Economic Minister Razifi Ramli gave his opening address at the National Energy Transition Roadmap event ironing out the details of the actionable bluepint that will set the country towards being a greener nation and contribute positively to the planet.
The past 30 years saw Malaysia’s GDP rise by 389%, but greenhouse gas (GHG) emissions also went up by 289%. Between 2000 to 2021, while the region’s GDP growth and life expectancy grew leaps and bounds, carbon emissions in Southeast Asia rose by as much as 56%.
With the cost of renewable energy having rapidly declined, and will likely be lower than the cost of fossil fuels very soon, the country is more ambitious in its push to embark on climate change mitigating initiatives. The cost of solar today has dropped by a factor of 5,000 since it was first used in 1958. The cost of lithium-ion batteries, a major cost component in EVs and grid-scale energy storage, has fallen by 90% in the past decade. This was made possible by better technology, economies of
scale, and most importantly — governments that invested heavily at the start because they had the conviction of a better world.
The National Energy Transition Roadmap (NETR) is the start of remaking the next generation. Every of the 50 initiatives set forth in the NETR, spurred by the 10 flagship projects, is meant to not only bring us closer to our Net Zero aspirations, but
to unlock the economic value that underlies it.
Razifi said the strategy set forth in the NETR does not come from an imagined ideal state of the world or what leading countries are doing. Instead, they come from a sobering understanding of the world as it is, a realistic view of Malaysia’s strengths, and a pragmatic view of what needs to be done to grow.
The first step was to set stretched targets so that the slight discomfort could drive creativity and innovation in reaching them. By 2050, we are stretching the RE installed capacity target to 70%; the Energy efficiency savings target to 22%; and (iii) EV penetration to 80%.
The government is introducing the Responsible Transition 2050, i.e. a low carbon pathway for the energy sector from now till 2050, more ambitious than the Low Carbon Nation Aspiration 2040 set forth previously. The pathway will reduce the GHG emissions from 25gigagrams of carbon dioxide equivalent to 175 gigagrams in 2050. On top of that, it will unlock the economic value brought by the initiatives and enablers the Minister said.
For the economy, Rafizi is expecting a 10-15% uplift in GDP value from market-creating products that are high-growth and high-value (HGHV). There will also be a 32% reduction in emissions in the energy sector, besides bringing in a higher volume of green FDIs into the country.
For businesses, infrastructure and technology would become the impetus for investments to flow through. A cleaner energy mix and energy efficiency would also future-proof our industries so that we are prepared for a world where money responds to the greenest products.
For the people, 350,000 jobs will be created in the HGHV sectors across the country. Importantly, 70% of income gains will flow to low- and medium-income households. The upskilling opportunities that are created could also give Malaysian workers the chance to work on something fulfilling and fully utilise their skills.
And in order to realise these economic gains for the country, Razifi said there are three critical structures that will become the bedrock of the NETR ambitions, strong governance, substantial financing, and a credible and transparent exchange system.
First, governance, the government will set up the National Energy Council as a strong signal of its intention to move beyond blueprints and into the nitty gritty of implementation. The National Energy Council, chaired by the Prime Minister, which the Ministry of Economy is the secretariat, would set forth high-level strategic directions and policies, allowing for the working committees to coordinate and report the progress in turn.
Second, financing. The National Energy Transition Facility will adopt an innovative blended finance instrument that combines the funding from public, private, and philanthropic channels.
Third, energy exchange. At the basic level, an exchange is necessary for the country to command the price premiums of RE that come from cross-border trading. As the exchange matures, market-creating products could be created to further unlock the value of different markets that yield healthy returns to its participants.
The exchange could also facilitate the closer interconnectedness of Southeast Asia, which mutually benefits the region as a single economic bloc.
In conclusion, the EPU Minister said the journey of energy transition has just begun and is an opportunity for Malaysia to remake the country, and — through the inseparable bonds of kinship — the world.
