Paula Adamczyk
OECD Economic Surveys: Malaysia 2026
Abstract
Malaysia is exposed to significant climate-related risks, including floods, heatwaves and rising sea levels. Floods have historically been the most frequent and costly natural disaster, and climate change is projected to exacerbate these risks, with significant implications for economic activity and public finances. While progress has been made in strengthening climate mitigation policies, adaptation efforts will need to be bolstered. Strengthening climate resilience will require a comprehensive national adaptation strategy, improved climate risk data, expanded natural hazard insurance coverage and mobilising private sector investment for adaptation. At the same time, climate mitigation efforts will need to be enhanced for Malaysia to achieve net zero greenhouse gas emissions by 2050. Accelerating the transition to renewable energy, removing fossil fuel subsidies and introducing carbon pricing will be critical to align incentives with climate objectives. A more integrated approach to adaptation and mitigation would support sustainable and resilient economic growth.
Malaysia is increasingly exposed to climate-related risks, including floods, landslides, heatwaves and rising sea levels (World Bank and Bank Negara Malaysia (BNM), 2024[1]). These hazards threaten infrastructure, economic activity and livelihoods, particularly in low-lying coastal and riverine areas and rapidly urbanising regions (OECD, 2025[2]). Climate change is expected to increase both the frequency and severity of extreme weather events, raising the importance of strengthening climate resilience (IPCCC, 2023[3]). Nearly two-thirds of all disasters recorded since 1975 in Malaysia occurred during the past two decades (Figure 2.1, panel A).
Climate-related disasters can have substantial macroeconomic and fiscal consequences. In addition to human losses and damage to infrastructure, disasters can disrupt economic activity through multiple channels. Physical damages to housing, infrastructure and productive assets generate immediate fiscal costs related to emergency response and reconstruction. At the same time, there are also indirect costs as disasters may reduce tax revenues and weaken economic growth through lower consumption, investment and productivity. Disruptions to transport networks and supply chains can affect production across sectors, while damages to agricultural land and natural resources may have longer-lasting impacts on food security and rural livelihoods (OECD, 2024[4]).
Floods have been by far the most frequent and costly natural disaster in Malaysia, accounting for over 70% recorded natural disasters in the past fifty years, and 85% of disaster-related damage costs since 1970s (Figure 2.1, panel B). Flood risks in Malaysia are closely linked to seasonal monsoon rainfall. The country experiences two monsoon seasons: the Southwest Monsoon from April to September and the Northeast Monsoon from October to March. The latter typically brings heavier rainfall, particularly to the east coast of Peninsular Malaysia and parts of Sabah and Sarawak (World Bank Group and Asian Development Bank, 2021[5]). Flooding occurs frequently in low-lying river basins and coastal plains, where dense populations and inadequate flood mitigation infrastructure increase exposure to flood risks (OECD, 2024[6]).
Source: EM-DAT: The International Disaster Database
Since 2000, Malaysia has experienced on average one to two major flood events each year, with particularly severe flooding occurring approximately once every seven years. Although flood events occur frequently, their economic impact has historically been smaller than in some neighbouring countries such as the Philippines, Thailand and Viet Nam, partly reflecting differences in exposure and disaster preparedness (World Bank and Bank Negara Malaysia (BNM), 2024[1]). However, extreme flood events have become more frequent in recent years, leading to significant economic losses. In December 2021, Malaysia experienced record rainfall leading to floods across 11 states and forcing more than 400 000 people to evacuate. The damage cost of this event was estimated at MYR 6.1 billion, equivalent to about 0.4% of GDP (OECD, 2024[7]). More recently, in 2024 and 2023, flood-related damages amounted to around 0.05% of GDP annually with significant damages to public infrastructure, living quarters, agriculture, and business premises (Department of Statistics Malaysia, 2025[8]).
Rising temperatures and changes in precipitation patterns will likely increase flood risks and the likelihood of landslides in mountainous areas, intensify droughts during dry periods and raise sea levels. Climate projections indicate that annual rainfall patterns may become more uneven, with heavier precipitation during monsoon periods and longer dry spells in other seasons. By 2035–2044, the population affected by extreme river floods could increase by approximately 100,000 people, representing a 140% rise from the population exposed to extreme flooding between 1971–2004 (World Bank Group and Asian Development Bank, 2021[5]). Flood-prone areas are expected to expand, while some northern regions could experience rainfall reductions of more than 20% by 2050 (UNFCCC, 2025[9]).
Landslides represent an important but often under-reported hazard. In Malaysia’s mountainous terrain, intense rainfall and land-use changes such as deforestation and urban expansion increase the risk of slope failures and landslides, particularly in rapidly developing areas (OECD, 2024). Landslides can cause significant damages to infrastructure, transport networks and housing, especially in hillside urban developments (OECD, 2024[6]).
In addition to floods, Malaysia is increasingly facing the impacts of prolonged dry spells and extreme heat. Malaysia’s average surface temperature has increased by approximately 0.14–0.25°C per decade since 1970, and average temperatures could increase by up to 1.6°C by the mid-21st century depending on global emission scenarios (World Bank Group and Asian Development Bank, 2021[5]). Potential El Niño-related weather conditions will intensify water demand and heat stress. Higher temperatures will also affect freshwater supply and the yield of crops, increase energy demand for cooling, reduce labour productivity and exacerbate health risks. Moreover, rising temperatures are also increasing the frequency and intensity of heatwaves. Dry spells have already affected farmers and smallholders, disrupted agricultural supply chains and raised concerns over food security. During the first half of 2026, dry spells have lowered paddy yields in areas such as Kedah, Perlis and Perak by more than 60% compared to normal conditions, with significant losses. The commodity sector has also experienced water stress, while declining reservoir levels have affected water supply and increased treatment costs.
Coastal areas are also highly vulnerable to climate change. Sea levels along Malaysian coastlines have risen by between 3.3 mm and 5.0 mm per year since the early 1990s and could increase by another 40-70 centimetres by 2100 (World Bank Group and Asian Development Bank, 2021[5]). Rising sea levels could potentially inundate up to 80% of coastal areas by 2100 (UNFCCC, 2025[9]). Coastal flooding threatens key economic sectors including tourism, fisheries and agriculture. Approximately 6% of palm-oil production and 4% of rubber production are currently located in areas exposed to sea-level rise (OECD, 2024[7]).
