Malaysia has been recognised as the best country in Southeast Asia in the Energy Transition Index by the World Economic Forum recently.
The index takes into account system performance and the country’s readiness to switch to more environmentally friendly energy sources.
Economy Minister Rafizi Ramli, in a statement, said this achievement shows that Malaysia is on the right track for a fast, safe and affordable energy transition management. In addition, Malaysia also has various strategic advantages such as a strategic location, diverse renewable energy sources (RES) and a high level of skills to become a regional leader in the field of energy transition.”
Malaysia is expected to be able to seize the opportunity to attract global investment in the clean technology sector which has reached RM5 trillion in 2022. This value is expected to continue to increase in the coming years, he added.
On 27 July 2023, the Ministry of Economy will launch the National Energy Transition Roadmap (NETR) Phase 1 during the Invest Malaysia KL 2023 Special Series program organised by Bursa Malaysia in collaboration with CLSA and Maybank at the Grand Hyatt Hotel, Kuala Lumpur.
The launch of NETR Phase 1 is the starting point in efforts to mainstream the energy transition of the national development narrative.
NETR will announce the implementation of 10 flagship pilot projects that are expected to generate investment amounting to RM25 billion, the creation of 23,000 high-quality job opportunities and a reduction in carbon dioxide equivalent emissions of more than 10,000 gigagrams per year cumulatively.
NETR is a thorough follow-up to the current policy reform related to wind turbines by the Ministry of Economy and the Ministry of Natural Resources, Environment, and Climate Change, specifically the increase in the new target of wind turbine installed capacity from 40% in 2035 to 70% by 2050.
The higher target is expected to create new economic opportunities in addition to attracting multinational companies, especially RE100 to operate in Malaysia.
A total of RM637 billion investment is required for the increase of TBB until 2050 which includes TBB generation sources, grid infrastructure strengthening including parallel connection, energy storage system integration and grid network system operating costs.
The Ministry of Economy hopes that NETR can drive a strategic agenda to create new high-paying job opportunities, boost domestic and foreign investment participation, ensure the continuity of the country’s energy supply, and make Malaysia a regional leader in the clean energy industry in the long term, Rafizi added.
Source : MFCCI
Malaysia set to be Asean’s energy transition leader: Rafizi
Malaysia is poised to be a regional leader in energy transition by harnessing natural resources and sound policy at high level, Economy Minister Rafizi Ramli said.
Despite contributing less than one per cent of carbon dioxide emission, Raifiz said the government continues to carry its global responsibility through thoughtful measures that secure a sustainable future for the people of Southeast Asia.
In the effort to embrace energy transition and decarbonising at scale, Rafizi said policy and resource are the two types of pathways that countries can really turn to.
He noted that while some countries favour one pathway over the other, most tend to do a combination of the two with some tradeoffs.
“But it is very rare for a country to do both at a high level. Those that do are poised to become climate leaders and regional energy hubs. I believe Malaysia is well placed to do exactly that,” he said at the International Greentech and Eco Products Exhibition and Conference Malaysia 2024 (IGEM) here today.
On carbon capture and utilisation storage (CCUS) bill that the ministry will be tabled in Parliament next month, Rafizi said the first of its kind regulatory framework is benchmarked against several countries’ and has incorporated internationally recognised standards.
He added that the path to decarbonisation goes through CCUS whereby without the latter, power plants and steel industries will just not meet their targets.
“By rolling out this legislation, we are piecing that final jigsaw to the puzzle. Demonstrating that Malaysia can marry both policy and natural resources towards net zero,” he added.
According to Rafizi, there is real demand from Japan, South Korea and Singapore for Malaysia to take the lead in regional climate move.
“Ultimately, being a megadiverse country comes with acknowledging that actually most countries aren’t blessed like us. Having this head start means we have a greater responsibility.
“It doesn’t matter if we aren’t the biggest contributor of emissions. What matters is we show the right stewardship of our environment and push forward towards net zero,” he said.
Transforming the economy through energy transition
MANY are surprised that the National Energy Transition Roadmap (NETR) is under the purview of the Ministry of Economy instead of the Ministry of Natural Resources, Environment and Climate Change.
