom the Carbon Credit Units are registered and the person who immediately prior to such retirement who is the owner of the Carbon Credit Units, shall report the same electronically in a prescribed form, to the Registrar who shall then make an appropriate entry in the Carbon Register.

Issuance of Carbon Credit Units

All costs and expenses for the validation and verification of the activities or projects for the issuing of Carbon Credit Units shall be borne by the party seeking issuance of Carbon Credit Units.

Crediting of Carbon Credit Units

Subject to the conditions of this Ordinance, Carbon Credit

Units entered in such account may be used for payment or settlement of the carbon levy imposed under section 24.

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Carbon Price

The amount of the carbon levy imposed under subsection (1)

shall be assessed based on the formula of A x B where –

The carbon levy charged under subsection (1) accrues as a liability of the registered business entity at the end of the reporting period for which the carbon levy is assessed and shall be paid in accordance with this Part.

Notwithstanding anything under this section, the registered business entity who has been given approval by the Controller for his plan submitted under section 8(1)(b) shall not be imposed levy under this section during the period stipulated in the plan for reduction of carbon emission:

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Provided that the registered business entity shall, at all times, comply with all the conditions and requirements of the said approved plan.

Assessment of carbon levy

the amount of the carbon levy to be paid by the registered business entity; and

the number of Carbon Credit Units that the registered business entity shall surrender for the payment of the carbon levy or any part thereof.

On completion of the assessment under subsection (1), the

Controller shall issue to the registered business entity a notice of assessment.

Appeal against assessment

Notwithstanding any appeal lodged under subsection (1) the amount of carbon levy stipulated in the notice of assessment issued under subsection 25(2) shall be paid on due date, but if the assessment is cancelled, varied or reduced, the amount of the carbon levy or such amount that had been varied or reduced shall be refunded to the aggrieved party.

Remission and relief

The payment of carbon levy under subsection (1) may be made by:

The number of Carbon Credit Units that shall be surrendered for retirement under subsection 2(a) is the number assessed by the

Controller to have a total carbon price equal to the amount of the carbon levy assessed, rounded up to the nearest Carbon Credit Units.

Notice of surrender of any Carbon Credit Units shall be given in a prescribed form to the Registrar by the person who has the Carbon

Register account for the Carbon Credit Units surrendered.

Upon receipt of the Notice of Surrender, the Registrar shall record the Carbon Credit Units in the Carbon Register as retired and notify any other Registry where the Carbon Credit Units may also be registered as retired, and the registered business entity is treated as having paid the carbon levy assessed against that business entity to the extent of the total carbon price of the carbon credited so surrendered.

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If the registered business entity shall fail or neglect to make full payment of the carbon levy within the period stipulated under subsection (1):

a registered business entity has failed to make full payment of any carbon levy under section 28 (2) or (3) then without prejudice to the recovery thereof under section 28(6)(c);

and

that registered business entity has Carbon Credit Units in its Carbon Register account;

the Registrar, may upon the request of the Controller, supported by a certificate that the carbon levy and financial penalty had not been paid by the registered business entity, cancel the Carbon Credit

Units and remove it from the Carbon Register account, and the registered business entity is treated as having paid the carbon levy or the financial penalty imposed or both to the extent of the price of Carbon Credit Units so cancelled and removed:

Provided the amount of carbon price of Carbon Credit Units cancelled shall not exceed an amount of twenty per cent of the Carbon levy and financial penalty as stated in the certificate, which shall be conclusive

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evidence of the balance outstanding and may be recovered by the

Government as a civil debt.

Where any Carbon Credit Units in a Carbon Register account for a registered business has been obtained by fraud or other unlawful means, the Registrar may cancel and remove it from that Carbon

Register account.

Any registered business entity that has any Carbon Credit Units cancelled or removed under subsection (1)⎯

The Registrar shall issue notice to the registered business entity to show cause why the Carbon Credit Units stated in the notice should not be cancelled and removed prior to cancelling and removing

Carbon Credit Units under this section;

Upon cancellation and removal of Carbon Credit Units under this section, the Registrar shall make appropriate entry in the Carbon

Register of such cancellation and removal and notify electronically any other Register in which the Carbon Credit Units is registered.

Refund of Carbon levy

The Dewan Undangan Negeri may appropriate any amount from the State Consolidated Fund to be paid into the Climate Change

Fund during any financial year to meet the objective of that Fund.

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The appointment may be for such period and on such terms as to remuneration and other privileges, as the Minister may determine, and the person may be eligible for re-appointment.

