Carbon Pricing for a Low-Carbon Future

Justifying Policy Adoption in Malaysia and Indonesia with Insights from Islamic Values

Abstract

The Indonesian government has implemented a mandatory intensity-based cap-tax-and-trade system and is planning to introduce a carbon tax as an additional carbon pricing policy. In contrast, Malaysia has outlined plans to implement a carbon tax and a domestic emissions trading system to achieve its climate targets and transition toward a low-carbon economy. These developments reflect both governments’ commitment to mitigating climate change. However, implementing new policies that directly affect the economy presents significant challenges. Historical evidence indicates that, without a clear understanding of their necessity, carbon pricing policies often face public rejection, resulting in depletion of substantial financial, administrative, and human resources. Clarifying the importance of carbon pricing instruments is therefore essential, yet prior research has not critically addressed this area. This paper provides an in-depth analysis of the necessity of carbon pricing policies for both nations. Using a qualitative research methodology based on document and thematic analysis, the study identified six key justifications for adopting carbon pricing in both nations. In the context of Islamic countries, these justifications are supported by Islamic values, offering a holistic and grounded perspective. By examining these factors in detail, this paper provides a comprehensive understanding of the underlying rationale for these policies. Ultimately, by embedding Islamic values into the discourse, the justifications may enhance public trust and foster more effective communication strategies.