But to Rafizi Ramli, the Minister of Economy, it would be even more surprising if it were the opposite. For this simple reason — the energy transition is not just about generating renewable energy and pursuing the net zero goal but it is also an economic growth catalyst.
He sees the energy transition as an avenue to transform Malaysia’s economic structure, which emphasises a low-cost and minimum value-added model, to one that is technology-driven and content-led.
Rafizi clearly understands that the energy transition is not an option but a necessity, and the country has to do it fast, otherwise it will be even harder for Malaysia to catch up with its neighbours.
“In terms of the decision, it sounds very simplistic. The government allows a willing seller, willing buyer; self-contained; and self-sufficient energy generation system … but it is many things,” he says.
“Energy transition is very much driven from an economic competitiveness perspective, especially when you put this into the equation — we can no longer operate as a low-cost manufacturing nation. Our task is to restructure the economy, and Malaysia needs to transform from our current state of the economy to one that is driven by technology and sustainability and one that can attract new investments,” says Rafizi in an interview at his office in Menara Prisma in Putrajaya.
While the focus now is on the upcoming polls in six states, which have been fixed for Aug 12, the work to transform the country’s economy continues. The government will launch the NETR on July 27.
“The successive administrations before us had policies on renewable energy, it wasn’t even called energy transition, so it had a different approach. So, while we had plans for renewable energy here and there, all the components of the ecosystem were not urgent enough,” says Rafizi, an accountant by training.
“By now, it has become a national imperative, economically and socially. And that is where I think we have reached the right point, where it is possible to accelerate the transition.”
Besides raising competitiveness, the NETR will enable the country to revamp the energy model, one that has the government absorbing the fluctuations in energy prices [in the form of subsidies]. “[The model] is no longer sustainable. Fiscally, we can’t go on like this,” he says.
Rafizi stresses that subsidy rationalisation is a question of sequencing and the government has started its work by cutting the electricity subsidy for mid- and high-voltage users.
He disagrees that the government is dragging its feet on this thorny issue, pointing out that it needs to ensure that domestic households and small and medium enterprises (SMEs) are given the option to buffer the impact first. “It cannot be that we remove the subsidies and then say good luck to you.”
Earlier, the government announced industry reforms that included RE exports to generate revenue for the government’s coffers and grow the local RE industry. Malaysia also committed to doubling the speed of its initial RE installation target and achieve a 70% generation capacity by 2050, from its previous target of 40%, which will be ironed out in the upcoming Planning and Implementation of Electricity Supply and Tariff Committee (JPPPET) report.
Energy transition a growth catalyst
The minister highlights that Malaysia is ranked No 1 in Southeast Asia and No 35 in the world in the Energy Transition Index (ETI) by the World Economic Forum (WEF). “I don’t think anyone knows this,” he says.
The ETI benchmarks countries on their current energy system performance and provides a forward-looking measure of transition readiness. The framework has been revised to incorporate a wider approach of balancing the three imperatives of the energy triangle — equity, security and sustainability.
Among emerging and developing Asia, Malaysia ranks No 2, behind China, which ranks No 17 globally.
Rafizi says Malaysia’s high ranking demonstrates that the country is in a rather comfortable position in terms of the energy transition and that gives little reason for it to delay any further.
“The number one area where investments had poured in globally over the past two to three years was into the energy transition. So, it just matches well that we are ready, more than any other country in this region, and we are strategically located,” he says.
“We have to find two or three growth narratives. And to find growth narratives, we must look at our existing advantages and leadership position.”
Investments in energy transition projects have overtaken those in other sectors in terms of receiving the most investments globally.
According to the United Nations Conference on Trade and Development (Unctad) in the World Investment Report 2023, international project financing in renewable energy remains the largest among all the sectors, despite falling 30% year on year to US$368 billion.
Large projects included the US$15 billion construction of floating marine wind farms in Italy by Falck Renewables and Bluefloat Energy and the construction of a 4,000mw offshore wind power plant in Binh Thuan, Vietnam, by AES for US$13 billion.