Duties and roles of the Registrar

have custody and control of the Carbon Register of the

Carbon Credit Units issued for activities and projects in the State;

enter into the Register of all Carbon Credit Units issued under this Ordinance or under the Forests (Forest Carbon Activity)

Rules, 2022 [Swk. L.N. 350/2022];

register all transactions relating to the Carbon Credit

Units including sales, retirement, and cancellation thereof including any Carbon Credit Units in a Register account used for payment of carbon levy;

ensure no double counting of the Carbon Credit Units;

to record in the Carbon Register all information and data contained in the Register kept under Rule 27 of the Forests (Forest

Carbon Activity) Rules, 2022 [Swk. L.N. 350/2022];

record all activities and projects from which the Carbon

Credit Units has been issued;

maintain Register accounts for Carbon Credit Units of registered business entities including records of retirement, cancellation and removal of Carbon Credit Units therefrom;

ensure accuracy, consistency and transparency of reporting for issuance of Carbon Credit Units;

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communicate with Carbon Standard Administrators on all matters pertaining to the Carbon Credit Units issued for activities or projects in Sarawak; and

prepare and submit to the Minister, for information of

Majlis Mesyuarat Kerajaan Negeri at the end of every calendar year, the number of Carbon Credit Units verified, issued, sold, or retired and any other matters connected with the Carbon Credit

Units issued for activities or projects in Sarawak.

Carbon Credit Units Register

The Carbon Register shall be in the prescribed form by rules made under section 57.

All entries shall be made electronically by the Registrar, or any person authorized by him.

Notwithstanding subsection (3), the Carbon Register can be kept in any other form for reference and record purposes but the electronic Carbon Register shall prevail upon any inconsistency.

Relationship with other Registers for Emission Trading Systems and other markets

Any investigating officer may in writing require the attendance before himself of a person who appears to be acquainted with the facts and circumstances of the case or is suspected of being concerned with the offence under investigation.

If the person who is so required to attend fails to comply therewith, the investigating officer may report such failure to a

Magistrate who will issue a warrant to secure the attendance of that person.

An authorized person or any Investigating Officer referred to in subsection (1) shall be issued with an authority card to be signed by the Controller.

Whenever such investigating officer exercises any of the powers under this Ordinance, he shall, on demand, produce to the person against whom the power is being exercised the authority card issued to him under subsection (4).

Examination of persons acquainted with case

Such person shall be legally bound to answer all questions put to him by the investigating officer, but the person may refuse to answer any question the answer to which would have a tendency to expose him to a criminal charge or penalty or forfeiture.

A person making a statement under this section shall be legally bound to state the truth whether or not the statement is made wholly or partly in answer to any question.

The investigating officer shall first inform that person of the requirements of subsections (2) and (3).

A statement made by a person under this section shall, whenever possible, be reduced to writing and signed by the person making it or affixed with his thumb print, as the case may be, after it has been read to him in the language in which he made it and after he has been given an opportunity to make any correction he may wish.

Power of Arrest

Any officer authorized by the Controller, or any police officer may, without warrant, arrest any person reasonably suspected of having been concerned in any such seizable offence or if the person refuses to give his name and residence, or gives a name and residence which such officer has reason to believe is false, or that he will abscond.

Every officer making an arrest under this section shall, without unnecessary delay, take or send the person arrested to the officer in charge of the nearest police station.

Where the person arrested under this section is required, for the purposes of investigation, to be detained for more than twenty-four hours, section 47 shall apply.

Power to release on personal bond

The amount of every personal bond executed shall be fixed with due regard to the circumstances of the case as being sufficient to secure the attendance of the person arrested when so required.

Search and Seizure

Where a person is brought before a Court under subsection

, the investigating officer shall comply with section 117(1) of the

Criminal Procedure Code [Act 593] and the Court shall have the powers over that person as are provided in section 117(2) of that Code.

Diary of proceedings in investigations

the time at which the instruction, if any, for investigation reached him;

the time at which he began and closed the investigation;

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the place or places visited by him; and

a statement of the circumstances ascertained through his investigation.

Notwithstanding anything contained in the Evidence Act 1950 [Act 56], an accused person shall not be entitled, either before or in the course of any inquiry or trial, to call for or inspect any such diary:

Provided that if the investigating officer who has made the investigation refers to the diary for the purposes of section 159 or 160 of the Evidence

Act 1950 [Act 56], such entries only as the officer has referred to shall be shown to the accused, and the Court shall at the request of the officer cause any other entries to be concealed from view or obliterated.

Power to Compound

All sums of money received under this section shall be credited to the State Consolidated Fund.

Any power vested in an authorized officer by notification under subsection (1) may, at any time, be withdrawn by the Controller, by notification in the Gazette.

Power to Conduct Prosecution