Reducing carbon footprint in Malaysia: The potential of green-tech startups

• Key for M’sia to identify green-tech startups dedicated to sustainability 
• Multiple stakeholders' collaboration is crucial in addressing climate challenges

Malaysia, with its vast forested area of 18.27 million hectares, or 55.3% of the total land area, is navigating the complexities of carbon emissions. In 2021, the country’s CO2 emissions were approximately 298.5 million metric tons, largely attributed to energy production and consumption. Over the past decade, the country has seen a steady increase in carbon intensity, with an annual increase of about 1.3%.

The rise in carbon emissions has led to significant environmental impacts in Malaysia. The country is increasingly vulnerable to climate change, including more frequent heatwaves and rising sea levels, which pose substantial threats to its coastal regions.

Deforestation is another pressing issue. In 2023, Malaysia lost about 133,000 hectares of natural forest, leading to biodiversity loss and contributing to the release of significant amounts of stored carbon into the atmosphere, thereby intensifying climate change.

These environmental changes have serious economic implications, with climate change potentially shrinking Malaysia’s GDP by 20% by 2050. This puts vital sectors such as agriculture, tourism, and fisheries at risk, along with potential impacts on public health and labor productivity.

However, addressing climate change also presents significant opportunities for Southeast Asia. A study by BCG and Fairatmos titled "Climate Technology in Southeast Asia: Key to Unlocking the World’s Carbon Sink" highlights that nature-based solutions (NbS) could supply approximately 30% of the global carbon offset by 2030, despite Southeast Asia covering less than 1% of the world's total landmass. Critical sectors such as agriculture, tourism, and fishing can thrive by focusing on sustainable practices while enhancing human health and labor productivity.

To successfully harness nature-based solutions, collaboration between multiple stakeholders is needed, especially in technological advancement, private-public partnerships, and green investment. While technology plays a crucial role in NbS implementation through advancements like the Internet of Things (IoT), artificial intelligence, big data, remote sensing, and quantum computing, more green investment and political will are needed to overcome barriers to NbS uptake.

In Indonesia, the impact of collaboration and investment to develop NbS is already underway with support for Fairatmos, an organisation working on high-quality carbon offset projects across Southeast Asia. 

Fairatmos founder and CEO Natalia Rialucky said, “Indonesia hosts 15% of the world's potential nature-based carbon sinks. Fairatmos seeks to simplify the process, enabling anyone, regardless of size, to initiate nature-based projects that reduce greenhouse gas emissions without excessive costs. Overcoming hurdles like limited technical expertise, lengthy certification processes, and high capital investment is vital to ensure everyone can participate in restoring the atmosphere.”

Fairatmos has received support for its product, Atmoswatch, from ANGIN, an early-stage investment platform and development advisory consulting company in Indonesia, through its Product Market Fit Programme powered by Official Development Assistance. This initiative aims to refine startups’ products to better meet market needs by providing funding, tailored mentorship, and networking opportunities.

Ursula Toding, ANGIN business development senior associate, said, “We were impressed by Fairatmos’ alignment with government priorities, especially in carbon offset initiatives amid Indonesia’s focus on carbon regulation. Startups like Fairatmos are crucial in leveraging business to address environmental challenges, aligning impact with commercial viability. Through the organisation, we can become more strategic in our approach, achieving both meaningful impact and sustainable growth.”

Fairatmos also received investment from Vertex Ventures Southeast Asia and India (VVSEAI), a regional venture capital firm. VVSEAI's partner, Puiyan Leung, said, “Innovators like Fairatmos play a vital role in supporting these efforts. We hope there will be similar projects across Southeast Asia so we can mitigate the impact of the climate crisis in a creative and innovative way. Not only to reduce emissions but also to provide economic and social benefits to local communities and support their efforts in adapting to climate change, just like Fairatmos.”

To replicate this model in Malaysia, identifying green-tech startups dedicated to sustainability is essential. Venture capital firms, such as VVSEAI, can provide support through funding, mentorship, and networking, while the Malaysian government and stakeholders foster conducive environments for sustainable investments.

The collaboration between Fairatmos and key ecosystem players serves as a successful blueprint for green-tech startups, investment platforms, and venture capital firms. This partnership showcases how these entities can synergise to mitigate carbon footprints and accelerate Southeast Asia's transition to a low-carbon economy, significantly advancing sustainability endeavors. This collaborative model offers a replicable framework for Malaysia, demonstrating the potential for effective climate change combat through strategic alliances with firms.