Climate change also has important distributional implications. Low-income households, rural communities and small farmers may be disproportionately exposed to climate hazards, reflecting their higher dependence on climate-sensitive sectors such as agriculture and fishery. Climate-related disasters therefore risk widening existing inequalities.
Natural hazards can also create significant fiscal risks. Governments often bear a substantial share of disaster costs through emergency relief, reconstruction spending and support to affected households and firms. These expenditures can place pressure on public budgets, particularly following large-scale disasters. In addition, disasters may reduce tax revenues through lower economic activity and damage to productive assets, creating additional fiscal challenges (IMF, 2022).
As climate damages intensify, strengthening climate resilience through a well-designed climate adaptation framework will become increasingly important. While mitigation efforts remain essential to limit global warming, many climate impacts are already inevitable due to past emissions. Improving disaster risk management, investing in climate-resilient infrastructure and other adaptation policies can therefore play a key role in reducing economic losses and protecting vulnerable populations.
2.2.1. Developing a national climate change adaptation strategy
In Malaysia, like in many Southeast Asian countries, the approach to disaster risk management has relied disproportionately on ex-post responses rather than on proactive ex-ante adaptation policies in the past (OECD, 2024[6]). More recently, Malaysia has made some progress in moving from mainly ex-post response to a more balanced approach with both ex-ante and ex-post measures. The economic and social costs of natural disasters, in particular floods, can be significantly reduced through effective public and private climate adaptation efforts. The wider benefits of adaptation actions far outweigh the costs of financing in the long-term, in addition to reducing the financial burden of disaster response. Some estimates show that every dollar invested in climate adaptation can generate up to 10 dollars in economic, social, and environmental benefits (Brandon et al., 2025[10]).
Designing and implementing effective climate adaptation policies is inherently complex. Climate risks affect multiple sectors, including water management, agriculture, transport, urban development and public health, and require coordination across different levels of government. Effective adaptation policies therefore require a whole-of-government approach supported by strong institutional coordination (OECD, 2024[11]).
Climate change adaptation efforts comprise different strategies, including improving disaster risk management frameworks, mobilising physical infrastructure investments to mitigate natural disaster risks, supporting businesses in their efforts for climate change adaptation, and strengthening financial resilience to climate risks. As climate risks and their impacts vary significantly across regions, local governments should play a crucial role in disaster risk reduction and other adaptation policies. Malaysia has recently made progress in strengthening its disaster risk management framework, organised under the National Disaster Management Agency (NADMA). Adopted in late 2024, the National Disaster Risk Reduction Policy 2030 aims to decentralise risk management to state and district levels and mainstream resilience into national budgetary processes. However, human and financial capital shortages at the local level often hinder effective implementation, requiring a strengthening of local-level disaster management capacities (OECD, 2024[6]).
Recognising the urgency of strengthening Malaysia’s national response to its climate change vulnerabilities and risks, climate policies are being mainstreamed through specific policy frameworks. Adopted in 2024, the National Climate Change Policy 2.0 provides the main strategic framework and guidance for integration and alignment of climate change mitigation and adaptation into national development. It also serves as a basis for coordinating and implementing climate-specific policies and strategies. The Thirteenth Malaysia Plan for 2026-2030 also highlights the need for increased efforts to improve climate resilience and sustainability. A number of important sector-specific frameworks flesh out Malaysia’s envisaged path towards a more resilient low-carbon economy. Energy transition is guided under the National Energy Transition Roadmap (NETR) while climate risks are integrated into sectoral planning such as for water management, agriculture, and urban development.
Despite the ongoing policy initiatives, developing a coherent economy-wide climate change adaptation strategy has proven challenging so far. Adaptation policies are currently fragmented across various sectoral policies and ministries (World Bank and Bank Negara Malaysia (BNM), 2024[1]). The national government is still working on developing a National Adaptation Plan (MyNAP) which will provide a framework to assess, prioritise, and implement adaptation actions across five priority sectors: water and coastal resources, agriculture and food security, forestry and biodiversity, infrastructure and cities, and public health. MyNAP is currently under development and will also incorporate risk assessment, vulnerability mapping, and climate-proofing of policies and investments. A more coherent adaptation strategy would help prioritise investments, clarify institutional responsibilities and reduce policy uncertainties for the private sector. Developing regular sectoral risk assessments as well as their interlinkages will be essential to design tailored adaptation policies across different policy areas and should be part of MyNAP. Malaysia can draw example from other countries which developed comprehensive NAPs with clear monitoring and evaluation frameworks. For example, Chile’s National Climate Change Adaptation Plan is supported by sectoral adaptation plans that are monitored on a yearly basis by the Ministry of Environment (OECD, 2024[12]). The Philippines have also recently put in place a National Adaptation strategy.
As Malaysia experiences frequent flooding, policies related to water management should be central in the forthcoming MyNAP. As flood risks in Malaysia are increasing nationwide across many regions, integrating climate risks into urban planning and investing in improved drainage infrastructure could help reduce vulnerability to floods across the country. Strengthening flood management systems, including river basin management, drainage infrastructure and early-warning systems will be essential to reduce disaster risks and improve flood resilience.
Revising land use plans and tightening construction permits in high-risk areas will help to prevent development in flood-prone areas. Increasing public awareness and education on flood preparedness, especially in rural areas, would also support the effectiveness of flood mitigation strategies. Communities that actively participated in improving flood preparedness and resilience, such as through development of nature-based solutions, have shown greater resilience in responding to flood events (Abid et al., 2024[13]).
2.2.2. Improving climate risk information and data
Effective climate adaptation policies require reliable, timely and accessible information on climate risks. Understanding how climate-related hazards are likely to evolve over time is essential for identifying vulnerabilities, prioritising adaptation investments and designing effective disaster risk management strategies. Regular climate risk assessments provide the backbone for adaptation policies by combining information on hazards, exposure and vulnerability (OECD, 2024[6]).
Malaysia has made progress in strengthening its climate and disaster information systems. Several government agencies contribute to climate monitoring and risk assessment, including the Malaysian Meteorological Department, the Department of Irrigation and Drainage, the National Disaster Management Agency (NADMA), and the Department of Statistics Malaysia (DOSM). These institutions provide meteorological observations, flood monitoring systems and early-warning services that support disaster preparedness and response. Flood forecasting systems have improved significantly in recent years, including the development of real-time hydrological monitoring networks and early-warning mechanisms. These systems help authorities issue alerts ahead of extreme rainfall events and allow emergency services and local communities to prepare for potential flooding. The government has also expanded flood forecasting infrastructure in several river basins, including those in the Klang Valley and eastern Peninsular Malaysia, which are particularly vulnerable to severe flooding. However, further improvements in forecasting accuracy and dissemination of warnings could strengthen preparedness, particularly in high-risk regions.
