NORMAN GOH, Nikkei staff writer *July 31, 2023 12:44 JST *

KUALA LUMPUR -- Malaysia has launched programs to promote renewable energy in a country that has relied heavily on fossil fuels, hoping to lead Southeast Asia in transition to a greener economy.

But the ambitious targets, such as having renewables supply 70% of the total energy supply by 2050, have experts stressing that the government needs to roll out complementary regulatory frameworks to support the transition.

Unveiling the first phase of the National Energy Transition Roadmap (NETR) last week, the government identified 10 flagship catalyst projects and initiatives -- ranging from constructing renewable energy zones and creating biomass demand to capturing carbon and promoting greener mobility.

These projects are expected to generate an estimated investment of more than 25 billion ringgit ($5.5 billion) and 23,000 jobs while reducing greenhouse gas emissions by the equivalent of more than 10,000 gigagrams of carbon dioxide per year, according to the road map.

Economy Minister Rafizi Ramli said at the launch event in Kuala Lumpur on July 27 that overall, NETR will open up investment opportunities of between 435 billion ringgit to 1.85 trillion ringgit in the country by 2050.

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As a resource-rich country, the Malaysian economy has primarily relied on natural gas and oil in its energy mix. Renewables accounted for only 3.9% of the total energy supply in 2020, according to the ministry.

"As a nation, we are used to falling behind and lagging behind. And when others pace ahead, we rarely think about how we could be the ones leading others instead," the minister said during his keynote address at the NETR launch. "With NETR, however, there is a real opportunity for us to lead Southeast Asia as the regional powerhouse in renewable energy."

The economy minister mentioned that the government had lifted the export ban on renewable energy to increase potential yield from company participation in the energy transition and the establishment of a central electricity exchange that a single-market aggregator will operate.

As part of the NETR initiatives, UEM Group, a subsidiary of Malaysia's sovereign wealth fund Khazanah Nasional, will develop a 1-gigawatt hybrid solar power plant in the country. The project is the largest of its kind in Southeast Asia and has attracted investments totaling 6 billion ringgit.

The second phase of the road map will be launched in mid-August, focusing on specific strategies to promote the energy transition, such as human capital and international cooperation.

Experts say how the government will implement the programs will be crucial, calling for greater clarification of the transition process.

"The government needs to provide greater clarification on how the long-termed goals can be materialized. It will depend on how the government initiates their policies into action in the upcoming years," Anjulie Razak, a researcher at the University of Malaya, told Nikkei Asia.

Ijlal Hannan, an analyst at the strategic advisory company BowerGroupAsia, said that "complementary regulations and facilitative trade platforms" are necessary to promote renewables in Malaysia, referring to initiatives such as setting up an energy exchange and carbon pricing mechanism.

"I think [the renewable energy target] is ambitious, for sure. It's likely that [non-renewable energy] will remain in use longer here, setting back on higher [renewable energy] capacity in the energy mix," Ijlal said. "But better to have a moonshot goal than to aim conservatively."

Rais Hussin, CEO of local think tank EMIR Research, said that the green and renewable energy sector is still new and requires the government's intervention in all dimensions such as institutional, regulatory, fiscal, investment and technical.

"We should continue to push ahead and expedite our [investment policies] to position Malaysia as a potential carbon trading hub in the region with the rollout of carbon pricing mechanisms and sector-specific environmental, social and governance and climate-risk policy measures in the area of five key strategic sectors -- namely electrical and electronics, digital economy, pharmaceuticals, aerospace and chemicals," Rais said.

lofty goals but won't even consider nuclear energy.