The first auction on the Bursa Carbon Exchange (BCX), Malaysia’s new voluntary carbon market, took place on March 16 with around RM7.7 million in carbon credits sold.

Although the auction was described in the official press release as evidence of “strong interest and [a] healthy price signal by the domestic corporate sector”, it must be noted that all credits were sold at the minimum reserve price set by Bursa Malaysia, and that Bursa itself appears to have been one of the 15 buyers. Viewed from this perspective, the claim by Bursa Malaysia chief executive officer Datuk Muhamad Umar Swift that “we now have a proven market mechanism which provides price discovery” seems somewhat questionable.

The BCX has been launched at a time where there is broad agreement that Malaysia needs some kind of carbon pricing scheme to realise its international climate change commitments. However, no carbon tax or other clear driver of a Malaysian carbon market has emerged as yet. Although the government has hinted at the introduction of a carbon tax for several years, it continues to subsidise carbon emissions through its petrol subsidies.

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