Malaysia could draw example from other countries in the region faced with similar challenges. For instance, the Philippines has recently upgraded its disaster risk framework, integrating granular data supported by advanced satellite and telecommunications technologies. Launched in partnership with major telecom providers, the system delivers hazard warnings to all mobile phones in the areas where the warning is issued, regardless of subscription status, ensuring that alerts reach millions of citizens in seconds. Complementing this legal and technological advancement is the country’s involvement in CopPhil (National Copernicus Capacity Support Action Programme) which is a multi-agency collaboration with the European Union’s Copernicus programme in the Philippines. This co-operation enables high-resolution satellite-based monitoring for floods, landslides, and other environmental hazards (OECD, 2025[14]).
Despite the improvements in Malaysia, important gaps remain in the availability and accessibility of climate risk information, especially related to floods. In some cases, risk information remains fragmented across institutions or is not easily accessible to local governments, businesses and households (World Bank and Bank Negara Malaysia (BNM), 2024[1]). Making high-resolution flood risks maps publicly accessible could significantly strengthen private sector adaptation planning, especially among SMEs who often have more limited awareness of their risk exposure. Open data platforms that integrate climate projections, hazard maps and socioeconomic exposure data can help policymakers, researchers and private actors better understand climate risks. Expanding access to such information would also support better land-use planning, infrastructure investments and private investment decisions. It would also strengthen the capacity of financial institutions to provide financing and insurance for households and businesses. Digital technologies and advanced modelling tools can also play an increasing role in climate risk assessment. Satellite data, geospatial analytics and machine learning techniques can improve monitoring of extreme weather events and help identify vulnerable areas. All of these tools can support more accurate disaster risk modelling and help authorities prioritise adaptation investments where they are most needed.
Strengthening monitoring and evaluation frameworks in Malaysia is another priority. Weak data governance and non-standardised monitoring frameworks limit the ability of governments to assess disaster risks and allocate resources effectively (OECD, 2025[2]). Systematic monitoring of climate hazards and adaptation outcomes can help policymakers track progress and adjust policies as new information becomes available. Integrating climate risk indicators into national development planning and public investment management systems could therefore improve the effectiveness of climate adaptation policies.
2.2.3. Strengthening financial resilience to climate risks
Climate-related disasters can impose substantial financial costs on households, businesses and governments. Insurance mechanisms can play an important role in strengthening financial resilience to climate risks by providing compensation after disasters occur and reducing the fiscal burden on governments. However, insurance coverage against natural disasters remains limited in many countries, including Malaysia. Many Malaysian households and businesses are not at all or not sufficiently insured against climate-related hazards, and many floods result in significant protection gaps between insured and uninsured losses (World Bank and Bank Negara Malaysia (BNM), 2024[1]).
The significant financial impacts of natural disasters call for strengthening financial resilience to climate risks and developing comprehensive disaster risk finance (DRF) frameworks. This includes both ex-post financing in the aftermath of a natural disaster and insurance solutions for ex-ante financial protection. Since no single policy is effective in mitigating financial risks, a comprehensive DRF framework should incorporate a range of instruments combining risk retention and risk transfer to maximise disaster preparedness in a sustainable, fair and effective manner (OECD, 2025[2]).
In Malaysia, the DRF strategy relies primarily on ex-post financing, mobilised to support recovery and reconstruction once floods or landslides have occurred (OECD, 2025[2]). Combining these ex-post measures with ex-ante financing solutions will be key to strengthening Malaysia’s disaster risk financing framework and increasing businesses and households’ financial resilience. Ex-ante financing tools, such as insurance, help to pool risks and increase businesses and households’ financial resilience. Although insurance is more widespread in Malaysia compared to other countries in Southeast Asia, it remains relatively low, especially among vulnerable households. Over 80% of overall economic losses incurred from natural hazards between 2000 and 2023 were not insured, reflecting large insurance protection gaps (Figure 2.2).
Share of insured economic losses due to natural hazards, 2000-2023 average
Source: (OECD, 2025[15]) based on Swiss Re, sigma database.
Affordability and awareness are the main reasons behind limited insurance demand in Malaysia. Higher awareness of risks and the potential losses is usually correlated with higher uptake of insurance coverage and greater willingness to pay for it (OECD, 2025[15]). Households and businesses are often not fully aware of their exposure to climate risks and the potential damage that they could face, especially in case of risk events with low frequency but strong impact (OECD, 2024[6]). A survey of residents of the Klang Valley, in the Greater Kuala Lumpur metropolitan area, found that 68% of them would be willing to acquire flood insurance if available (Khairunisia, 2023). Insurance uptake might also be related to trust in financial institutions. For example, a study in Indonesia found that although 62% of people surveyed understood the benefits of insurance coverage, only 10% had confidence in the insurance sector (OECD, 2025[15]).
Limited willingness to pay is another significant factor behind low demand for insurance coverage, especially for low-income households and SMEs. Households and businesses located in high-risk areas or poorly constructed buildings may face higher costs of insurance premiums, leading to insurance coverage being unaffordable (OECD, 2025[15]). In Malaysia, some evidence shows that affordability is less of an issue compared to neighbouring countries (Figure 2.3, panel A). Estimated premium costs for an average Malaysian household are equivalent to half a week of income, significantly less than in Indonesia or the Philippines. For the lowest 20% income group, they amount to one and half weeks on average, which is still largely below the estimated affordability stress level. Despite insurance being broadly affordable, the willingness-to-pay for the coverage is quite low, which might be reflected by the underestimation of the exposure to climate risks. This is particularly true for the low-income households for whom insurance costs come with trade-offs to other spending demands, and when insurance coverage for natural hazards is offered as an optional add-on (Figure 2.3, panel B). In Malaysia, around half of the households with property insurance chose to purchase the optional coverage for natural hazard risks (OECD, 2025[15]). Individuals and businesses might also be less prone to taking up insurance coverage if they expect to be compensated by the government in case of disaster (World Bank and Bank Negara Malaysia (BNM), 2024[1]). Promoting the benefits of insurance coverage and requiring the coverage of natural hazards in property insurance contracts would improve financial protection while reducing the financial pressure on public finances in case of a natural disaster. Subsidising insurance for low-income households could also be considered for the most vulnerable households.
