Calls for review of renewable energy policy

1. Do you think Malaysia can achieve the reduction in carbon emissions by 45% in 2030 under the Paris Agreement, judging by the current slow developments in Renewable Energy (RE)?

RE development effectively improves the country’s energy mix and reduce grid emission intensity. Having said that, it is but one lever to reduce emissions in Malaysia, there are many other areas to consider in the push towards having emissions reduced by 45% in 2030. Some other levers include: a controlled reduction in carbon emissions across all emission sources, especially from the perspective of corporates in Malaysia with high emission profiles; deployment of emission removal-related solutions such as nature-based as well as tech-based solutions will be able to aid in arriving at the target reduction levels.

2. Is the country still underutilized or not utilizing its RE sources like Biomass and Biogas etc. and heavily reliant on fossil fuels like coal and natural gas?

In Malaysia, there is potential for the use of biomass and biogas as RE sources due to abundant supply of agricultural waste and livestock manure. However, we are not fully utilising these resources for energy generation due to a few reasons:

a. development of biomass and biogas projects have been relatively slow, this could be due to a lack of a comprehensive regulatory framework to incentivise the deployment of such resources;

b. Malaysia enjoys a relatively low levelised cost of energy due to large scale usage of traditional energy sources such as coal and natural gas – this poses a challenge for RE projects to compete in terms of price points. Having said that, there have been multiple successful biomass and biogas projects in Malaysia, such as those related to the plantation industry, whereby palm oil mills use biomass as a source of energy to power their operations.

3. How can an effective RE mix be accomplished or sustained? How can an effective RE mix or policy drive economic growth of the country?

An optimal RE mix requires a multifaceted approach, from technical to non-technical considerations. Some of such elements to be considered include: diversification of RE sources; development of RE infrastructure such as transmission lines, storage facilities; implementation of supportive policies and regulations to incentivise the RE space, such as feed-in tariffs, tax incentives, supporting policies that facilitate transition; an increase in public awareness across the public and private sectors in terms of the importance of RE and its linkages to sustainable development for the future generations; a strategy to enable partnerships and collaborations with larger, more advanced players in the space so knowledge transfer can occur in Malaysia; etc.

An effective RE mix will be able to herald in many systemic benefits for Malaysia, such as job creation, environmental benefits, technological advancements, and access to potential off-grid energy to better improve access to and reliability of electricity in certain underdeveloped communities, as well as energy cost savings, especially because RE technologies, over time, is forecasted to become more cost-effective per kWh in comparison to traditional, emission-heavy sources – such cost savings could further lead to increased purchasing power for each household.

4. What are the main challenges in the RE segment? And how can it be addressed?

The main challenges in the RE segment can be broadly described in 3 pillars:

a. stronger government support; a comprehensive and long-term policy could be created to incentivise investments in RE development in Malaysia. Careful, balanced considerations of funding, offtake, storage, and human capital need to be taken care of.

b. costs – technological limitations, land-use complications, as well as a general lack of human capital have contributed to the relatively higher cost for deployment and maintenance of RE in Malaysia. A potential approach to tackling the problem can be to attract more advanced players into Malaysia so technology and knowledge transfer can occur. This needs to be further supported by a robust policy to attract such players. Furthermore, for land use, discussions with local communities will need to be initiated at an early stage to avoid potential project delays –leading to higher project costs as a function of increased time taken for negotiations.

c. competition with existing traditional energy sources – Malaysia enjoys relatively affordable energy prices for its traditional energy sources. RE can be chiefly tackled through a careful shift in energy purchase options as well as prices for RE in comparison to traditional sources.

5. Is the implementation of RE Certificates (RECs) important to spur RE growth? How can this be done, etc.?

Yes, as RECs can aid in helping companies with their respective climate-related targets, which can further stimulate the growth of RE. RECs can be generated through certification procedures that involve independent verification of RE produced against specific standards. RECs are generated after verification is completed based on the energy produced, with each REC representing a unit of RE produced typically in MWh. These RECs are then traded across producers and users typically through market-based mechanisms. Utilised RECs will then be retired after utilisation by the buyer to claim that their energy consumption is RE-based, thus not carrying negative environmental impacts in comparison to traditional energy sources – this is to avoid double-counting of the same unit of RE generated.