On the ETI, Malaysia scores highly on system performance, at 70 points, which is higher than the scores of some higher-ranked countries on the index, such as Finland (No 4), Austria (No 8), the Netherlands (No 9), Germany (No 11), the US (12), the UK (No 13), Canada (No 19), Australia (No 24) and Japan (No 27).
Malaysia also scores highly in terms of energy security, due to supply diversity and reliability, according to the WEF Energy Transition Index 2023 report. The top scorers in the security dimension are mainly advanced economies, such as the US, Australia and Estonia, says the report.
However, it is worth noting that the country’s transition readiness is rather low, at 49.3 points, which is lower than the scores of some lower-ranked countries on the index, such as Colombia (No 39), Vietnam (No 43), Bosnia and Herzegovina (No 50) and Singapore (No 70).
Likewise, Malaysia scores low in renewable capacity buildout, with only 0.22 points out of 100, and development of environmental technologies as a percentage of all technologies (7.88 out of 50). It is also deemed quite restrictive when it comes to foreign direct investment regulations.
The low scores reflect the lack of government efforts in the energy transition so far.
Rafizi says a key takeaway from the Asia Zero Emission Community (AZEC) in Japan in March is that Malaysia is not considered serious about energy transition. “And part of that reason is because when compared with other countries, we spend less time focusing on energy transition projects, we did not allocate enough [and] we did not reform the market and legislations that can expedite the energy transition,” he tells The Edge, and that pushed him to set a short three-month deadline to roll out the NETR. The launch coincides with the state polls that are just around the corner.
Rafizi attributes the low number of investments, particularly foreign direct investments, in the energy transition to such a perception.
“While the global investments had gone into the energy transition in the past few years, it wasn’t as exciting in Malaysia, so the investments went to other countries. That is the bit where we have to reassert our strategic competitiveness, because we hope through NETR, the international investment community will embrace us because they have been with it,” the minister explains.
More economically viable now’
In the past, the approach was to open bidding for Large Scale Solar (LSS) plants to encourage the race to the bottom, and so the tariff went down to as low as 18 sen per kWh, which is even lower than the conventional generation, says Rafizi.
“So, if you are looking at 18 sen per kWh, obviously it is not going to be economical, so we may, and most probably, end up in a situation where some of those who came forward to do LSS did not have the capability or economic means to do it,” he adds.
“So, these lessons learnt are reflected in the different approach that we have spelt out in the NETR, because we are looking at a transparent pricing model. We want to strike a balance between affordability and economic sustainability or RE capacity.”
With the removal of subsidies for medium- and high-voltage users, which resulted in tariffs that mirror market prices, the differentials between the RE pricing and conventional tariffs are a lot closer, says Rafizi.
With the surcharge, high-voltage industrial users are already paying 40.20 sen per kWh during off-peak periods and 53.7 sen per kWh during peak periods. This makes the electricity tariff for high-voltage users higher than the feed-in tariff for solar photovoltaic (PV) of about 40 sen per kWh.
This would attract companies that are required to have a higher RE mix, only to find that it is no longer economically prohibitive to consume and switch their electricity sources more towards RE. This also removes the need to suppress RE tariffs, especially for the industries, says Rafizi when elaborating on the possible measures in the NETR, emphasising that the priority is to remove the impediments.
“In that sense, it is a lot more economically viable now for RE capacity than before, because it also comes hand in hand with the subsidy retargeting programme which, in the case of electricity, the government has already completed,” he says.
“If you compare, they [heavy industrial users] have to pay about 40 sen per kWh on average anyway. And for solar generation, anything above 25 sen per kWh, they make a profit. There is a big range where suddenly, it is economical. Before this, at 18 sen, it was quite difficult (see ‘Transparent pricing model to include grid capex and wheeling charges’).”
Harnessing the rooftop potential
To be sure, the NETR isn’t the first roadmap for RE in the country. However, it will be the first to lay out the path to energy transition, by making the landscape more attractive for investors to come in and set up the infrastructure, and for consumers to switch to RE as well as to become prosumers.
