The United Kingdom and Malaysia have launched the UK PACT 2.0 Country Fund to deepen cooperation on climate policy and investment frameworks. Announced in Kuala Lumpur, the programme supports green finance, carbon markets, and energy systems as Malaysia advances its net-zero transition.
The second phase of the UK–Malaysia Partnering for Accelerated Climate Transitions programme builds on earlier cooperation from 2020 to 2023.
It aligns UK technical support with Malaysia’s latest climate roadmaps and forthcoming legislation.
Launch of the UK PACT 2.0 Country Fund
The UK PACT 2.0 Country Fund was formally launched in Kuala Lumpur on 12 December 2025. The programme is led by the British High Commission in Malaysia in partnership with the Ministry of Natural Resources and Environmental Sustainability. It represents the UK’s largest bilateral climate programme in Malaysia to date.
Official launch and programme scope
The launch was presided over by British High Commissioner H.E. Ajay Sharma CMG alongside Malaysia’s Minister for Natural Resources and Environmental Sustainability, Datuk Seri Johari Ghani. Senior officials from finance, energy, forestry, and regulatory bodies also attended, signalling cross-government coordination. Funding of up to £2.9 million will be delivered across the 2025–26 and 2026–27 financial years.
UK–Malaysia Climate Partnership Framework
UK PACT 2.0 sits within a wider strategic partnership between the two countries. Climate cooperation has become a central pillar of bilateral engagement, alongside trade, security, and development policy. The programme is positioned as practical support for policy implementation rather than direct project finance.
Strategic partnership and diplomatic context
The fund supports commitments announced earlier in the year by UK and Malaysian Prime Ministers. It also reflects a shared focus on climate governance, regulatory clarity, and long-term investment readiness. By embedding technical assistance within national policy priorities, both governments aim to accelerate delivery while maintaining domestic ownership.
Policy Priorities and Programme Focus
UK PACT 2.0 concentrates on targeted interventions intended to unlock larger private and public investment flows. The programme was shaped through consultations with Malaysian ministries, regulators, and agencies. Its priorities focus on frameworks, standards, and institutional capacity rather than infrastructure spending.
Green finance and carbon market development
Workstreams include the development of a strategic roadmap for green finance, strengthening carbon market mechanisms, and improving institutional readiness for emissions trading. These measures are designed to improve investor confidence and policy consistency. Capacity building will also support nature and land-use governance linked to carbon markets.
UK PACT 2.0 Priority Areas
| Green finance frameworks | Strategic roadmaps, disclosure standards, and investment guidance |
| Carbon markets | Institutional capacity, trading mechanisms, and governance systems |
| Energy systems | Policy support for storage and grid integration |
Supporting Malaysia’s Energy Transition
A core objective of the programme is to reduce regulatory and technical barriers that slow renewable deployment. Energy storage and grid readiness are identified as enabling factors for higher renewable penetration. The fund focuses on policy design, planning tools, and investment frameworks.
Grid infrastructure and energy storage investment
Support will target clearer rules for grid expansion and energy storage integration. By improving regulatory certainty, the programme aims to help developers reach financial close more easily. This approach is intended to complement Malaysia’s wider power sector reforms.
Funding and Delivery Overview
| Total funding | Up to £2.9 million |
| Delivery period | FY 2025–26 and FY 2026–27 |
| Delivery model | Technical assistance and policy support |
Alignment With Malaysia’s National Climate Agenda
UK PACT 2.0 is aligned with Malaysia’s updated climate commitments and policy direction. The programme supports implementation rather than replacing domestic initiatives. Its design reflects recent shifts in Malaysia’s climate governance landscape.
NETR, NDC commitments, and climate legislation
The fund aligns with Malaysia’s National Energy Transition Roadmap, its updated 2035 Nationally Determined Contribution, and preparations for a forthcoming Climate Change Bill. By supporting policy coherence across these frameworks, the programme aims to improve delivery and accountability.
- National Energy Transition Roadmap alignment
- Support for updated climate targets
- Readiness for new climate legislation
Stakeholder Comments
Ministerial Comments
H.E. Ajay Sharma CMG, British High Commissioner to Malaysia said;
“Together, each of the projects in the UK PACT portfolio will support Malaysia in reaching its climate ambitions and support sustainable growth. This partnership will increase prosperity, security, and help protect the planet.”
Industry Comments
Industry representatives attending the launch said;
“Clearer policy frameworks and coordinated standards are essential for unlocking long-term investment in low-carbon projects across Malaysia.”
The Takeaway
UK PACT 2.0 signals a shift towards deeper policy-led climate cooperation between the UK and Malaysia. By focusing on finance frameworks, carbon markets, and energy systems, the programme aims to support Malaysia’s net-zero transition while strengthening bilateral ties. Its effectiveness will depend on sustained coordination, regulatory clarity, and transparent implementation over the next two years.
Sources: British High Commission Kuala Lumpur, and Ministry of Natural Resources and Environmental Sustainability (Malaysia).
Prepared by Ivan Alexander Golden, Founder of THX News™, an independent news organisation delivering timely insights from global official sources. Combines AI-analysed research with human-edited accuracy and context.
