The UK and Malaysia have launched the second phase of the Malaysia-UK Partnering for Accelerated Climate Transitions (UK PACT) fund, which is aimed at supporting Malaysia's energy transition through targeted projects.
The UK will provide up to £2.9mn ($3.88mn) in funding across the 2025-26 and 2026-27 financial years, the countries announced on 12 December. The programme aims to establish a pathway for private and public sector participants through a strategic roadmap for green finance, as well as enable investment into energy storage solutions and grid infrastructure, and strengthen carbon market mechanisms.
This second phase builds on the support provided by the UK over 2020-23 and is in line with Malaysia's more recent climate policies such as its national energy transition roadmap, its nationally determined contribution (NDC) for 2035 and its upcoming climate change bill. The first iteration of the programme involved up to £2.6mn in funding for projects in priority areas such as energy, nature and low-carbon policies.
The Malaysia-UK PACT in July called for proposals from eligible organisations to develop projects focusing on objectives such as developing a sustainable finance roadmap, improving project bankability by establishing a regulatory framework for renewable integration solutions with a focus on energy storage systems, and providing support to industry and high-emitting sectors to prepare to participate in the domestic emissions trading scheme.
The UK has partnered with multiple other countries such as Thailand, Indonesia and most recently, the Philippines, under the PACT programme, which is governed and jointly funded by the UK's Foreign, Commonwealth and Development Office and Department for Energy Security and Net Zero.
Malaysia intends to hit peak emissions by as early as 2030 and no later than 2034, depending on the availability of support. In its latest NDC, it aims to achieve an absolute emissions reduction of 15mn-30mn t of CO2 equivalent (CO2e) by 2035 from its projected peak level, which it did not indicate.
The country will introduce a carbon tax next year, with an initial focus on the iron, steel and energy sectors.