One of the major aspects of the NETR will be unlocking the huge potential of rooftop solar, says Rafizi. This will be done by allowing rooftop owners — from private houses to commercial and industrial premises, as well as government institutions, for example schools — to monetise their assets.
Under the Net Energy Metering (NEM) Rakyat programme, the current approach to residential rooftop solar requires users to fork out a huge capital expenditure. Capex for a 4.5 kWp residential rooftop solar system starts at about RM20,000 to offset a few hundred ringgit in their monthly electricity bill.
A typical landed home can install even higher capacity, the bigger the size of the rooftop. For households that consume less electricity, the excess power generated is kept as credit, which can be used to offset future consumption or electricity bills for the consumer’s other properties — but it can be rolled over for just one year under the current guidelines.
In a nutshell, with existing mechanisms, those who use less electricity do not benefit from a rooftop solar system and could potentially lose money in the long term. Meanwhile, NEM NOVA for commercial and industrial customers capped the inverter output at 100% of its maximum demand — which theoretically limits the amount of excess electricity generated.
This is why rooftop solar has not taken off in Malaysia in a big way, despite its tropical climate with sunshine all-year round. And this is what Rafizi and the government will want to address through the NETR.
“Turn the vision upside down. What the government intends to achieve, in stages, is a situation where we reform the market to allow rooftop owners, whether domestic or commercial, to monetise their rooftops. Then, they can earn money from that,” says Rafizi.
“We will have companies that are willing to invest in rooftop solar installations out of their capex and pay monthly rent to rooftop owners, because they can supply to the grid. If you think about it, suddenly you have assets that households and SMEs can monetise.”
According to the Malaysian Renewable Energy Roadmap (MyRER), the country has 269gw potential for solar PV, dominated by ground-mounted configurations (210gw) and including considerable potential from rooftop (42gw) and floating configurations (17gw).
While the ground-mounted configurations are still bigger than the rooftop installations, with LSS, there will always be the question of whether the land should be utilised for other purposes, rather than for RE.
Rafizi points out that one of the models that the ministry has studied for the NETR is the Australian model, particularly the one adopted by the South Australian government.
While Australia is a continent with a small population, where land use may not be as competitive as Malaysia, yet the South Australian government has taken the rooftop solar path to generate electricity from renewable sources, rather than large-scale solar farms.
According to the Department of Climate Change, Energy, the Environment and Water of Australia, the largest source of electricity in South Australia comes from renewables other than hydroelectric power, at 65% of the mix in 2021.
“They have demonstrated that if you turn the solar rooftop model upside down, which allows rooftop owners to monetise, that is a catalyst for capacity build ups, compared with the approach to focus on LSS,” says Rafizi.
“If you think about it, Australians have a lot of land, so the LSS is not as restrictive to them as it is to us. But South Australia has adopted the rooftop model as a pathway to energy transition, rather than focus too much on LSS.”
Being an oil-producing nation, many Malaysians are concerned that the energy transition will be a threat to the country’s oil revenue in the future. However, Rafizi sees it as an advantage, making the country’s energy transition pathway smoother than others, as we have the buffer to withstand any energy shock.
“We have to understand there is a fine line between being complacent and taking that advantageous position to move towards energy transition. We want to take the latter approach.”
Source : The Edge
Govt plans to create energy transition financing mechanism with financial sector
The government is planning to collaborate with the financial sector to create an energy transition financing mechanism for companies to participate in green projects, said Minister of Economy Rafizi Ramli.
He said to complement the National Energy Transition Roadmap (NETR) initiatives, there is a need to create an overall ecosystem where the industry can contribute towards realising green projects, not necessarily only related to solar or hydrogen projects.
“We are looking at working with the banking and financial industry to develop another set or stream of financing which we will call transition financing.
“As we talk about energy transition, there are many sectors, industries or even projects that may not qualify for green funding. For example, if you bring equipment to increase energy efficiency, by definition, that is not a green project,” he told the media after delivering his keynote address at the Asian Strategy and Leadership Institute (ASLI) Banking and Finance Summit 2023 here today.
The event was jointly organised by ASLI, the United Nations Sustainable Development Solutions Network and Sunway University.
