The Carbon Capture, Utilization and Storage Act 2025 (“Act”) was gazetted on 1 August 2025 and became law on the following day.
 
A.  Enforcement of the Act
 
Although the Act has become law, it will come into operation on a date to be appointed by the Minister¹ (“Minister”) by notification in the Gazette. The Minister may appoint different dates for the coming into operation of different provisions of the Act.
 
Notwithstanding the foregoing, Part VII of the Act (Assessment and Permanent Storage in Onshore Areas) will come into operation in a State on such date as the Minister may, after consultation with the State Government, appoint by notification in the Gazette.
 
B.  Application
 
The Act only applies to Peninsular Malaysia and the Federal Territory of Labuan.²
 
C.  Objectives of the Act
 
The Act provides for matters relating to the capture, transportation, utilization and permanent storage of carbon dioxide, reducing carbon dioxide emissions, mitigating the effects of climate change and catalysing the development of the carbon capture, utilization and storage industry as a new source of economic growth.
 
D.  Establishment of the Malaysia Carbon Capture, Utilization and Storage Agency
 
Part II of the Act (Malaysia Carbon Capture, Utilization And Storage Agency) (sections 6 to 14), among others, provides for the establishment of the Malaysia Carbon Capture, Utilization and Storage Agency (“Agency”) (section 6).
 
The functions of the Agency, as set forth in section 8(1), include, among others: 

The Agency is conferred all such powers as may be necessary for, or reasonably incidental to, the performance of its functions under the Act (section 8(2)).
 
Section 14(1) authorises the Minister to appoint a separate competent technical entity to advise the Agency on any technical and operational matters relating to any of the following components for which the entity was appointed, namely carbon capture, transportation of carbon dioxide, utilization of carbon dioxide, and offshore and onshore storage of carbon dioxide.
 
E.  Carbon capture
 
Carbon capture installation
 
Any person who owns or operates any carbon capture installation³ is required to be registered with the Agency under the Act (section 15(1)).
 
F.  Transportation and importation of carbon dioxide
 
Transportation of carbon dioxide
 
Any person who transports, by road, railway, water, pipeline or any other means, carbon dioxide obtained through carbon capture, shall prior to such conveyance, be registered with the Agency under the Act. Such person shall also comply with any other written laws relating to transportation, and prudent carbon capture, utilization and storage practices⁴ (section 17).
 
Importation of carbon dioxide captured outside of Malaysia
 
Section 19 prohibits any person from importing for permanent storage any carbon dioxide which is obtained through carbon capture outside of Malaysia unless the carbon dioxide complies with the carbon dioxide stream acceptance criteria specified in section 28⁵.
 
Import permit for carbon dioxide captured outside Malaysia
 
Further, section 20(1) prohibits the importation into Malaysia by road, railway, water, pipeline or other means, any carbon dioxide which is obtained through carbon capture unless such importation complies with an import permit granted by the Agency.
 
G.  Utilization of carbon dioxide
 
Registration to utilize carbon dioxide
 
Any person who utilizes any carbon dioxide obtained through carbon capture in Malaysia is required under section 21 to be registered with the Agency.
 
Prohibition of utilization of carbon dioxide captured outside of Malaysia
 
Section 23(1) prohibits any person from utilizing any carbon dioxide obtained through carbon capture outside of Malaysia which has been imported into Malaysia for the purpose of permanent storage.
 
H.  Assessment and permanent storage in offshore areas
 
Offshore assessment permit
 
Section 24(1) prohibits any person from carrying out any offshore geological assessment of any potential storage complex or geological formation in offshore areas without an offshore assessment permit granted by the Agency.
 
The Agency may, after considering the application for an offshore assessment permit under section 24, grant or refuse to issue the offshore assessment permit, and may impose such conditions as it deems fit, in granting such permit (section 25).
 
Offshore storage licence
 
Section 26(1) prohibits any person from operating a storage site in the offshore areas of Malaysia for the permanent storage of carbon dioxide captured within or outside of Malaysia without an offshore storage licence granted by the Agency.
 
The Agency may, after considering the application for an offshore storage licence under section 26, grant or refuse to issue the offshore storage licence, and may impose such conditions as it deems fit, in granting an offshore storage licence (section 27).
 
Carbon dioxide stream acceptance criteria for offshore storage
 
Section 28 prohibits an offshore operator from accepting and injecting carbon dioxide streams into a storage site in an offshore area unless such carbon dioxide streams comply with the following carbon dioxide stream acceptance criteria: 

Section 28 also imposes an obligation on an offshore operator keep a register of the quantities and properties of the carbon dioxide streams accepted and injected, including the composition of the stream.
 