Source: (OECD, 2025[8]) based on Swiss Re, sigma database.
Limited uptake of insurance coverage may also be due to supply side factors. Insurers may be reluctant to provide insurance products if they face difficulties pricing disaster risks, particularly when climate risks are increasing or uncertain (World Bank and Bank Negara Malaysia (BNM), 2024[1]). Limited availability of detailed hazard data and catastrophe risk models can complicate risk pricing and lead to high premiums (OECD, 2025[2]). Moreover, financial markets for flood risk management remain relatively small, limiting flood risk diversification for financial institutions (World Bank and Bank Negara Malaysia (BNM), 2024[1]). Flood risks can be also highly concentrated geographically, which may lead insurers to restrict coverage in high-risk areas.
An increasing number of OECD countries have been establishing public-private insurance programmes that provide compensation, insurance coverage or reinsurance for floods and other natural hazard risks. For example, the Danish Natural Hazards Council covers storm surge and flood losses, funded by a surcharge on property insurance policies. In Spain, the public-private insurance system is managed by the Consorcio de Compensación de Seguros (CCS), a state-owned insurer, which ensures insurance coverage where private insurability is limited and facilitates universal coverage by substantially reducing insurance costs. It is funded through a mandatory surcharge on all property, life, and accident insurance policies issued by private insurers, which results in high coverage, with around 75% of Spanish properties insured (OECD, 2026[16], OECD, 2025[17]).
Innovative financing tools can help bridge the insurance protection gap. For example, the use of parametric insurance has been gradually increasing in disaster risk financing frameworks. Unlike traditional indemnity insurance that compensates for actual losses incurred, parametric insurance pays out a fixed pre-agreed amount once an event meets or exceeds a pre-defined threshold, such as a specific water level, wind speed, precipitation amount or earthquake magnitude (OECD, 2025[2]). As no lengthy damage assessment is necessary and administrative burdens are reduced, it offers faster claims processing and pay out, and greater affordability. Moreover, parametric insurance products are typically fully customisable to fit policyholder’s needs and budget. They can be therefore more attractive to people with limited financial knowledge by offering a more predictable and transparent coverage. This type of insurance instrument is thus of particular interest where climate risks affect mostly the low-income and vulnerable groups, such as in Malaysia.
The simplicity of parametric insurance comes with the drawback that the payouts can be below actual sustained losses, leading to a negative basis risk. On the other hand, a positive basis risk can occur when payouts are trigged even when limited losses are incurred, overcompensating the policyholder. High-quality and timely data are therefore needed for accurate assessment of risk exposure and potential losses. Parametric insurance could nevertheless be utilised in combination with the traditional indemnity-based insurance coverage as a hybrid risk management solution. In that case, parametric insurance can swiftly cover the first urgent losses and provide liquidity support, while traditional insurance covers the remaining, higher losses (Generali and UNDP, 2024[16]).
Several countries have recently introduced parametric insurance products for natural disasters, notably the highly disaster-prone Pacific Island Countries. For example, in Fiji, cyclone insurance payout amounts to ten times the insurance premium, with a portion of the payout disbursed before the cyclone makes landfall to strengthen preparedness and response (UNDP, 2025[17]). In agriculture, parametric drought cover linked to a rainfall-index has been used for coffee farmers in Colombia, Indonesia, and Kenya, enabling farmers to have quick access to finance and rapidly recover from severe drought risks (Marsh, 2025). The Southeast Asian Disaster Risk Insurance Facility (SEADRIF), which serves as a regional platform to provide participating ASEAN countries with financial and risk management solutions, also offers parametric solutions to its member countries.
2.2.4. Implementing and financing climate change adaptation measures
Strengthening resilience to climate change will require significant investments in infrastructure, ecosystems and climate-resilient economic systems. Integrating climate resilience into infrastructure planning can reduce future repair and reconstruction costs while ensuring that new infrastructure remains functional under changing climate conditions, therefore improving long-term productivity and fiscal sustainability.
In Malaysia, strengthening resilience to floods represents one of the most important adaptation investment priorities. Strengthening flood resilience through a combination of infrastructure investments, improved zoning regulations and early-warning systems could cost around 0.2% of GDP annually, while significantly reducing the economic losses associated with extreme flood events. Without additional adaptation measures, a severe flood event occurring once every twenty years could lead to economic damages of up to 4.1% of GDP by 2030 (World Bank and Bank Negara Malaysia (BNM), 2024[1]).
The type of investments needed to address flood risks can be very area-specific and the use of detailed cost-benefit analysis and comprehensive risk assessments should guide infrastructure projects design and implementation. Examples of flood-mitigating infrastructure investments include river basin rehabilitation, modernising drainage systems, construction of dams in rural areas prone to flash floods, as well as restoring mangroves and peatlands in coastal areas. Urban flooding represents a particular challenge as rapid urbanisation has increased the share of impermeable surfaces in cities, reducing natural drainage capacity and increasing the risk of flash floods (World Bank and Bank Negara Malaysia (BNM), 2024[1]) The construction of the SMART tunnel in Kuala Lumpur is a successful example of an infrastructure project mitigating floods risks in a densely populated urban area as it can be used to divert water from the city centre during floods.
Adaptation investment needs to extend beyond flood mitigation. Agriculture remains sensitive to climate variability. Rising temperatures, changing rainfall patterns and more frequent extreme weather events may affect crop yields and agricultural productivity. Floods and droughts during key growing periods can damage crops and disrupt planting cycles, affecting rural incomes and food security (Food and Agriculture Organization, 2022). Supporting climate-resilient agricultural practices, including improved irrigation systems, drought-resistant crop varieties and better climate information for farmers could help to strengthen resilience in the agricultural sector.
Malaysia’s tourism sector is also vulnerable to climate risks. Coastal tourism infrastructure such as resorts, beaches and marine ecosystems may be affected by sea-level rise, coastal erosion and extreme weather events. Protecting coastal ecosystems such as mangroves and coral reefs can therefore play an important role in strengthening climate resilience while preserving tourism assets (see Section 2.2.5).
Mobilising funding for climate adaptation remains a major global policy challenge. Global estimates suggest that climate adaptation investment needs are substantial and likely to increase as climate impacts intensify. Recent assessments indicate that developing countries may require between USD 215 billion and USD 387 billion per year in adaptation investment during this decade (UNEP, 2025[18]). Current levels of international adaptation finance remain far below these estimates, highlighting the need to mobilise additional public and private resources.
