Green sukuk and carbon neutrality in Malaysia: an analysis of the effectiveness of Islamic finance in funding renewable energy projects

Mohd Thas Thaker, Hassanudin and Lechumanan, Bawani and Syed Salleh, Sharifah Nabilah (2026) Green sukuk and carbon neutrality in Malaysia: an analysis of the effectiveness of Islamic finance in funding renewable energy projects. In: Green finance and energy transition in ASEAN. Series in energy transition, carbon neutrality, and sustainability, 3 . World Scientific, Singapore, pp. 1-348. ISBN 2972-3957

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Abstract

This chapter examines the role of green sukuk in advancing carbon neutrality in Malaysia, focusing on their effectiveness in funding renewable energy projects. Green sukuk are Shariah-compliant financial instruments that merge Islamic finance principles with environmental sustainability goals. Malaysia, a global leader in Islamic finance, issued the world’s first green Sukuk (singular form of sukuk) in 2017, setting a precedent for sustainable finance. The study explores the operational mechanisms and market dynamics of green sukuk and highlights successful case studies such as Tadau Energy and Quantum Solar Park. These projects demonstrate the potential of green sukuk to attract diverse investors and support large-scale renewable energy initiatives. The chapter also addresses challenges in the adoption and implementation of green sukuk, including high initial costs, regulatory complexities, and market awareness. Through qualitative research and expert interviews, the study provides insights into the socioeconomic and environmental impacts of green sukuk, emphasizing their role in promoting sustainable development and financial inclusion. The findings suggest that while green sukuk have significantly contributed to Malaysia’s renewable energy sector, further efforts are needed to enhance financial support market and innovation in green finance products. This research underscores the importance of integrating Islamic finance with sustainability objectives to achieve carbon neutrality and foster a resilient, inclusive economy.

Item Type:	Book Chapter
Uncontrolled Keywords:	Green Sukuk; carbon neutrality; Islamic finance; renewable energy
Subjects:	BPH Islamic Economics H Social Sciences > HB Economic Theory H Social Sciences > HB Economic Theory > HB3711 Business cycles. Economic fluctuations H Social Sciences > HC Economic History and Conditions H Social Sciences > HC Economic History and Conditions > HC79.E5 Environmental policy and economic development. Sustainable development. Sustainability. H Social Sciences > HG Finance H Social Sciences > HJ Public Finance
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button):	Kulliyyah of Economics and Management Sciences Kulliyyah of Economics and Management Sciences > Department of Economics
Depositing User:	Dr Hassanudin Mohd Thas Thaker
Date Deposited:	01 Apr 2026 09:12
Last Modified:	01 Apr 2026 09:13
Queue Number:	2026-03-Q2675
URI:	http://irep.iium.edu.my/id/eprint/128092

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