Operational obligations in relation to offshore storage
 
An offshore operator of an offshore storage, shall in accordance with prudent carbon capture, utilization and storage practices, comply with the following obligations set out in section 29: 

Injection levy
 
The Minister shall, pursuant to the recommendation by the Agency, determine the rates of the injection levy to be paid by the offshore operator for the purpose of long-term monitoring of each storage site by the Federal Government. Such rates may be reviewed by the Agency every five years. An offshore operator may request the Agency to review the rates (section 30).
 
Closure and post-closure obligations in relation to offshore storage
 
The prescribed conditions for closure must be complied with before a storage site may be closed and a closure certificate is issued by the Agency under section 31.
 
After closure of a storage site, the offshore operator remains responsible for the following until the obligations are transferred to the Federal Government: 

Transfer of obligations in relation to offshore storage
 
The transfer of obligations in respect of a storage site to the Federal Government shall only occur if a prescribed period has lapsed from the issuance of the closure certificate under section 31, and other prescribed conditions in the closure certificate have been fulfilled (section 32).
 
I.  Assessment and permanent storage in onshore areas
 
The requirements relating to permanent storage of carbon dioxide in onshore areas are substantially similar to those applicable to offshore areas.
 
Onshore assessment permit
 
Section 33(1) prohibits any person from carrying out any onshore geological assessment of any potential storage complex or geological formation in onshore areas without an onshore assessment permit granted by the Agency.
 
The Agency may, after considering the application for an onshore assessment permit under section 33, grant or refuse to issue the onshore assessment permit, and may impose such conditions as it deems fit, in granting such permit (section 34).
 
Onshore storage licence
 
Section 35(1) prohibits any person from operating a storage site in the onshore areas of Malaysia for the permanent storage of carbon dioxide captured within or outside of Malaysia without an onshore storage licence granted by the Agency.
 
The Agency may, after considering the application for an onshore storage licence under section 35, grant or refuse to issue the onshore storage licence, and may impose such conditions as it deems fit, in granting an onshore storage licence (section 36).
 
Carbon dioxide stream acceptance criteria for onshore storage
 
Section 37 prohibits an onshore operator from accepting and injecting carbon dioxide streams into a storage site in onshore areas unless such carbon dioxide streams comply with the carbon dioxide stream acceptance criteria specified in section 28.
 
Section 37 also imposes an obligation on an onshore operator to keep a register of the quantities and properties of the carbon dioxide streams accepted and injected, including the composition of the stream.
 
Operational obligations in relation to onshore storage
 
The operational requirements set out in section 29 in relation to offshore storage shall apply mutatis mutandis to an onshore operator of an onshore storage (section 38).
 
Closure and post-closure obligations and transfer of obligations in relation to onshore storage
 
The closure and post-closure obligations in relation to offshore storage specified in section 31 shall apply mutatis mutandis to the closure and post-closure obligations to be imposed on an onshore operator of an onshore storage (section 39). Before the closure of a storage site in an onshore area under section 39, any transfer of obligations relating to monitoring, corrective and remediation measures of that storage site shall be determined by the Minister, after consultation with the State Government (section 40).
 
J.  Post-Closure Stewardship Fund
 
Section 41(1) establishes the “Post-Closure Stewardship Fund” which is to be administered and controlled by the Agency in accordance with the provisions in Part VIII of the Act (Post-Closure Stewardship Fund).
 
K.  Enforcement actions
 
The Act does not confer powers of enforcement on the Agency. Instead, such powers under the Act are to be exercised by a public officer authorised in writing by the Minister (section 45). A police officer not below the rank of inspector or a senior officer of customs may also exercise the powers of enforcement under the Act (section 46).
 
L.  Issue of standards, guidelines etc.
 
The power to issue any standard, guideline, specification, practice, measure, reporting requirement and any other matters in respect of carbon capture, transportation, utilization and storage of carbon dioxide are vested in the Minister. The Act stipulates that such standard, guideline, specification, practice, measure, reporting requirement and any other matters issued shall be in accordance with prudent carbon capture, utilization and storage practices set out in section 5 (section 53).
 
Comments
 
While the Act confers power on the Agency to oversee activities relating to carbon capture, transport, utilization and storage, and to issue licences and permits relating to these activities, detailed requirements for some of these activities will be drawn from the practices, methods and standards followed by the global carbon capture, transportation, utilization and storage industry, and the requirements prescribed by the Minister, guidelines issued by the relevant competent technical entities appointed under the Act and standards issued by recognised national or international bodies.
 
Article by Fariz Aziz (Partner) and Amanda Swee Lin Hollow (Associate) of the Oil & Gas and Energy Practice of Skrine.
 
 

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