The financial impact of adopting carbon-tax as policy on electricity generation system: A case study of Malaysia’s power generation mix

It has been acknowledged that increasing amount of carbon in the atmosphere is being responsible for climate change and seasonal variation. The burning of fossil fuel for electricity generation has been among the key factor for increased CO2 production. However, the biggest concern of the policymakers around the world is to minimize the rate of carbon emission by implementing effective and efficient policies. Considering the catastrophic impact of carbon 192 countries of the world have signed an agreement under the umbrella of United Nations Conventional framework on climate change (UNFCCC) to restrict the emission by a significant value. Malaysia has also committed to reducing the carbon emission rate 45% by the end of 2030.Among the several measures, carbon-tax is advocated most effective tool and has high possibility to be implemented as Malaysia’s future low carbon development. The main objective of this study is to highlights the global carbon taxing trend and to estimate the energy price equivalence of carbon taxes in Malaysia’s energy market. To evaluate the financial impact of adopting a carbon-tax policy on current power generation mix of Malaysia the system was examined by three different carbon pricing rate. The study is set to compliance with the five fuel diversity strategy as per 11th energy action plan for electricity generation in Malaysia.