Rafizi noted that through the NETR, the government has allocated RM2 billion in financing for energy transition projects, and his ministry will work with financial institutions to see how much can be allocated for the new mechanism.
“I hope that will open up the channels for the government to work with the banking and financial sectors to expand what already is a good system for green financing and to also include transition financing, which is far bigger than the understanding of green financing that exists in our financial market now.
“That is where the existing approach and perspective about green financing and sustainability financing has to be expanded to include transitioning financing,” he added.
Rafizi said he believes that the initiative would be reciprocated and complemented by the banks and the financial industry so that the new financing for energy transition could be rolled out soon.
Source : Malay Mail
Rafizi Ramli: NETR, A Commitment To Just Energy Transition For The Rakyat In A Whole-Of-Nation Approach
Economy Minister Rafizi Ramli spent some time with BusinesToday exclusively to discuss the impact and nature of the National Energy Transition Roadmap 2023 (NETR 2023) which was launched on 29 August 2023 to steer Malaysia’s shift from traditional fossil fuels-based economy to a high-value green economy through the whole-of-nation approach.
NETR Part 1 launched on 27 July 2023 introduced 10 flagship catalyst projects across six energy transition levers among them being; energy efficiency (EE), renewable energy (RE), hydrogen, bioenergy, green mobility, and carbon capture, utilisation and storage (CCUS).
The engagement resulted in a clear direction towards realising the nation’s aspirations towards being a high value green economy.
Scene-setting
● Malaysia is one of the world’s megadiverse countries (terrestrial biodiversity). We are a small open economy, with a population of 32.7 million and GDP of RM1.79 trillion. Economic and population growth is expected to drive a rise in energy demand (2% annually until 2050).
● During the UN climate summit COP26 in Glasgow in 2021, Malaysia announced its aspiration to achieve net-zero GHG emission target by 2050. We have also committed to reduce carbon intensity against GDP by 45% by 2030 compared to 2005 levels, maintain forest cover of at least 50% and support the Global Methane Pledge, of which Malaysia is a member.
● The National Energy Transition Roadmap (NETR) was launched on 29 August 2023 aimed at steering Malaysia’s shift from traditional fossil fuels-based economy to a high-value green economy through the whole-of-nation approach. NETR Part 1 launched on 27 July 2023 introduced 10 flagship catalyst projects across six energy transition levers i.e. energy efficiency (EE), renewable energy (RE), hydrogen, bioenergy, green mobility, and carbon capture, utilisation and storage (CCUS).
● The final NETR launched on 29 August 2023 features 50 initiatives under the six energy transition levers and five enablers namely financing and investment; policy and regulation; human capital and just transition; technology and infrastructure; and governance and implementation.
● NETR has developed the Responsible Transition (RT) Pathway 2050 that outlines the energy sector’s low carbon pathway to reduce 32% GHG emission from 259 MtCO2eq. (2019) to 175 MtCO2eq (2050). The pathway is designed to accelerate Malaysia’s energy transition journey while balancing the energy trilemma. Towards this, the RT pathway will achieve the following by 2050:
⮚ Increase use of RE in the power generation mix
⮚ Phase-out coal from the power generation mix
⮚ Broad based energy efficiency initiatives pursued, particularly from the demand side management that include optimising energy consumption across key sectors, namely residential, commercial, industrial, and transport to prevent wastage and indirectly prolong the lifespan of indigenous resources
⮚ The shift to electrification and biofuels expedited in the transport sector.
● RT Pathway reinforces Malaysia’s commitment to net-zero emission as early as 2050 through the shift from traditional, fossil fuel-based energy systems to a greener, low-carbon energy framework. The Total Primary Energy Supply (TPES) Modelling indicated that by 2050. natural gas will account for 56% of TPES. RE share will increase from 4% in 2023 to 22% in 2050. The successful implementation of NETR will uplift GDP value from RM25 billion in 2023 to RM220 billion and generate 310,000 jobs in 2050.
Question 1: In looking towards implementing the NETR, the impact of the energy trilemma is still present, namely; balancing the security, affordability, and sustainability issues within an economy. With the energy transition gaining momentum – which directly affects the economy of Malaysia – what are the implications of the trilemma seen today and what measures are being taken to reduce these issues? In improving energy transition, though very plausible, how is it economically viable to Malaysia?
