Methodologies for Forest Carbon Offset by Malaysia Forest Fund

Let skepticism drive higher standards and better design — not paralysis or cynicism

I was invited to participate as a member of the Sub-Technical Working Group (SUBTWG) at a workshop organized by the Malaysia Forest Fund (MFF) on the development of Forest Carbon Offset Methodologies, held on April 28, 29, 30, and May 2, 2025. As I write this article, the draft methodologies are undergoing further consultation, during which the SUBTWG is providing additional feedback before finalization. Like other national methodologies, the Forest Carbon Offset Methodologies led by MFF focus the key ones namely Afforestation, Reforestation and Restoration (ARR), Improved Forest Management (IFM), Reducing Emissions from Deforestation and Degradation (REDD), and Wetland Restoration.

There are still mixed sentiments regarding MFF’s undertaking of this initiative. Why do we need national methodologies when several credible international standard certifiers already offer established frameworks? Why reinvent the wheel?

My take — skepticism is healthy and necessary — it helps ensure that new carbon credit methodologies are robust, transparent, and deliver genuine climate benefits. After a prolonged wait for a national Carbon framework, I believe this initiative marks an encouraging beginning with the promise of many positive developments ahead.

Norita Ja’afar

Here is my perspective on the matter.

This skepticism is understandable. Many carbon credit methodologies developed by standard certifiers have come under intense scrutiny for failing to deliver real, additional, or permanent emission reductions. Why should we, as Malaysians, claim that our methodologies are superior? In fact, new methodologies, lacking a sufficient track record of projects to justify proposed improvements, can be vulnerable to manipulation or designed with weak baselines, over-crediting, and inadequate monitoring, reporting, and verification (MRV). These issues can compromise environmental integrity.

Nature-based solutions are inherently complex and uncertain. Ensuring additionality requires not only identifying historical changes in land use, but also conducting thorough financial and regulatory analyses. Baselines are never static; measuring carbon sequestration with minimal sampling error is extremely challenging, and the risks associated with project activities must be clearly addressed. New methodologies also face significant MRV challenges, particularly in their initial implementations, where robustness is difficult to guarantee.

The voluntary carbon market (VCM) has already suffered repeated reputational damage from the issuance of low-quality credits. Introducing new, untested methodologies without successful benchmarks may further weaken the national VCM if not handled properly. Gaining the confidence of offtakers in new methodologies is difficult, except in cases of national preference or corporate insetting. Moreover, new systems increase the risk of double counting — where both a project and a country claim the same emissions reductions.

Given the limited local expertise in the carbon credit sector, there is a risk that new methodologies may lack strong independent oversight or effective enforcement. Currently, the country has only two local entities officially registered as ISO 14064 Validation and Verification Bodies (VVBs) for the standards certifier Verra. Without rigorous audits by VVBs, there is a danger that some bodies may seek to maximize credit issuance for financial gain, sometimes at the expense of integrity.

Nations that are pursuing similar approaches

Malaysia is often considered a laggard in this space. Some countries have already developed, or are in the process of developing, their own nature-based solutions (NbS) methodologies for generating carbon credits — either for their domestic carbon markets or as part of their nationally determined contributions (NDCs) under the Paris Agreement. These countries frequently blend or adapt international standards, such as those from Verra, Gold Standard, or the Clean Development Mechanism (CDM), to better suit their local contexts.

Countries with dedicated Systems/Programmes and Methodologies:

Australia (Emissions Reduction Fund (ERF)):-Human-Induced Regeneration of Native Forests, Reforestation by Environmental or Mallee Plantings, Savanna Fire Management, Soil Carbon Sequestration

New Zealand (New Zealand Emissions Trading Scheme (NZ ETS)): Permanent Forest Sink Initiative, Afforestation/Reforestation

United States (California Air Resources Board (CARB) Compliance Offset Program): U.S. Forest Projects, Urban Forest Projects, Rice Cultivation Projects

Canada (Federal and Provincial Offset Systems, e.g., Alberta, Quebec): Alberta: Conservation Cropping Protocol, Tillage System Management, etc. Quebec: Afforestation/Reforestation, Sustainable Forest Management. Each province may have its own methodologies, often aligned with national GHG quantification standards.

Kenya (Kenya Emissions Reduction Registry (pilot)): Agroforestry, Forest Restoration

China (China Certified Emission Reduction (CCER)): Afforestation/Reforestation, Grassland Management, Wetland Restoration

South Africa (Carbon Tax Offset Program): Afforestation/Reforestation, Grassland Restoration

Colombia (National Carbon Tax and Offset Program): Forest Restoration, Agroforestry, Sustainable Forest Management

Indonesia (Sistem Registri Nasional (SRN) and Indonesia Carbon Exchange): Peatland Restoration, Mangrove Restoration, Forest Conservation

Brazil (National REDD+ Program; voluntary market initiatives): REDD+ (Reducing Emissions from Deforestation and Forest Degradation), Forest Restoration

Other notable examples include Costa Rica, where the national payment for ecosystem services (PES) program is linked to carbon credits. Mexico, which maintains a national registry and methodologies for forestry and land use and India, which has developed national carbon market and methodologies for agriculture and forestry.

