AMIDST the global urgency to tackle climate change, energy transition has emerged as a critical priority for nations worldwide. As one of the top 25 emitters globally, alongside G7 nations, the EU, and China, Malaysia's commitment to achieving net-zero emissions by 2050 underscores its determination to combat climate change and shift towards cleaner energy sources.

Advancing with Policy Support

For years, Malaysia has relied heavily on fossil fuels to power its energy sector, with over 90% of its total energy supply in 2021 sourced from coal, oil, and natural gas. However, there has been a notable shift towards renewables, particularly in electricity generation, aimed at curbing carbon dioxide emissions. This is reflected in the target of achieving 70% renewable energy capacity in the country’s energy mix by 2050.

The government has launched several programs to steer towards a sustainable future, including the well-established feed-in tariff (FIT) mechanism under the Renewable Energy Act. Recent initiatives like the Twelfth Malaysia Plan and the National Energy Policy, supported by the National Energy Transition Roadmap (NETR), are guiding Malaysia on this transformative journey. Consequently, the share of modern renewables in energy consumption has surged by over 80% in the last two decades.

Unlocking New Business Potentials

The transition to renewable energy presents significant investment opportunities. Achieving the country's energy mix goals by 2050 is estimated to require over RM600 billion. The NETR Phase One has introduced 10 flagship projects and initiatives under six energy transition drivers: energy efficiency, renewable energy, hydrogen, bioenergy, green mobility, and carbon capture, use, and storage, expected to attract over RM25 billion in investment. Additionally, according to the Malaysian Investment Development Authority, investments worth RM2.5 billion were approved in 2022, with domestic investments making up 93.5% and foreign investments comprising 6.5%.

The Voluntary Carbon Market launched by Bursa Malaysia through the Bursa Carbon Exchange is another key initiative aimed at accelerating the transition to a sustainable energy future. This platform facilitates the trading of carbon credits and renewable energy certificates. Projects aimed at reducing or removing carbon emissions, which were once seen as cost-intensive, can now become profitable ventures. This shift is achievable by selling carbon credits derived from the emission reduction efforts.

Diversifying Renewable Energy Sources

Despite Malaysia's abundant renewable energy resources, its supply relies heavily on hydro, biofuels, and waste, which contribute over 90% of the renewable energy share. Therefore, there is a pressing need to diversify the renewable energy mix. The recent announcement by Deputy Minister of Investment, Trade, and Industry, Liew Chin Tong, at the Biomass Roundtable Meeting 2024, to utilize biomass as a feedstock for new and advanced fuels and other green industries is noteworthy. This approach is a low-hanging fruit compared to other initiatives that typically require substantial research before scaling up and commercialization, which can often take years to materialize.

As the world's second-largest palm oil producer, Malaysia generates millions of tonnes of biomass annually. This makes the biomass sector an attractive field, offering not only promising business opportunities but also playing a crucial role in fostering a circular economy for a sustainable future. For example, palm kernel shells can be used as solid fuel for biomass boilers to generate heat and energy, palm oil mill effluent oil can be upgraded to biodiesel and sustainable aviation fuel, and empty fruit bunches can be converted to bioethanol.

Progressive Actions Featuring Research, Development and Commercialization

While Malaysia has implemented several initiatives and policies to support the transition to a sustainable energy future, additional measures could further accelerate this progress. For instance, introducing a carbon tax—a fee on the carbon content of fossil fuels—would make high-carbon activities more expensive. Initially targeting industries with significant carbon footprints, this tax would encourage businesses to adopt cleaner energy sources and more efficient technologies. Revenue from the carbon tax could fund renewable energy projects, such as increasing quotas for household feed-in-tariff projects like solar photovoltaics.

Another straightforward approach is enhancing efforts to capture methane from palm oil mill effluent and convert it into biogas. Currently, just around one-third of palm oil mills have biogas plants, with others hindered by factors such as their remote locations, which result in high capital expenses to connect electricity to the national grid. However, the introduction of carbon credits trading and the potential implementation of a carbon tax could motivate more mills to undertake investments in biogas capturing for electricity generation.

Recognizing the significance of advancements in technology, it's crucial to emphasize ongoing investment in research and development. Prioritizing funding in this domain is paramount, with a focus not solely on fundamental research but also on facilitating commercialization. Additionally, to ensure the effectiveness of research projects, funding should be aligned with their progress and impact. Ultimately, the aim is to bring innovations to practical application, thereby aiding the transition to sustainable energy.

Malaysia's Chance to Set the Standard

Malaysia's strides in energy transition not only address pressing needs but also pave the path for a pioneering example in sustainable development. Embracing a multifaceted renewable energy portfolio, fortifying regulatory structures, and nurturing innovation, Malaysia stands poised to set a benchmark for sustainable progress, shaping a future that is cleaner, more robust, and environmentally sound for future generations.

* Eur Ing Hong Wai Onn, a chartered engineer and chartered environmentalist, is a Fellow of the Institution of Chemical Engineers, the Royal Society of Chemistry, and the Malaysian Institute of Management. He is also the author of “A Chemical Engineer in the Palm Oil Milling Industry”

** The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect the position of Astro AWANI.