The role of public investment
The public sector plays a central role in steering climate adaptation investments. Governments are typically responsible for providing large-scale infrastructure such as flood protection systems, drainage networks, coastal defences and water management infrastructure. These investments can significantly reduce disaster risks and generate substantial long-term economic benefits (OECD, 2024[11]).
Malaysia has increased budget allocations for flood mitigation in recent years, and the Thirteenth Malaysia Plan identified strengthening of flood mitigation and adaptation as one of its priorities. Several flood mitigation programmes are being implemented across the country, including river basin management projects, stormwater drainage upgrades and coastal protection initiatives. Between 2020 and 2025, 17 flood mitigation projects were implemented which strengthened protection for over 150 000 residents living across an area of 74 square kilometres (Ministry of Economy, 2025[19]). Under the Thirteenth Malaysia Plan, the government has prioritised flood management infrastructure with a budget allocation of MYR 12 billion. It consists of implementing 43 high-priority flood mitigation projects (RTB) in areas with high population density and economic activity, such as the Klang Valley and along the Johor River (Ministry of Economy, 2025[19]). Until the RTB projects are completed, short-term mitigations measures are prioritised, such as river dredging and bank stabilisation, with over MYR 500 million allocated between 2022 and 2025 to selected high-risk areas.
Mobilising private investment
Given the limited public resources, mobilising private capital for climate change adaptation investments will also be important to meet the scale of future investment needs. Private businesses, financial institutions and infrastructure investors can play a key role in financing adaptation measures such as climate-resilient buildings, resilient supply chains and water management technologies. In Malaysia, like in other countries, the private sector financing gap for adaptation is significant. Only 8% of global climate adaptation finance came from the private sector in 2022, against 54% for climate mitigation (Climate Policy Initiative, 2024[20]). Unlike mitigation investments, adaptation projects are more difficult to monetise as they don’t necessarily generate predictable revenue streams and their value is often based on avoided losses or public benefits, reducing their attractiveness for private investors. In addition, adaptation projects typically suffer from high upfront costs, uncertain returns and limited availability of standardised metrics to assess resilience benefits. However, evidence shows that adaptation investment can generate substantial economic benefits, with returns of two to ten times the initial cost (OECD, 2024[21]).
Green and sustainable finance instruments can play an increasing role in mobilising private capital for climate adaptation. Malaysia has been a regional leader in the development of green and sustainable sukuk (Islamic bonds), launching the world’s first sustainability sukuk in 2021 under the Sustainable and Responsible Investment (SRI) Sukuk Framework. It has been used primarily to finance renewable energy and other mitigation projects but has the potential to be expanded to support climate-resilient infrastructure and nature-based solutions. Issuances have grown rapidly in recent years, with MYR 27.6 billion of SRI sukuk issued in 2023 alone, and total ESG and sustainability-linked sukuk issuance estimated at over MYR 30 billion in 2023–2024 (Capital Markets Malaysia, 2025[22]). Scaling up the use of green and resilience bonds for projects such as flood mitigation, coastal protection and water management could help channel institutional investor capital towards adaptation.
Another way for governments to promote private adaptation investment is by improving climate risk disclosure, strengthening regulatory frameworks and providing better access to climate risk data. Clear information on climate risks can help investors assess long-term vulnerabilities and incorporate resilience considerations into investment decisions (OECD, 2025[23]). Public policy can also help de-risk private investment in adaptation. For example, expanding blended finance instruments that provide concessional finance, public-private partnerships and guarantees in Malaysia, such as those explored by the Climate Finance Innovation Lab (CFIL) and under the Joint Committee on Climate Change (JC3), could reduce investment risks and encourage private sector participation in resilience projects. These mechanisms are particularly important for infrastructure projects where upfront investment costs may be high but long-term benefits are substantial (OECD, 2023[24]). Similar approaches have been used in Singapore, where public co-financing and long-term infrastructure planning have helped attract private investment into coastal protection and water management systems.
2.2.5. Nature-based solutions to climate change adaptation
Nature-based solutions (NbS) can play an important role in strengthening climate resilience while delivering additional environmental benefits. NbS use natural ecosystems and ecological processes to reduce climate risks, complementing traditional infrastructure-based adaptation measures. Restoring and protecting ecosystems such as forests, wetlands and mangroves can reduce exposure to floods, storm surges and coastal erosion while also supporting biodiversity conservation and carbon sequestration. Nature-based solutions have great potential in mitigating flood risks as they can help to detain floodwater, reduce the energy and extent of floods as well as divert floods away from populated areas (Molnar-Tanaka and Surminski, 2024[25]).
Malaysia has significant potential to use NbS for climate adaptation given its rich ecosystem, including extensive tropical forests and coastal wetlands. Strengthening efforts to protect forest areas is essential as between 2017 and 2023, almost 7% of mangrove coverage was lost in Malaysia (The STEM Bulletin, 2026). Mangrove forests in particular play an important role in protecting coastal communities from storm surges and coastal erosion by acting as natural barriers against waves and extreme weather events. Mangroves also improve water quality, creating better conditions for fisheries and aquaculture, and store large amounts of carbon. They can thus act as large carbon sinks, generating co-benefits for both climate adaptation and mitigation (OECD, 2024[21]).
Malaysia has already implemented several initiatives to protect and restore mangrove ecosystems. Programmes led by government agencies and local communities have focused on mangrove reforestation and coastal ecosystem conservation (WWF Malaysia). These initiatives help to restore degraded coastal habitats while strengthening natural flood protection. However, continued urbanisation, coastal development and land-use changes continue to act as important pressures on these ecosystems, and it will be up to policymakers, often at the local level, to contain these pressures through appropriate regulation.
Nature-based solutions can also help mitigate inland flood risks. Wetlands, river floodplains and forested catchments can absorb and store large volumes of water during heavy rainfall events, reducing the severity of downstream flooding. Integrating ecosystem restoration into river basin management can therefore complement traditional flood protection infrastructure such as dams, levees and retention basins (UNEP).
The resilience to climate risks of urban areas can also be greatly improved through the integration of nature-based solutions. NbS such as urban parks and green roofs help to lower urban surface temperatures and improve air quality, in addition to providing CO2 storage function and recreational benefits (UNEP FI, 2023[26]). Increasing permeable surfaces and incorporating nature-based drainage systems would improve water management and flood risk mitigation. In Sweden, retrofitting sustainable drainage systems in urban areas led to a 50% reduction in run-off and an increase in biodiversity (Molnar-Tanaka and Surminski, 2024[25]).
