Carbon taxation in Malaysia: insights from the enhanced PAGE09 integrated assessment model

If an emerging economy were to adopt climate policy as part of a larger tax reform, what is the ideal initial carbon tax (CT), and its trajectory over time, that internalizes the mean social cost of carbon dioxide (SCCO2)? Here we use the PAGE09 model to show that in Malaysia, a rapidly developing economy, this would be an initial CT in the year 2020 of about US$68.40.7/tCO2 in constant 2005 US$ prices under the A1B Business-as-Usual (BAU) scenario, rising steadily to around US$225.13.8/tCO2 in 2050. Under a low-emissions scenario, it would be a lower CT at around US$33.30.5/tCO2 in 2020 rising to US$100.93.2/tCO2 in 2050.