Malaysia is stepping up its efforts to prepare its steel industry for the impact of the Carbon Border Adjustment Mechanism (CBAM). This is according to The Edge Malaysia.
According to estimates by the Malaysian Steel Institute (MSI), the cost of compliance for the sector in 2026 will amount to 970.7 million ringgit (around $237.3 million) and is set to rise in subsequent years.
The country’s Ministry of Investment, Trade and Industry (MITI) has stated that it views the CBAM as an opportunity to accelerate the transformation of the country’s steel industry.
The steel industry is a key export sector for Malaysia, with around 6 million tonnes of steel products shipped abroad last year. Exports to the EU totalled 752,000 tonnes.
MITI noted that the government has introduced several strategic measures related to the European mechanism.
The initiatives focus on enhancing the industry’s readiness through the establishment of a system for measuring, reporting and verifying carbon emissions (MRV). In addition, there are plans to accelerate decarbonisation efforts in the ferrous metallurgy sector by improving energy efficiency and increasing the use of renewable energy.
There are also plans to provide political and financial support to facilitate the sector’s transition to more environmentally friendly practices.
The government will also continue negotiations with the EU to ensure, within the framework of the implementation of the EU ETS, fair treatment for developing countries whilst maintaining the competitiveness of Malaysian exporters in the European market.
As a reminder, in September, Malaysia presented a roadmap for the development of its steel sector. The country plans to reform its steel industry — its aim is to manage excess capacity, restructure the licensing system and prepare for decarbonisation, so that by 2050 the sector becomes fully green.