Scaling up nature-based solutions would strengthen Malaysia’s climate adaptation strategy while generating additional environmental and social benefits. Integrating ecosystem-based approaches into land-use planning and coastal management strategies could help protect natural buffers against climate hazards. Public investment programmes for flood management and coastal protection could also incorporate nature-based components alongside traditional infrastructure. Nature-based solutions are typically cost-effective compared to purely infrastructure-based adaptation measures and can deliver multiple benefits across sectors and local communities.
2.3.1. Efforts to decrease greenhouse gas emissions should be strengthened
The increased incidence of climate-related disasters in Malaysia serves as a reminder for the importance of mitigation efforts to reduce emissions and contain climate risks. Malaysia has made progress in strengthening its climate mitigation framework in recent years, although greenhouse gas (GHG) emissions have continued to rise. Annual GHG emissions have more than doubled compared to 2000 levels, amid rapid economic growth and increased demand for energy (Figure 2.4, panel A). The energy sector has been the primary source of GHG emissions, followed by the transport sector, reflecting the economy’s reliance on fossil fuels. It has also been the primary driver of emissions increases, as GHG emissions from the power sector grew by almost 250% since 2000 (Figure 2.4, panel B). Malaysia’s GHG emission intensity, with respect to GDP, has been gradually declining in post-COVID19 years, but it remains above its regional peers (Figure 2.4, panel C). In contrast, per capita GHG emissions have risen over the same period and are significantly above that of other ASEAN economies (Figure 2.4, panel D).
Source : Crippa et al (2025), EDGAR database.
In October 2025, Malaysia submitted an updated Nationally Determined Contribution (NDC). Unlike the previous NDC, which focused on reducing the emission intensity of GDP by 45% by 2030 relative to 2005 levels, the new commitment introduces an economy-wide absolute emissions target. In its revised NDC, called NDC 3.0, Malaysia commits to peaking GHG emissions between 2029 and 2034, with the goal to peak by 2030, and reducing emissions by 15-30 million tonnes CO2e from the peak level by 2035. Of these, 20 million tonnes CO2e would be unconditional and another 10 million tonnes CO2e conditional on the provision of climate finance, technology transfer and capacity-building from international sources (UNFCCC, 2025[9]). This shift improves the transparency and comparability of Malaysia’s climate targets, although the pace of emission reductions following the peak remains relatively modest, given that annual GHG emissions increased by 40 million tonnes between 2019 and 2024. As a result, the new target might not substantially strengthen mitigation ambition in the near term. Stronger mitigation action will likely be needed for Malaysia to become a net-zero carbon economy by 2050 as envisaged.
Several national policy frameworks support Malaysia’s climate mitigation efforts. The National Energy Transition Roadmap (NETR), launched in 2023, outlines a long-term pathway for transforming the energy system through six priority transition levers: expanding renewable energy deployment, improving energy efficiency, developing hydrogen and bioenergy technologies, electrification of transport, and the deployment of carbon capture and storage (CCUS) technologies (Ministry of Economy, 2023[27]). In addition, Malaysia has introduced several initiatives to support sustainable finance and investment, including the Sustainable and Responsible Investment (SRI) Sukuk framework which raised MYR 13 billion for social and green projects since 2023 and the Green Investment Strategy, which has helped mobilise financing for renewable energy and other green investment projects, or the National Energy Transition Facility (NETF) designed as a catalytic blended-finance platform aimed at expediting the mobilisation and deployment of capital, or the Ecological Fiscal Transfer allocates funds to state governments for nature conservation.
2.3.2. Decarbonising the energy mix
As the energy sector is the largest single sector contributor to Malaysia’s GHG emissions, lowering its emissions could significantly bolster climate mitigation progress. Malaysia’s energy mix remains heavily dependent on fossil fuels (oil, coal, and natural gas), although the share of renewables in electricity generation has been gradually increasing. Reliance on fossil fuels in Malaysia is also much higher than in peer economies (Figure 2.5). While natural gas has historically dominated the energy mix, coal has become an increasingly important source of generation since the 2010s as a cheaper alternative to gas, although the GHG emissions intensity of natural gas use is generally much lower than that of coal. On average, natural gas results in about 35% fewer emissions than coal, and more than 95% of the natural gas consumed in 2024 had fewer lifecycle emissions than coal (IEA, 2025[28]). Malaysia also relies on imported crude oil for its domestic use, making it vulnerable to global energy price shocks and geopolitical tensions. While balancing energy security, affordability, and environmental sustainability considerations, Malaysia has taken ambitious steps in recent years to reduce the reliance on fossil fuels and accelerate the transition to renewable energy sources, including through the Large-Scale Solar (LSS) programme and Hybrid-Hydro Floating Solar (HHFS) projects. Under the NETR, Malaysia has committed to phasing out coal power by 2044, while natural gas remains a key transitional fuel.
Total energy supply by source, share %
Source: IEA, World Energy Balances.
Progress in decarbonising the energy mix will require expanding the use of electricity and generating more electricity from cleaner sources. It would also strengthen Malaysia’s energy security and competitiveness due to lower generation costs and electricity tariffs, compared to fossil fuels. Electricity currently contributes one fourth of Malaysia final energy consumption, with the industry sector accounting for half of that demand (IEA). Electricity generation in Malaysia has almost tripled in the past 25 years, largely driven by the increase in coal-fired power generation (Figure 2.6). In 2025, 80% of electricity came from fossil fuels, with coal and natural gas accounting for 45% and 34% respectively (Ember, 2026[29]). Renewables contributed 20% to electricity generation, compared to a global average of 41%. Renewable energy deployment has increased rapidly in recent years, particularly in solar power generation, supported by policy instruments such as feed-in tariffs, large-scale solar auctions and rooftop solar schemes. Installed capacity of solar photovoltaic generation increased from 0.5 GW in 2018 to 2.3 GW in 2024, representing an increase from 6% to 24% in total renewable installed capacity, although less than 24% in terms of effective electricity generation.
