Parliament passes Carbon Capture, Utilization and Storage Bill 2025

28 April 2025

On 25 March 2025, the Carbon Capture, Utilization and Storage Bill 2025 (“Bill”) was passed by the Dewan Negara. It is currently pending Royal Assent. The Bill seeks to catalyse the development of the carbon capture, utilisation, and storage (“CCUS”) industry as a new source of economic growth and applies only to Peninsular Malaysia and Labuan, excluding Sabah and Sarawak.

The main objectives of the Bill are to:

• provide for matters relating to the capture, transportation, utilisation and permanent storage of carbon dioxide;
• reduce carbon dioxide emissions; and
• mitigate the effects of climate change.

The Bill consists of 10 parts, detailing the responsibilities of storage site operators in environmental protection, risk management and liability to ensure international compliance of CCUS.

Summary of key provisions under the Bill

Malaysia Carbon Capture, Utilization and Storage Agency

The Bill seeks to establish the Malaysia Carbon Capture, Utilization and Storage Agency (“Agency”) with functions including, among other things, overseeing licensing, compliance, and industry development, while ensuring the safe capture, transportation, utilisation, and permanent storage of carbon.

Carbon capture

Carbon capture installations will be required to register with the Agency. A carbon capture installation is defined in the Bill as “an installation which carries out carbon capture and includes any associated technical facilities of such installation”.

Transportation and importation of carbon dioxide

It will be mandatory for any person transporting carbon dioxide obtained through carbon capture to register with the Agency. The importation of carbon dioxide for permanent storage obtained through carbon capture outside Malaysia will be required to comply with the carbon dioxide stream acceptance criteria specified in clause 28 of the Bill, and such importation will require an import permit granted by the Agency.

Failure to comply with these provisions will be an offence leading to a fine not exceeding RM 1,000,000 or imprisonment for a term not exceeding five years, or both.

Utilisation of carbon dioxide

The requirements for registration and the application for registration to utilise any carbon dioxide obtained through carbon capture in Malaysia are set out in Part V of the Bill.

The Bill seeks to prohibit the utilisation of carbon dioxide captured outside Malaysia and imported into Malaysia for the purpose of permanent storage.

Assessment and permanent storage in offshore and inshore areas

The Agency must grant offshore or onshore assessment permits for any persons to carry out geological assessment of potential storage complexes or geological formations in offshore or onshore areas. The issuance of these permits will be subject to fees imposed by the Agency. Further, an offshore or onshore storage licence will be required for the operation of a storage site in offshore or onshore areas for permanent storage of carbon dioxide captured within or outside Malaysia.

The Bill also seeks to impose requirements on offshore or onshore operators (“Operator”) to comply with the carbon dioxide stream acceptance criteria for the acceptance and injection of carbon dioxide into storage sites in offshore or onshore areas. The Operator shall keep a register of the quantities and properties of the carbon dioxide streams accepted and injected, including the composition of the stream.

The Operator shall also comply with the CCUS practices specified in clause 5 and provide information to the Agency relevant for the purposes of assessing compliance with offshore or onshore storage licence conditions.

The Minister responsible for matters relating to CCUS is empowered to determine the rates of injection levy offshore operators must pay for long-term monitoring of each storage site by the Government. The rates shall be determined based on the risk and probability of risk of each storage site.

Post-Closure Stewardship Fund

The Bill seeks to establish the Post-Closure Stewardship Fund (“Fund”) which will be administered and controlled by the Agency. This Fund will consist of:

• any sums as provided by the Government,
• any injection levy made by offshore operator to the Agency for the purpose of providing financial support to the Government; and
• all monies earned from investments financed from the Fund.

This Fund will be expended to cover costs borne by the Government for the long-term stewardship of storage sites after the transfer of obligations to the Government.

General provisions

Any person aggrieved by (a) the refusal of the offshore or onshore assessment permit, or storage licence, (b) the imposition of any condition or restriction on his permit or licence, or (c) the revocation, suspension or variation of his permit or licence, may appeal to the Minister within thirty days of being informed of the decision at issue in writing.

Part X also sets out the liability of directors, compliance officers, partners, and others of a body corporate if the body corporate commits an offence under the Bill.