Malaysia has earned recognition as the best country in Southeast Asia on the Energy Transition Index by the World Economic Forum (WEF). This acknowledgement is attributed to our diverse and reliable energy supply. We have high electricity accessibility in both rural and urban regions, and our household electricity rates rank among the lowest globally. Furthermore, production from our oil and gas reserves have reduced our dependence on energy imports.
However, we face challenges in environmental sustainability. Although Malaysia contributes a mere 0.8% to global GHG emissions, our current CO2 emissions intensity in the energy sector remains significant at 7.5 MtCO2eq per capita. Notably, the energy sector is the primary source of greenhouse gas (GHG) emissions in the country, accounting for 78.5% of Malaysia’s total emissions.
Implication of this can be felt by Malaysia’s corporations and enterprises, where they confront a rapidly changing market landscape with carbon costs reshaping business dynamics and potentially straining competitiveness. It is estimated that the EU’s Carbon Border Adjustment Mechanism (CBAM), aimed at reducing carbon leakages in trade, will affect 57% of Malaysia’s total exports. Additionally, the USA’s Inflation Reduction Act (IRA) introduced in 2022 emphasises the production and demand for domestically produced clean energy products and services over foreign imports.
NETR is the main policy document to accelerate our energy transition efforts. This roadmap is vital for steering Malaysia’s shift from traditional fossil fuels-based economy to a high-value green economy. By 2050, NETR initiatives are expected to deliver 32% reduction in GHG emissions for the energy sector compared to the 2019 baseline – reaching 4.3 MtCO2eq emission per capita.
To make it economically viable, the NETR was designed to leverage on Malaysia’s various advantages such as a strategic location, diverse RE sources and a high level of skills to become a regional leader in energy transition. This can be seen embedded in the NETR’s six energy transition levers. For example, bioenergy lever leverages Malaysia’s abundant biomass resources, particularly from agriculture, offering both economic value and a cleaner energy source.
The NETR not only charts a sustainable energy future for Malaysia but also presents significant economic opportunities. Through strategic investments, diversification of energy sources, and effective governance, the energy transition can be both environmentally beneficial and economically viable for Malaysia.
Question 2: NETR aims to power Malaysia’s future by unlocking potential in new growth areas and delivering progress and prosperity to Malaysian households and businesses. The successful implementation of NETR will uplift GDP value from RM25 billion in 2023 to RM220 billion and generate 310,000 jobs in 2050.
Could the ministry shed some light in terms of these projections, in terms of which sectors will improve? How can household incomes rise? Could you also break down the actual values for the expected rise of the GDP? What are also the actual reasons as to why would the GDP rise, solely due to energy transition? (this is to explain to the reader the actual economic viability of NTER and for them not to view it as just another government policy.) Also, what are the specific sectors that are expected to employ 310,000 jobs? In your view, do Malaysians meet the exact skill sets required with energy transition now at the forefront and what needs to be done to ensure there are no shortfalls in the economy as it progresses? Does the NETR offer commercial prospects for organisations that fit Malaysia’s RE vision, and how?
● Beyond the energy sector, the investments in energy transition are expected to significantly benefit several sectors, with the services industry leading the way, followed by manufacturing and construction. The services sector stands to gain primarily from projects in CCUS, biofuels, and RE generation. Concurrently, the manufacturing sector will see a boost, particularly from the emphasis on EV production, public transport, and green hydrogen plants. The construction sector will not only benefit from these projects but will also see growth opportunities from the development of EV charging infrastructure, the integration of smart grids, and advancements in energy storage solutions.
● These sectors are also expected to see growth in job opportunities catalysed by projects as mentioned above, contributing to increased household incomes as well.
● Household incomes are expected to directly benefit from income gains arising from investment opportunities across all six energy transition levers which requires a highly skilled workforce. This is expected to be realised through the generation of 310,000 jobs in these pivotal sectors, subsequently elevating household incomes across the nation.