What’s good about having National Methodologies? What else should we look out for?

Why are these countries developing their own methodologies? First and foremost, the initiative encourages domestic carbon market development and offers a more structured way to attract investment. National methodologies provide standardization in protocols, rules, benchmarking, and reliability. Once endorsed by the national government, they offer credibility and boost confidence among ecosystem actors. Furthermore, developing such methodologies allows integration with national commitments, ensuring carbon credit projects support and align with a country’s NDCs under the Paris Agreement.

I believe that the key differentiation to MFF’s methodology is the integration to social and environmental safeguards, tailored to local contexts. Emphasis need to be given on engagement with local stakeholders, communities and talents in the measurement, reporting, and verification (MRV). This will not only align standardisation but also promote local capacity-building and knowledge within the country. With a standardized methodology, it is also potentially easier to manage leakage at the national level — provided a national registry enables easier tracking of credit ownership and prevents double counting. Ensuring credits are not counted toward both international and domestic targets can be a complex challenge.

‘The buck doesn’t stop there’

Nevertheless, national standardized methodologies come with their own challenges and setbacks. These are complex documents to uphold, requiring substantial technical, financial, and institutional resources for development, maintenance, and updates. If the advisors lack practitioners and the technical consultants short of international carbon market experience, the resulting methodologies may be suboptimal. It will require the implementation of several projects before any methodology can be properly improved upon and mature.

Naturally, the actors in the ecosystem are concerned that applications and processes could become overly bureaucratic, potentially slowing down or delaying project development and the issuance of credits. Therefore, it is likely best for MFF to test existing methodologies first, over a set period, as introducing multiple national methodologies could fragment the market and complicate international carbon credit trade.

There may be circumstances in which national methodologies are less stringent than international standards, risking the issuance of credits with lower environmental integrity if these are not properly designed. Therefore, developing a national methodology must involve clearly defined objectives and goals. Once methodologies are established, a robust control environment will also be necessary — investors and offtakers will naturally observe if the enforcement for safeguards and standards be consistent as this partly defines high quality credits.

What’s Next — Do We Need an ETS?

Examining the experience of other countries above, it is evident that the completion of methodologies often works hand-in-hand with the establishment of an Emissions Trading System (ETS) to support domestic carbon markets. From my understanding, an ETS is not strictly required to complement a national methodology for carbon credits. A country can have one without the other. However, when both are present, they can mutually reinforce and benefit one another. (Note: An Emissions Trading System (ETS) is a market-based policy tool that sets a cap on emissions and allows regulated entities to trade emission allowances.) Some countries have national methodologies for voluntary or compliance carbon credits but no ETS. Conversely, some ETSs exist without integrating project-based credits, trading only as allowances.

However, when methodologies and ETS are combined, these mechanisms can increase demand and liquidity in the carbon offset market. This, in turn, incentivises more domestic project-based mitigation activities and enhances transparency and integrity in supply, demand, and pricing. Most importantly, such integration will help catalyze progress toward achieving national and international climate goals.

Final

I am hopeful that the national methodologies being developed at Malaysia Forest Fund (MFF) will lead to greater alignment within other national carbon priorities (RUUPIN, NDC, ETS, Carbon Tax, etc), and enable the adoption of improved data, and strengthen the integrity and quality carbon credits coming from Malaysia. At this stage, I observe that MFF is adopting a hybrid approach — utilizing both national and international methodologies — to balance potential trade-offs.

Certainly, buyers or offtakers may prefer internationally recognized standards (e.g., Cercarbono, Verra, Gold Standard) and may question the rigor of national methodologies. However, if new methodologies are designed transparently, with sufficient stakeholder input and public consultation, previous global pitfalls can be avoided.

Let’s all agree, outright rejection of MFF’s methodologies would only stifle necessary innovation and adaptation to local contexts within the carbon space. The key is to demand high standards, strong independent oversight, and transparency in any new methodology. MFF cannot do this alone. All stakeholders must contribute to this collective effort.

While skepticism from various parties is understandable and some nuance is warranted, I am a firm believer that taking bold action — however incremental — is far better than inaction when it comes to decarbonization. Every effort counts toward our shared goal of limiting the rise in global average temperature to well below 2 degrees Celsius above pre-industrial levels, with concerted efforts to keep the increase to 1.5 degrees Celsius.

I am passionately committed to this cause, and I applaud the Malaysian Forest Fund (MFF) for doing the same.

Norita Ja’afar is a Certified Sustainable Practitioner & Climate Change Officer. Partner at Tabah, specialising in Conservation & Restoration of Blue Carbon .