Malaysia has considerable potential to further expand renewable energy production, particularly solar energy. The country benefits from high solar irradiation levels throughout the year, creating favourable conditions for both large-scale solar projects and distributed rooftop systems. Malaysia’s solar potential is estimated at 337 GW and it could become the dominant renewable electricity source by 2050 if regulatory and infrastructure constraints are addressed (IRENA, 2023[30]). As the cost of solar energy is declining rapidly, wider deployment would also contribute to strengthening Malaysia’s competitiveness, affordability and energy security, including its resilience against shocks to global energy prices. Solar power generation in Peninsular Malaysia already achieved cost parity with fossil-fuel-based electricity in 2021. By 2023, further declines in the cost of solar power generation have made it 50% less expensive than power generated from fossil fuels (Ember, 2024[31]).
Recognising the untapped potential of renewables in Malaysia, the government has announced ambitious targets to increase the installed renewable energy capacity, as set out in the NETR. The first target of 31% renewable energy capacity has been reached in 2025. Subsequently, the government has committed to increasing renewable energy capacity to 40% in 2040 and 70% in 2050.
Source: Ember Energy database.
Achieving these targets will require a significant acceleration in renewable energy deployment and major investments in electricity infrastructure. A key challenge relates to the electricity grid infrastructure and system flexibility. Like in other countries, Malaysia’s power system was originally designed for centralised fossil-fuel generation and faces difficulties in integrating variable renewable energy sources such as solar. As solar penetration increases, deployment of large-scale energy storage will be essential to manage the variability of renewable energy production and to ensure grid stability, in addition to investments in transmission networks and digital grid management systems.
Limited competition in the electricity market may reduce incentives to integrate new renewable energy technologies (Castle and Varriale, 2026[32]). Malaysia’s power sector is divided into three separate electricity grids, each dominated by a state-owned utility company in its region: the Tenaga National Berhad (TNB) in Peninsular Malaysia, Sabah Electricity Sdn Bhd (SESB), and Sarawak Energy Berhad (SEB). In Peninsular Malaysia, TNB is solely responsible for power transmission and distribution while independent power producers (IPPs) also participate in electricity generation. IPPs are licensed by the government and sell power under long-term power purchase agreements (PPAs) and single buyer model, which may limit competitive prices in the long-term and reduce incentives for innovation and efficiency improvements. International evidence from OECD countries suggests that beyond direct support, strengthening competition in electricity markets, including by enhancing third-party access to the grid and unbundling generation and transmission functions, facilitates renewable energy deployment and supports the energy transition ( (OECD, 2025[33]); (Nicolli and Vona, 2019[34]); (IEA, 2005[35])).
2.3.3. Pricing carbon properly
Energy pricing policies play a critical role in shaping incentives for emissions reductions. In Malaysia, fossil fuel subsidies have historically been an important component of energy policy, keeping fuel and electricity prices artificially low. While these subsidies have supported affordability and competitiveness, they also weaken incentives for energy efficiency and low-carbon investment.
The government has initiated several reforms in recent years to provide more targeted subsidy schemes. In a welcome move, in 2024 a diesel subsidy reform was implemented in Peninsular Malaysia, which liberalised the diesel pump price and raised it to its market value, while providing cash transfers to the most vulnerable groups. In contrast, the 2025 petrol subsidy reform was not income-targeted, with continued subsidies of petrol prices at the pump to all Malaysian citizens (see Chapter 1).
Low fuel prices are likely to slow the transition towards more energy-efficient technologies and a more widespread electric-vehicles (EV) uptake. Despite the partial price liberalisation, fuel prices in Malaysia remain among the lowest in the world. Average pump prices of RON-95 and diesel were equal to USD 0.63 and USD 0.72 respectively at the beginning of 2026, equivalent to about half the global prices and placing Malaysia at the lowest end among Southeast Asian countries (Figure 2.7). Given that the initial cost of buying an EV is higher than that of a combustion-engine car, lower operating expenses after the purchase are an important part of the argument for buying an EV, but that argument is weakened by low fuel prices. The share of EVs has been rising in Malaysia, representing 5.5% of new vehicles sales in 2025. However, some market experts fear that the new petrol subsidy could slow the transition to green vehicles (Kenanga Research, 2026[36]). Fossil fuel subsidies also impose a significant fiscal burden, particularly during periods of high global energy prices. As discussed in Chapter 1, energy subsidies should be phased out gradually, while targeted transfers can be used to support vulnerable households.
Source: Global Petrol Prices, data accessed in February 2026, https://www.globalpetrolprices.com/.
Beyond an end to fuel subsidies, reducing GHG emissions will require implementing a carbon pricing strategy. Carbon price policies create incentives for households and businesses to reduce emissions by reflecting the environmental cost of carbon in energy use (D’Arcangelo, 2022[37]). Many countries have introduced market-based instruments to reduce emissions, either through explicit carbon taxes, emissions trading systems or a combination of both. Very often, the first step to pricing emissions has been the implementation of a fuel excise tax that increases prices at the pump, as is the case in most OECD countries (Figure 2.8, panel A).
The current energy price signals provide the wrong incentives for emission reductions as subsidies essentially act in the opposite direction to carbon pricing. As a result, Malaysia currently stands out for a negative carbon price (Figure 2.8, panel A). In 2023, before the diesel subsidy reform, the resulting net effective carbon rate was equivalent to EUR -25 (USD 29) per tonne of CO2-eq (OECD, 2024[19]). Reducing the subsidies for petrol and eventually moving towards taxing rather than subsidising fossil fuels would incentivise lower fuel consumption and a shift to more energy-efficient transport modes. Targeted transfers to the most vulnerable groups can be an effective way to improve the distributional effects of moving towards a positive carbon price.
Malaysia is still in the early stages of developing a domestic carbon-pricing framework and currently none of its GHG emissions are covered under any market-based instrument (Figure 2.8, panel B), although a voluntary carbon market was launched at the end of 2022. The Bursa Carbon Exchange (BCX) provides a platform for companies to trade standardised carbon credit contracts linked to verified emissions reduction or removal projects. In addition to enabling firms to voluntarily offset their emissions, it can mobilise private financing towards climate mitigation projects such as forest conservation and renewable energy. It can also provide a first signal for a domestic carbon price ahead of introducing a broader carbon tax or emission trading system. BCX’s first auction in 2024, which involved the sales of carbon credits totalling more than 20 000 tonnes of CO2-eq. from the Kuamut Rainforest Conservation Project in Sabah, cleared at MYR 50 (USD 12) per tonne. While the voluntary carbon market can support emissions reductions in hard-to-abate sectors and help build market infrastructure, its impact remains limited due to its partial and optional coverage.
