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Doubling Down On a Just, Inclusive Energy Transition in 2024

After two weeks of negotiations, the COP28 climate summit in Dubai closed with a watershed agreement that signals the “beginning of the end” of the fossil fuel era. Representatives from nearly 200 countries pledged to start reducing global consumption of fossil fuels, a move that scientists say will be humanity’s last best hope to stave off the worst effects of climate change.

Leaving COP28 behind, the world’s attention now turns to climate action at the national level. Following up on its climate commitments on the global stage, the Malaysian government has rolled out major policy shifts to drive economic reforms and generate the investments needed for a just and successful energy transition going forward.

Charting a Path Towards a New Energy Future

As one of the original parties to the Paris Agreement, Malaysia has gradually scaled up its commitment to slash greenhouse gas (GHG) emissions over the years, aiming for an ambitious 45% reduction by 2030 to achieve net-zero as early as 2050. Consequently, the government also targets to reach 70% of renewables in the power mix by 2050, from the existing 25%.

To deliver on these aspirations, the National Energy Transition Roadmap (NETR) was launched last year to serve as the definitive pathway for Malaysia to accelerate its shift to renewable energy. Central to the NETR is the recognition that the energy transition presents opportunities rather than obstacles to sustainable development and green economic growth.

The NETR outlines 10 flagship catalyst projects and over 50 initiatives under six energy transition levers and five enablers, which collectively aim to power Malaysia’s future by unlocking potentials in nascent growth areas. These include investments in the electric vehicle (EV) value chain, hydrogen, as well as carbon capture and usage storage (CCUS) technologies.

By taking a pioneering role in these emerging areas, Malaysia could enhance its competitive advantage and generate investment opportunities estimated between RM435 billion and RM1.8 trillion by 2050. These investments in turn will contribute an additional GDP of up to 15% or RM220 billion, while creating approximately 310,000 green job opportunities.

Investing for Tomorrow’s Renewable Economy, Today

At the heart of Malaysia’s low-carbon transition lies the acceleration of renewable energy (RE) capacity deployment, where the power sector plays a critical role in providing affordable and reliable access to clean energy. Investing in a smart and sustainable energy grid will be pivotal for shaping a future marked by lower GHG emissions in electrification.

Among the major changes announced by the government in this regard was the lifting of the ban on RE exports, which was imposed back in 2021. The move is meant to de-bottleneck growth in the energy industry to spur more income, which can help fund the heavy capital expenditure initially required to develop the grid infrastructure.

In terms of infrastructure, among the flagship catalyst projects set out under the NETR include the development of an Integrated RE Zone, championed by Khazanah Nasional in collaboration with local and foreign investors. The pilot RE Zone will feature a 1-Gigawatt (GW) hybrid solar photovoltaic (PV) power plant, the largest of its kind in Southeast Asia.

In parallel, national utility Tenaga Nasional Berhad (TNB) will lead the development of five centralised large-scale solar (LSS) parks with a total capacity of 500 Megawatts (MW), or 100 MW each. The parks will be co-developed in partnership with SMEs, cooperatives, and state economic development corporations to ensure a trickle-down of the economic benefits.

Aside to that, TNB has also earmarked RM2 billion for an investment in 2.5 GW of hybrid hydro-floating solar photovoltaic (HHFS) projects at its hydro dam reservoirs. The hydro plants will increase RE generation close to 24-hour availability and could potentially be scaled up for future green hydrogen feedstock in collaboration with other hydrogen producers.

Joint collaborations are also taking place to accelerate the country’s transition. Industry giants like Petronas and TNB are leveraging their expertise to advance the carbon capture storage (CCS) technology for Gas-Fired Power Plants.

Empowering a Fair and Equitable Transition For All

While the energy transition promises to foster job creation and new opportunities particularly in emerging green growth areas, other non-green areas might experience a significant decline. This underscores the importance of greening the economy in a way that is fair, inclusive, and equitable, ensuring that nobody gets left behind.

This underscores the importance of greening the economy in a way that is fair, inclusive, and equitable, ensuring that nobody gets left behind.

As such, the NETR ensures that the socio-economic benefits of the energy transition reach every segment of society, without exacerbating the financial burdens of the most vulnerable populations. Indeed, medium- and low-income households are expected to be the biggest beneficiaries, taking up to 70% of expected income gains.

With the rising costs of electricity, the government is also exploring targeted subsidy and RE adoption mechanisms to keep energy costs low for vulnerable groups, while simultaneously raising the electricity tariff for heavy users. Amid the trend of rising tariffs, consumers will be prompted to practice more energy-efficient lifestyles and habits.

Indeed, households and private sector players have resorted to self-generation by installing rooftop solar panels under the Net Energy Metering (NEM) Programme. Apart from rooftop solar power, consumers are also warming up to electric vehicles, thanks to supportive tax policies and extended incentives to encourage charging infrastructure rollout.

To further encourage behavioural change to embrace sustainability, the government has also embarked on a ‘green gotong royong’ of policy initiatives to empower Malaysians to become energy prosumers and proactively manage their carbon footprints. This includes the Feed-in Tariff, Corporate Green Power Programme, and Green Electricity Tariff Programme.

Welcoming a New Era of Climate Action

Globally, the momentum for the energy transition persists, with the final text of COP28 signaling to the world a clear and definitive need to end the use of fossil fuels, while calling for a tripling of global renewable energy capacity by 2030. At the same time, there is a need to ensure that the transition remains just, orderly, and equitable for everyone.

On the global stage, Malaysia has demonstrated its determination to drive positive change and explore new avenues for collaboration. The Sustainable Energy Development Prospectus launched at the Malaysia Pavilion during COP28 welcomes collaboration with global partners in the collective endeavor to secure a low-carbon energy future.

At the national level, the energy landscape will continue to be transformed by the initiatives and projects under the NETR – producing green services and products, creating new jobs, facilitating the flow of investments along the RE value chain and ramping up energy literacy programs to educate the average consumers. This will unlock key socio-economic benefits to empower consumers, businesses, communities, and the nation.

The government’s recent decision to establish a new energy transition and public utilities ministry demonstrates the country’s continued determination to meet the targets laid out under the national roadmap. We look forward to seeing Malaysia’s accelerated and responsible energy transition underway in 2024 and the years to come.

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