Malaysia’s recent National Energy Transition Roadmap (NETR) is a bold and ambitious plan to achieve a sustainable and inclusive energy system by 2050. Launched on 29th August 2023, the NETR outlines six key energy transition levers: decarbonizing the electricity sector, electrifying end-use sectors, enhancing energy efficiency, developing renewable energy sources, promoting sustainable transport, and managing energy demand.
Malaysia is a country with a population of 33.4 million, and its economy is growing. While the Gross Domestic Product (GDP) and Gross National Income (GNI) per capita are relatively low, Malaysia’s rate of development and urbanization rate is high. This economic and population growth and rapid urbanization are expected to increase energy demand by 2% annually until 2050. Emissions will undoubtedly increase in tandem with this progress, necessitating an urgent need to transition towards a low-carbon economy.
Around the world, countries are increasingly committed to sustainability. By 2022, approximately 140 countries had pledged to achieve net-zero emissions, and 86 of these countries had already developed policy documents and frameworks to achieve their goals. To make this transition a reality, we need to adopt more clean energy alternatives.
Introducing The Six Energy Transition Levers
The purpose of the 6 energy transition levers is to accelerate the transition to a sustainable and inclusive energy system. As the energy transition gains momentum both domestically and internationally, these six levers will unlock economic opportunities. The levers are:
- Energy efficiency (EE) – To improve energy security, lower costs for users, enhance energy equity, and elevate environmental sustainability, we can reduce demand for energy and minimize emissions from energy production.
- Renewable energy (RE) – Malaysia has a vast renewable energy (RE) potential, with an estimated 290 gigawatts (GW) of technical potential nationwide. Solar photovoltaic (PV) alone has a technical potential of 269 GW. However, only a small fraction of this RE potential has been realized, with just over 9 GW of installed capacity. This means that more than 95% of Malaysia’s RE potential remains untapped.
- Hydrogen (HY) – Hydrogen is a versatile and sustainable energy carrier that has the potential to transform Malaysia’s economy. It can help reduce the carbon footprint, diversify energy sources, and create new economic opportunities for the country. Hydrogen can also help monetize natural resources, such as solar and hydroelectric power.
- Bioenergy (BI) – Bioenergy is energy that is produced from biomass, such as agricultural waste, wood, and municipal solid waste. Bioenergy can be used to generate electricity, heat, and transportation fuels.
- Green mobility (GM) – Transportation is a major source of greenhouse gas (GHG) emissions in Malaysia, primarily from internal combustion engine (ICE) vehicles. Land transport is the biggest culprit, accounting for 55 MtCO2eq (metric tonnes of carbon dioxide equivalent), or 85% of total transport emissions. To reduce these emissions, Malaysia must adopt green mobility practices and technologies.
- Carbon capture (CC), utilization, and storage – By definition, invest and adopt technologies that can capture carbon dioxide emissions from power generation and other industrial processes and store them underground. CCUS can help to reduce greenhouse gas emissions and mitigate climate change.
The six energy transition levers are interrelated, and they must be addressed together in order to achieve Malaysia’s energy transition goals. For example, decarbonizing the electricity sector will require the development of renewable energy sources and the electrification of end-use sectors. Similarly, enhancing energy efficiency and promoting sustainable transport will help to reduce energy demand, which will make it easier to decarbonize the energy sector.
Making the Levers Work: Ten Flagship Catalyst Projects
The NETR identifies ten flagship catalyst projects that will be implemented to advance the aforementioned six energy transition levers. The ten flagship catalyst projects are:
- Deploying 10 gigawatts (GW) of solar photovoltaic (PV) capacity by 2030 – This project will involve the development and installation of large-scale solar PV systems across Malaysia. Solar PV is a renewable energy source that converts sunlight into electricity, and it is a key part of the NETR’s plan to decarbonize the electricity sector.
- Developing a 1 GW offshore wind farm – This project will involve the development of an offshore wind farm off the coast of Malaysia. Offshore wind is another renewable energy source that can help to decarbonize the electricity sector.
- Constructing a 1,000 megawatts (MW) battery energy storage system – This project will involve the construction of a large-scale battery energy storage system. Battery energy storage systems can store electricity from renewable energy sources and then discharge it when needed, which can help to stabilize the grid and ensure a reliable supply of electricity.