● The projected rise in NETR’s contribution to GDP is driven by investments in the energy sector. The NETR highlights potential investment avenues in government co-funded facilities dedicated to energy transition, with projections reaching RM1.2-1.3 trillion by 2050, further bolstering the nation’s GDP.
● Addressing the workforce, the NETR underscores the importance of strengthening energy literacy and awareness to all levels of society. Concurrently, there’s an emphasis on refining the skill sets of the workforce through green skilling programs, especially in capitalising nascent technologies such as CCUS, green hydrogen and energy storage. This indicates a proactive approach to equip Malaysians with the necessary skills, acknowledging the need for continuous learning and adaptation in the face of the energy transition.
● On the commercial front, the NETR presents investment opportunities for businesses interested to pursue green growth across the energy transition value chain. Investments in RE power generation, along with grid enhancements, are categorised as commercially viable or with market-rate returns. These projects typically possess the capacity to secure funding from capital markets and domestic financial institutions but require robust policy support to accelerate adoption.
Question 3: This NETR roadmap is vital for steering Malaysia’s shift from traditional fossil fuels-based economy to a high-value green economy. The NETR requires a whole-of-nation approach, encompassing federal and state governments, industry, general public, and international community. From the perspective of the Ministry of Economy, what are the payoffs to be seen within the economy and how can these results be forecasted to be attained quicker (if possible)? What are the present risks within the economy with the implementation of NETR and how can the government address these issues? (with the rise of ‘greener’ fuel sources, traditional O&G companies will eventually see a declining business, firstly, is this true? With a decline of business, this sector alone will see some negative issues like job retrenchment, falling FDIs into the sector and reduction in tax revenue for the government)
● One of the tenets of Ekonomi MADANI launched by YAB Prime Minister on 27 July 2023 is spurring Malaysia’s green growth for climate resilience in line with Malaysia’s commitment to become a net-zero GHG emissions nation as early as 2050.
● We are operating in an environment in which both the government and businesses must articulate clear GHG emissions reduction targets along with our plans to develop the economy. We must be able to turn the carbon intensive and hard-to-abate industries (iron, steel, aluminium) into green investments and comply with the Economic, Social and Governance (ESG) reporting.
● At the same time, we are mindful that SMEs form approximately 97% of business establishments in Malaysia. It is encouraging to see many of our companies are really striving to reduce the environmental impact of business activities, ensure fair labour practices throughout the supply chain and distribute the economic benefits to all stakeholders. However, as in many other countries, Malaysian enterprises grapple with resource limitations (e.g. funding, skills, talents). Drastic transition without clear direction on the path forward could threaten our social safeguards, especially given the low share of CE to GDP.
● In mitigating the risks of transition, the entire Government network has put into action the necessary tools to help our businesses which in return will help the households. For instance, MITI has launched the National ESG Industry Framework to support Malaysia’s manufacturing sector towards embracing ESG and strengthen Malaysia’s economic resilience.
● In the oil and gas realm, the Malaysian Petroleum Resources Corporation (MPRC) is developing the National OGSE Sustainable Roadmap for OGSE players. It is intended to facilitate their transition towards sustainable practices and clean energy and have better adoption of ESG reporting. Given that NETR modelling points to natural gas making up 56% of our total primary energy supply (TPES) in 2050, oil and gas industry too needs to step up efforts to continue producing responsibly and sustainably.
● However, Malaysia welcomes all the support we can get to build the whole-of-society capacity right down to the households as a means to future-proof our talent pipeline. We need to develop energy knowledge platforms tailored for SMEs and businesses to tackle Scope 1, 2 and 3 reporting capacity and capability.
● Furthermore, investment for green education and training programmes could be lengthy and expensive which might be discouraging to our local industries. I would like to call on the potential investors, perhaps among the philanthropies, to come forward and support Malaysia’s efforts in producing and developing the pipeline of productive talents to implement NETR projects and initiatives.
Question 4: Ten flagship catalyst projects of the NETR, which cover six energy transition levers namely, energy efficiency (EE), renewable energy (RE), hydrogen, bioenergy, green mobility, and carbon capture, utilisation and storage (CCUS) were launched on July 27th 2023. How do they relate to Malaysia’s GDP?
