“We are subsidising our carbon,” natural resources and environmental sustainability minister Nik Nazmi Nik Ahmad said during an interview with Bloomberg TV’s Haslinda Amin and Avril Hong on Tuesday.

Malaysia has been an export-driven industrial economy “fuelled 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 petrol next.

The finance ministry is leading government talks on how to set up a carbon tax, and is looking at hard-to-abate sectors such as steel, Nik Nazmi said.

Separately at a Bloomberg conference, he said Malaysia is trying to revive talks about a regional grid between Southeast Asian countries.

Ministries and government agencies are set to meet next month to assess the heatwave impact on crops and the success of recent cloud seeding operations.

In the longer term, Nik Nazmi said policymakers are focussing on the national adaptation plan to address issues related to the impact of climate change, including extreme heat and floods. The plan is set for Cabinet approval in 2026.

He also said state governments must improve urban development plans to include better management and conservation of forests, in order to prevent the negative impact of climate change.