Note: The Effective Carbon Rate (ECR) is the sum of fuel excise taxes, carbon taxes and tradeable permits that effectively put a price on carbon emissions. The Net ECR equals the ECR minus fossil fuel subsidies that decrease pre-tax fossil fuel prices. 1 EUR = 1.15 USD in April 2026.
Source: OECD (2024), Pricing Greenhouse Gas Emissions 2024: Gearing Up to Bring Emissions Down (database).
The forthcoming Climate Change Bill is expected to provide more long-term clarity on the government’s carbon pricing strategy and the legal framework supporting its implementation. The Thirteenth Malaysia Plan mentions plans to introduce a domestic ETS, without providing further details. Nevertheless, Budget 2026 has confirmed Malaysia’s commitment to introduce a national carbon tax. The first phase of the carbon tax implementation is expected to cover emissions from the iron, steel and energy sectors but details as to the initial rate of the tax as well as exact coverage remain to be clarified.
A carbon tax could be a practical starting point, particularly in sectors where emissions monitoring is relatively straightforward, such as power generation and energy-intensive industries. Starting with a moderate tax rate and increasing it gradually over time would allow households and firms to adjust while providing clear long-term investment signals. This has been the case in neighbouring Singapore, where the carbon tax implemented in 2019 was initially set at USD 4/tCO2e in the first four years, before rising gradually to USD 19/tCO2e and USD 34/tCO2e, and is further targeted at USD 38-61/tCO2e by 2030. Alternatively, Malaysia could consider developing an emissions trading system (ETS), which would set an emissions cap while allowing firms to trade allowances. ETS typically require robust monitoring, reporting and verification frameworks and may be more complex to implement. A phased approach, such as starting with a carbon tax and gradually expanding coverage or transitioning toward trading mechanism, could therefore be of particular interest.
International experience suggests several design principles that can support the successful implementation of carbon pricing reforms. Introducing carbon pricing gradually can allow households and businesses time to adjust to higher energy prices. Complementary policies, such as targeted transfers to low-income households can help mitigate potential distributional impacts. Utilising revenues from carbon pricing to support green investment, reducing other distortionary taxes or financing climate adaptation would not only ensure policy effectiveness but also enhance social acceptance of such reforms (D’Arcangelo, 2022[37]).
Analysis conducted for this Economic Survey uses the OECD ENV-Linkages model to simulate the impacts of climate change mitigation policies under different policy scenarios. The OECD ENV-Linkages model is a dynamic multi-sectoral, multi-regional Computable General Equilibrium (CGE) model, allowing the analyses of the medium- to long-term effects of policy shifts that require reallocation across sectors and regions, as well as the associated spill-over effects (Chateau, Dellink and Lanzi, 2014[38]). The model is used to estimate the environmental and economic impacts of removing fossil fuel subsidies in Malaysia and introducing a carbon tax, as compared to the current emission pathway under the NDC 3.0 target.
To establish the business-as-usual (BAU) reference scenario for Malaysia until 2040, macroeconomic projections are taken from the OECD Long-term model (Guillemette and Chateau, 2023[39]). Historical and projected GHG emissions data by sector is taken from the 2024 Common Reporting Tables (CRT) and the Biennial Transparency Report (BTR) provided by UNFCCC. Data on historical electricity generation as well as historical and projected capacity mix are taken from the Malaysian Energy Commission. Data for other countries is taken from the International Energy Agency (IEA) World Energy Outlook 2023.
Under the BAU scenario, GHG emissions are assumed to peak by 2035. In the first policy scenario (FFS Phase-Out), fossil fuel subsidies are removed gradually until 2030 and fully afterwards. This policy scenario also assumes a full transfer of associated fiscal savings to households. In the second policy scenario (CO2 Tax + FFS), in addition to the full fossil fuel subsidies removal scenario, a carbon tax is introduced in the power sectors and energy intensive industries. The level of carbon tax is endogenous in the model for the GHG emissions to reach net zero by 2050, as envisaged in Malaysia. Under this scenario, the savings from fossil fuel subsidies removal and the revenues from the carbon tax are used to both support households (50%) and for investment into the electricity grid (50%).
Source: OECD (forthcoming), Technical Background Paper: Analysis of the economic and environmental impacts of climate change mitigation in Malaysia.
Modelling simulations using the OECD ENV-Linkages model (Box 2.1) suggest that climate mitigation efforts will need to be significantly bolstered beyond the NDC 3.0 target in order for Malaysia to reach net zero GHG emissions by 2050 (Figure 2.9). The results show that under a scenario consistent with Malaysia’s NDC-commitments (orange line), GHG emissions would peak by 2030 and reach a level 10% below the business-as-usual (BAU) scenario by 2040. Achieving this emissions trajectory does not require a full fossil subsidies removal. Removing fossil fuels completely, albeit gradually at first and with a full transfer to households (red line), would lead to a faster drop in emissions to almost 13% below the BAU scenario. A significant gap towards reaching net zero by 2050 would nonetheless remain. Only with the introduction of a carbon tax in addition to the full fossil fuel subsidy removal (blue line) would Malaysia be able to reach net zero by 2050. In the model, the carbon tax is applied on the power sector and energy-intensive sectors (iron and steel) and the resulting GHG emissions would be 32% below the BAU case by 2040. Under this scenario, half of the revenues from the carbon tax and the fiscal savings from the fossil fuel subsidies removal are invested into the electricity grid, supporting the green transition. In the latter two scenarios, the share of renewables in the electricity mix rises strongly, led by an expansion of installed solar capacity by 58% by 2050 with a carbon tax.
The results of these simulations suggest scope for more ambitious climate mitigation action with only moderate increases in carbon prices. Given the low relative cost of renewables in Malaysia, accelerating emission reductions up to 2040 through a more marked shift towards renewables would not have significant effects on energy affordability for households, but it would require additional investment into the grid and renewable energy generation capacity. Much of the fiscal resources from fossil fuel subsidy savings and the carbon tax could be used to finance this investment while still compensating households to avoid any real income losses. In addition to environmental impacts, the modelling results find positive effects on macroeconomic and social outcomes under both policy scenarios, including a positive impact on consumer welfare and GDP.
GHG emissions under different policy scenarios, Mt CO2e
Note: See Box 2.1 for a description of the model and the underlying policy scenarios.
Source: OECD analysis.
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