(Bloomberg) -- Malaysia needs to address its fuel subsidies before it introduces a carbon tax, as the nation holds discussions with the World Bank on how to implement a scheme to help curb emissions.

“We are subsidizing our carbon,” Nik Nazmi Nik Ahmad, Natural Resources and Environmental Sustainability Minister, said during an interview with Bloomberg TV’s Haslinda Amin and Avril Hong on Tuesday. Malaysia has been an export driven industrial economy “fueled by blanket subsidies,” he added.

Malaysia has set a net-zero goal by 2050, removing most subsidies on diesel this month and vowing to target gasoline next. The finance ministry is leading government talks on how to set up a carbon tax, and are looking at hard to abate sectors such as steel, Nik Nazmi said.

More from Nik Nazmi:

  • Malaysia is trying to revive talks about a regional grid between Southeast Asian countries, he said separately at a Bloomberg conference
  • Ministries and government agencies to meet next month to assess heat wave impact on crops and success of recent cloud seeding
  • In the longer term, policymakers are focusing on the national adaptation plan to address issues related to the impact of climate change, including extreme heat and floods. Plan set for cabinet approval in 2026
  • State governments must improve urban development plans to include better management and conservation of forests, in order to prevent negative impact of climate change

©2024 Bloomberg L.P.