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Rebuilding the Road Ahead with Greater Efficiency

While the challenges in meeting the goals of the Paris Climate Agreement remain stark, the impact of the COVID-19 pandemic has given us an unprecedented opportunity to revaluate the current trajectory of our climate roadmap. We’ve seen a window into a world where radical transformation has impacted both economic growth and energy demand. Now as the world looks to build back better, nations like Malaysia have an opportunity to take a lead on energy efficiency, and leverage the substantial value this critical industry could build.

Building Back Better with Energy Efficiency

Economic growth drives energy demand, not just from large factories and plants in the industrial sector, but also from the increased consumption of goods and services such as travel, transport, and luxuries that an expanding economy unlocks.

overall energy demand in Southeast Asia grew by over 80% between 2000 & 2019

The last two decades have seen remarkable growth across Southeast Asia – overall energy demand grew by more than 80% between 2000 and 2019. This is a reflection of a period of economic success that saw Malaysia’s GDP triple from just under US$94bil in 2000 to over US$358bil by 2018 – a record of growth that any country would be proud of.

It doesn’t end there either. Malaysia is expected to continue growing in the coming years, with the latest projections from the World Bank suggesting a 6.9% growth rate in 2021 alone. That’s a promising rebound from the challenges of COVID-19 the country has been facing, but comes with significant energy responsibilities. Malaysia’s energy demand growth has consistently increased at a rate greater than its GDP, so the first of those responsibilities is reducing the energy emissions burden of that growth.

Malaysia’s Energy Efficiency Master Plan was designed as part of the solution for this. Published in 2015 by what was then the Ministry of Energy, Green Technology and Water, this plan outlines how energy efficiency can help decouple economic growth from energy demand, reducing the environmental burden of growth, and increasing energy security for the country. The Master Plan estimates the nation could save 52,233 GWh of electricity through this transition, equalling 38 tonnes of CO2 equivalent removed in emissions over the ten years of the plan.

If Malaysia is to truly tackle the energy intensity of its economy, then transport has a big role to play

This isn’t a challenge for the nation, but a significant opportunity. Businesses which save money on energy bills become far more competitive on a global stage, enjoy reduced operation costs, and consumers benefit from the more competitive pricing for products and services. Optimising the energy efficiency in buildings is a prime example, with the potential to improve energy efficiency of commercial buildings by up to 70%.

There are clear signs of how lucrative this potential can be for Malaysia’s economy, with electrical engineering and energy efficiency services company Kejuruteraan Asastera Bhd (KAB) seeing its stock market valuation grow by 790% this year, due to the increased demand for its services in reducing energy bills for businesses. The success of similar services for both domestic and business consumers is evident from work of organisations such as TNB subsidiary TNB Energy Services.

Solar-powered industrial efficiency is another area of real opportunity. Malaysia boasts both ample year-round sunlight, and a skilled manufacturing industry. That means it is primed to benefit from both sides of the solar industry opportunity. Companies adopting solar panels can reduce electricity demand, eliminating emissions and driving down operating costs. At the same time, Malaysia is the biggest solar PV employer in the region. This expertise can help Malaysia capture a share of a growing market projected to quadruple in value to reach US$223bil by 2026.

Transport’s Role in Driving Efficiency

Transport remains one of the most complex and significant parts of Malaysia’s energy demand, responsible for over one-third (38.5%) of final energy consumption in 2017. That share has barely shifted over the last two decades, but the total energy consumption it represents has jumped significantly. Transport’s thirst for energy has seen its consumption increase more than ten-fold since 1980. Road transport represents the lion’s share of that consumption.

In 1980, Malaysia was home to approximately 2.6 million vehicles. There are now more than 31.2 million motor vehicles registered in Malaysia, from domestic cars and bikes through to commercial vehicles. If Malaysia is to truly tackle the energy intensity of its economy, then transport has a big role to play.

The National Transport Policy 2019-2030 (NTP) commits “to develop a sustainable transport sector that accelerates economic growth and supports the well-being of the rakyat in line with an advanced nation status.”

Electric vehicles can travel up to 3x the distance on the same absolute unit of energy as its traditional counterparts

Embracing a low-carbon future of transport will mean encouraging adoption of electric and plug-in vehicles for Malaysia’s roads. It means growing access to public transport. Introducing new low-carbon fuels while supporting rollout of electric vehicles (EVs) and hybrids is an ongoing journey. There are almost 400 EV charging stations available across the country today, with plans to roll out thousands more in coming years.

Electric vehicles not only reduce direction emissions on the road, but actually utilise energy more efficiently as you travel. Internal combustion engines operate at less than 40% thermal efficiency, meaning less than half the energy of the fuel is transformed into forward motion. Electric vehicles on the other hand deliver close to 90% efficiency. While the figures can vary between vehicles, the reality is that EVs can travel up to three times the distance on the same absolute unit of energy.

Once again, Malaysia’s established manufacturing industry is poised to gain. The IEA estimates that electric vehicle use will grow 30-fold by 2030, reaching 245 million vehicles by that year. With an established automobile industry, and enviable position for global trade opportunities, the right investment and incentives could see Malaysia as a major global hub of EV technology and manufacturing. This could also see a sharp increase in job opportunities in an industry that already employs an estimated 700,000 people.

Alongside these low-carbon vehicle opportunities, Malaysia must embrace a smarter public transport system for the future. The Intelligent Transport System (ITS) blueprint 2019-2023 imagines a smarter connected transport infrastructure for Malaysia. It envisions a future where big data is integrated to deliver a more efficient national and regional transport network. Using data insight to connect up road, rail, and urban transport systems can improve journey efficiency, reduce journey times, and help reduce the overall energy intensity of transport.


Smart Energy for the Road Ahead

Integrating growing adoption of EV technologies with emerging innovations can accelerate that journey. Utilising data and analytics to understand and map journey times can optimise routes, unlocking valuable new efficiencies. That means vehicles travel on routes or at times that reduce energy use, providing smarter transport in a more efficient way.

Increasing energy efficiency to support economic growth is a smart route forward for the country

Integrated artificial intelligence and smart city design can further support this transition. Smart traffic lights that are designed to keep traffic flowing can reduce time stuck in jams, eliminating wasted energy use from stop-start journeys. The advent of self-driving vehicles could even deliver an automated element to this energy saving journey in the coming decade.

The promise of smart, integrated efficiency presents a powerful reflection of Malaysia’s overall efficiency journey. Increasing energy efficiency while supporting economic growth is a smart route forward for the country. That’s not a question of sacrifices, but of linking up opportunities in an efficient and value-creating way. With its word-class manufacturing industry, and enviable global location, a world-class energy efficiency industry could well be the next great growth driver for Malaysia.

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