KPMG: Strong policy and regulatory framework required to realize Malaysia’s National Energy Transition Roadmap (NETR)

PETALING JAYA, 15 August 2023 – The newly released National Energy Transition Roadmap (NETR) by the Ministry of Economy is the strongest signal yet of the Malaysian government’s commitment to achieve the country’s aspirations for net-zero emissions by 2050.

Abhishek Kumar, KPMG’s Head of Infrastructure, Strategy & Operations in Malaysia, noted a wider number of government agencies and regulatory bodies engaged in the preparation of this roadmap as a stride forward in progressive collaboration.

He added, “Real progress to deliver according to the NETR roadmap will require infrastructural and legislative reforms on a national scale. The government has a heavy responsibility to introduce robust policy and regulatory frameworks to establish a level playing field that fosters a favorable investment climate for financing and implementing its initiatives.”

Phase 1 of NETR builds upon the National Energy Policy (DTN) 2022 – 2040 document and comprises 10 flagship catalyst projects selected based on ongoing initiatives across various stakeholders in Malaysia, including government agencies and private organizations. In the pursuit to achieve the targeted 70% renewable energy (RE) capacity by 2050, the NETR is expected to open up investment opportunities between RM435 billion to RM1.85 trillion by 2050

“This provides a clear view for investors and stakeholders on the efforts needed to achieve green power generation and grid integration of renewable energy sources. For starters, the 10 flagship catalyst projects outlined in Phase 1 of NETR are expected to bring significant investment to accelerate Malaysia’s energy transition. For example, the RE Zone project championed by Khazanah Nasional Berhad has the potential to attract billions in public-private investment and underscores Malaysia’s commitment in accelerating the energy transition. However, to fully realize the ambitions envisaged in the NETR will require a concerted approach from the local and international community to undertake further innovation and initiatives,” observed Abhishek.

For this reason, Abhishek emphasized the need to advance new policies, projects, and infrastructure which will be important enablers for corporates to embark on decarbonization.

The NETR's comprehensive approach extends to the substantial reduction of greenhouse gas emissions, primarily from the energy and transport sectors – the two largest contributors to greenhouse gases (GHG) emissions in the country[1]. The framework effectively segments its catalysts into three pivotal categories, namely: (1) energy usage reduction, (2) green energy supply, and (3) carbon capture.

Abhishek commends the government’s aspirations to enhance energy efficiency on a national scale under the first energy transition lever identified by NETR. This is one of the most cost-effective steps in curbing global warming through leveraging the reduction in energy consumption in existing infrastructures and supporting stakeholders in achieving proactive energy demand reduction.

“Among the various implementation modalities, the long-overdue Energy Efficiency and Conservation Act (EECA) is expected to be tabled in Dewan Rakyat by the end of 2023. This welcomed development will particularly benefit energy-intensive equipment suppliers, who will be further incentivized to invest in energy efficiency improvements. The EECA will undoubtedly elevate efficiency ratings, catalyze green building initiatives, bolster efficient cooling solutions, and drive building equipment automation in Malaysia,” added Abhishek.

Abhishek believes that the NETR can be considered as the first crucial step and that more updates will invariably be announced with further evolutions of technology. However, he cautioned against taking too long to introduce the necessary reforms because new risks will be emerging even as Malaysia embarks on this important energy transition journey. For example, as countries explore the adoption of alternative energy sources and electric vehicles (EVs), there is also a need to concurrently consider the health and safety risks that may potentially emerge. The government will therefore need to continue the holistic approach it has undertaken during the NETR to fully realize the aspirations it has set out for the country.

 

[1] Malaysia’s Fourth Biennial Update Report, United Nations Framework Convention on Climate Change, December 2022

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