● The Mid-Term Review of the Twelfth Malaysia Plan is the main policy document in realising the aspiration of Ekonomi MADANI: Memperkasa Rakyat aimed at rebuilding the “House of Malaysia” by strengthening its foundation, raising its floor, increasing its ceiling and developing its pillars.
● To address Malaysia’s long-standing economic structural challenge and growth disparity, we must develop and establish new firms to enter the market, preferably in the High Growth and High Value (HGHV) industries such as energy transition to explore opportunities in the new supply chain.
● When we were developing NETR, we realised that it was important to set clear focus areas from the outset. Hence, the six energy transition levers were introduced namely energy efficiency, renewable energy, hydrogen, bioenergy, green mobility and carbon capture, utilisation and storage (CCUS).
● We hope that this will send a clear signal to the market and garner the interests of future investors. The 10 flagship projects demonstrated 19 different modalities to show their varied technological readiness, state of development as well as challenges surrounding Malaysia’s choices of projects and initiatives to reduce the energy sector GHG emissions. Each of the 10 flagship projects and 50 initiatives is designed to reach our ambitious targets of improving RE installed capacity to 70%, energy efficiency savings to 22% and EV penetration to 80%.
● In reaching these targets, we anticipate an estimated uplift of 10%-15% in GDP and a 32% reduction in GHG emissions in the energy sector. This will coincide with 350,000 jobs being created in HGHV industries and 70% of income gains being flown into low and medium-income households.
● An estimated inflow of investments of RM435 billion to RM1.85 trillion by 2050 will be a catalyst to jumpstart economic activities in line with the global transition to clean and renewable energy sources.
Question 5: Today’s policies (the DTN, NETR, NIMP, the 12th Malaysia Plan’s forecasts) must be seen to have consistency overtime in the aspect of measuring its results. How is this carried out and what are the pillars involved to ensure these initiatives adapt to existing and future economic challenges to remain relevant? (With advancing technology, please highlight the measures and results expected, for e.g. government policies to reduce the impact and incentives for use and for producers)
● In terms of governance, YAB Prime Minister will chair the National Energy Council (MTN) to oversee Malaysia’s energy sector planning and development. The National Committee on Energy Transition (NCET) which I will chair will monitor the implementation of NETR and report to MTN.
● From a policy perspective, Malaysia needs to align our code of conduct and policies with trading partners’ expectations to maintain competitiveness. The ongoing Russia-Ukraine has disrupted the global supply chain, primarily in the energy sector. Uncertainties of stable and non-intermittent supply are growing at a time of steeper decarbonisation targets.
● Governments, including Malaysia must frequently evaluate policies on energy security to ensure that energy remains available, accessible, affordable, and acceptable to everyone. The crisis is not just a reflection of cyclical threats such as geopolitical tension, but also the structural factors undergirding it.
● Years of underinvestment have put the oil and gas production volumes in a volatile position. The increasing geographical distance between supply and demand locations had also exerted pressures on energy prices. Therefore, it is important to continue investing in large-scale initiatives to minimise the short-and long-term threats to energy security through several ways.
● We must ramp up investments into exploration and production. Having experienced a tight LNG supply in 2022, it is imperative for us to open more areas and access a wider range of operators that could provide not only more efficient solutions, but also catalyse the development of innovative skills and technologies, including CCUS.
● Energy pricing and public awareness must come hand in hand. NETR has identified the Malaysia Energy Literacy Programme (MELP) as one of the mechanisms to increase energy literacy of the people.
● Over time, market mechanisms such as TPA will be introduced to steer consumer behaviour in an environmentally responsible direction. Businesses should start introducing internal carbon price strategy to encourage behavioural changes in preparation for carbon trading on the voluntary markets.
● NETR is our commitment to a just energy transition that benefits the rakyat, creates business opportunities and supports innovation through a coordinated whole-of-nation approach. The Ministry welcomes industry players to be our partners in the journey aimed at achieving Malaysia’s Net Zero Aspiration as early as 2050.
Source : Business Today
The Coverage Malaysia