- Electrifying 1 million public and private vehicles by 2030 – This project aims to promote the adoption of electric vehicles in Malaysia. Electric vehicles are more efficient and produce fewer emissions than traditional gasoline-powered vehicles.
- Retrofitting 500,000 buildings for energy efficiency by 2030 – This project will involve retrofitting existing buildings to make them more energy-efficient. This can be done through various measures, such as improving insulation, installing energy-efficient appliances, and using renewable energy sources.
- Developing a national smart grid – This project aims to develop a smart grid in Malaysia. A smart grid is an electricity grid that uses digital technology to improve the efficiency, reliability, and sustainability of the electricity system.
- Establishing a sustainable biofuels industry – This project aims to develop a sustainable biofuels industry in Malaysia. Biofuels are renewable fuels that are produced from organic matter, such as plants or algae.
- Promoting energy efficiency in the industrial sector – This project aims to promote energy efficiency in the industrial sector. This can be done through various measures, such as improving production processes, installing energy-efficient equipment, and using renewable energy sources.
- Developing a green hydrogen economy – This project aims to develop a green hydrogen economy in Malaysia. Green hydrogen is produced using renewable energy sources, and it can be used as a fuel or a feedstock for a variety of industrial processes.
- Promoting research and development in energy technologies – This project aims to promote research and development in energy technologies in Malaysia. This is important to ensure Malaysia has the technologies it needs to achieve its energy transition goals. The NETR is a comprehensive and ambitious plan that will require the cooperation of all stakeholders, including the government, businesses, and individuals. If successful, it will help Malaysia to reduce its greenhouse gas emissions, improve its air quality, and create new jobs in the clean energy sector.
NETR anticipates that Malaysia will require an investment of RM1.2 trillion to RM1.3 trillion by 2050, based on the financial requisites.
Why is the NETR so Important?
The energy sector is a critical pillar of the Malaysian economy, contributing 28% of GDP and employing 25% of the workforce. It is also a key source of national income, with petroleum-related products contributing 31% of fiscal income and 13% of total export value. The energy sector benefits more than 10 million customers by providing daily access to electricity supply and enabling mobility through a reliable supply of fuels. It also creates jobs and business opportunities, contributing positively to the socioeconomic development of the nation.
The NETR flagship projects are expected to generate an estimated total investment of more than RM25 billion, create 23,000 job opportunities, and reduce GHG emissions of more than 10,000 Gg CO2 (greenhouse gas carbon dioxide) equivalent per year.
Setting the Bar for Better Energy Policies
The NETR is proposing ambitious energy efficiency targets, aiming to reduce energy consumption by 21% compared to business-as-usual by 2040, and by 22% by 2050. These targets represent a significant increase from the previous goals set in the National Energy Policy, 2022-2040 (DTN), which aimed for a 10% reduction in residential energy consumption and an 11% reduction in industrial and commercial energy consumption by 2040.
The Malaysian government has increased its target for installed renewable energy (RE) capacity from 40% in 2040 to 70% by 2050. This higher target is expected to generate new economic opportunities by attracting multinational companies, especially RE 100 companies, to operate in Malaysia.
RE development will also be expanded based on the concept of a self-contained system, which will encourage investment in the RE value chain and diversify RE programmes according to the principle of willing buyers, and willing sellers.
In addition, the government will scale up the installation of solar systems in government buildings and allow cross-border RE trade through the establishment of an electricity exchange system. This will help to increase the supply of RE in Malaysia and reduce the country’s reliance on fossil fuels.
The establishment of a RE exchange system will position Malaysia as a regional hub for RE while also supporting and expanding on the ASEAN Power Grid (APG) initiative. Malaysia is currently a key member of the Lao PDR-Thailand-Malaysia-Singapore Power Integration Project (LTMS-PIP), which is a pathfinder project to advance cross-border power trade among ASEAN Member States under the APG.
In conclusion, NETR is essential for Malaysia to navigate the complex and large-scale transition from a traditional fossil fuel-based economy to a high-value green economy. It also reinforces Malaysia’s commitment as a responsible stakeholder to achieve its net-zero greenhouse gas emissions (GHG) aspirations as early as 2050, despite contributing only 0.8% to global GHG emissions.
- Ministry of Economy, Malaysian Government 2023, ‘National Energy Transition Roadmap – Energizing the Nation, Powering Our Future’.