Malaysia faces ‘inconvenient truth’ on clean energy goals

Ko, now 39, launched himself into a career in the renewables industry about 15 years ago, working on green projects in a dozen countries before returning home to the capital Kuala Lumpur.

There he teamed up with two school-friends in 2012 to co-found Plus Xnergy, a company that helps homes, businesses and buildings to develop their own solar power systems or source clean energy supplies from elsewhere.

The entrepreneur – who has worked with the likes of furniture retailer IKEA, logistics giant DHL and entertainment conglomerate Sony and has developed six solar farms across Malaysia – said awareness about renewable energy among his country folk is the highest he has known.

Nonetheless, Ko and other energy experts warned that Malaysia is trailing its Southeast Asian neighbors on clean energy expansion, as a lack of financial incentives and investment, coupled with red-tape, hold back the big projects needed for the country to meet its ambitious climate goals.

“Malaysia is considered quite average in Southeast Asia,” said Ko, adding that its renewables efforts have seen “steady growth but not super fast”.

Like many countries in the region, Malaysia is hit regularly by the impacts of extreme weather and rising temperatures – whether choking haze linked to regional forest fires, water shortages, droughts or severe floods.

Flooding that began in late 2021 caused nearly $1.5 billion in losses and displaced more than 120,000 people, for example.

In that same year, to help tackle climate change, Malaysia – which has pledged to cut its planet-heating emissions to net zero by 2050 – set goals to source 31% of its power capacity from renewables by 2025 and 40% by 2035.

Then last September, the previous government published a policy targeting a 17% share for renewables in the total national energy supply by 2040.

But with renewables today accounting only for about 9% of Malaysia’s electricity generation capacity, the government targets seem “highly unrealistic”, said Attaurrahman Ojindaram Saibasan, a power analyst at data company GlobalData.

Malaysia lacks “strong” renewable energy policies, said Saibasan, whose firm published a report on Malaysia’s power sector last week.

“There are no incentives offered to large-scale renewables,” he said, adding that climate-heating coal and natural gas currently make up about 75% of Malaysia’s power capacity mix.

Slow investment

Despite expensive and deadly climate impacts and lofty clean energy targets, environmental issues did not feature in last year’s election, dominated by the economy and cost of living.

Malaysia trails Indonesia, the Philippines, Thailand and Vietnam in renewable power generation, said Saibasan.

The government has struggled to attract investment in large-scale renewable energy projects due to a “sluggish economy” and a lack of “robust policies” to make clean power more attractive than fossil fuels, he added.

Malaysia has previously provided incentives to invest in solar – which has the greatest potential, experts say. Other promising options for Malaysia are bioenergy sourced from the palm oil industry and hydropower.

Those measures are needed because the best areas to generate solar power are in the north, while demand is concentrated further south in the industrial Klang valley, which includes the capital Kuala Lumpur, he added.

Sabah and Sarawak states on Borneo island would also benefit from greater freedom to develop their own renewable power projects, alone or with neighbouring countries, experts said.

Malaysia’s 2050 zero-emissions goal is a “significant signal of intention” for a developing Southeast Asian country, noted Kwong. But consistent, longer-term plans to aid the expansion of renewables are needed to reach that and other targets, he added.

Malaysia’s energy ministry did not respond to requests for comment.

Costly coal

In recent months, Indonesia and Vietnam have clinched big finance deals with rich nations to shutter coal-fired power plants early and reduce greenhouse gas emissions from their power sectors.

Kwong, who focuses on energy and climate, urged Malaysia to make a clear pledge to phase out coal-fired power plants.

“It makes sense for the country because we import all our coal today, so that also improves our trade position,” he added.

Malaysia is largely reliant on Indonesia and Australia for its coal supplies.

Peter Godfrey, managing director for Asia Pacific at the Energy Institute in Singapore, said he expects Malaysia to discuss a similar energy transition deal with donors, to accelerate coal power closures.

“Retiring modern or relatively new coal capacity is a very expensive business – because who is going to pay for it?” he said.

However, Malaysia’s abundant natural gas supplies mean there is little urgency to meet renewable energy targets, he warned, underlining the importance of efforts to reduce emissions from the natural gas industry.

Gradual green growth

Despite the challenges Malaysia faces, more renewable energy is inevitable, said solar entrepreneur Ko, who is positive about the country’s green energy outlook.

Businesses have faced rising costs for labor, raw materials and energy in recent years – which switching to solar could help alleviate while also helping narrow the “huge gap to go” on the country’s clean energy goals, he said in an interview.

Governments cannot afford to continue providing large subsidies for some power users, while smaller companies doing business with major corporations are now under growing pressure to lower their emissions and go green, he added.

Ko, whose company also organizes free engineering workshops for students, called on banks to offer favorable lending rates to companies seeking to adopt cleaner energy.

“There is room for local players and local government to trial and error, to learn from mistakes, to improve policies, quality of work and technologies,” he said.

“It can gradually grow,” he added.